20231208-KPMG_Global-Canada_–_Plans_for_Short-Term_Rentals,_UHT_Rules_in_Fall_Economic_Statement_3页_275kb

Summary of Short-Term Rental and Underused Housing Tax Changes

Short-Term Rental Rules

• Finance Canada announced changes affecting short-term rental rules starting January 1, 2024.
• Taxpayers cannot claim certain income tax deductions for expenses incurred in provinces or municipalities that prohibit short-term rentals, including interest expenses.
• Operators must comply with applicable provincial or municipal licensing, permitting, or registration requirements to avoid non-compliant expense claims.

Underused Housing Tax (UHT) Clarifications

• For 2022 and subsequent years, minimum non-compliance penalties were reduced:
  • Individuals: $1,000 from $5,000.
  • Corporations: $2,000 from $10,000.
• Specified Corporations, Partnerships, and Trusts are now considered "excluded owners" and are exempt from filing obligations.
• Residential properties in lower-population areas used as employee residences or lodging are now exempt from UHT filing, effective for 2023 and later.
• Updates include modifications to the vacation property exemption.

Impact and Recommendations

• These rules affect globally-mobile employees, their employers, and entities involved in short-term rentals or UHT filings.
• Taxpayers should seek advice from qualified tax professionals or consult KPMG's tax team for compliance.

For further details, refer to specified GMS Flash Alerts or contact KPMG professionals.