What important tax updates and reminders should you keep in mind in 2024?
What important tax updates and reminders should you keep in mind in 2024?
What tax considerations will you need to navigate in the new year? Keeping these updates in mind can help both you and your business remain compliant and avoid incurring interest and penalties:
- Interest rates on overdue taxes
- Electronic payments for remittances and payments over $10,000
- New trust reporting rules
- T4/T4A reporting for Canada Dental Plan
- Second additional Canada Pension Plan contributions
- Electronic filing of GST/HST returns
- U.S. beneficial ownership information reporting
The new year is filled with exciting opportunities for both you and your business. However, it also brings new tax considerations to navigate throughout the year.
Keeping these important tax updates and reminders in mind can help ensure you remain compliant and avoid incurring interest and penalties.
Interest rates on overdue taxes
The prescribed interest rate on overdue federal taxes and remittances (Canada Pension Plan, Employment Insurance premiums) will be 10 percent for the first quarter of the 2024 calendar year. Provincial prescribed interest rates for Alberta and Quebec are also significant.
Ensure you make payments on time to prevent costly interest charges.
Electronic payments for remittances and payments over $10,000
As of January 1, 2024, payments or remittances to the Canada Revenue Agency (CRA) and Revenu Québec exceeding $10,000 are required to be made as an electronic payment rather than by cheque. Penalties may apply unless you cannot reasonably remit or pay the amount electronically.
Visit the CRA and Revenu Québec websites for more information.
New trust reporting rules
Most personal trusts resident in Canada will be required to file an annual T3 return under the new rules — starting with tax years ending on December 31, 2023. The annual filings are required even where the trust has no income tax liability or made no distributions or allocations during the year.
The rules will also apply to bare trusts, including many bare trust arrangements that were previously not subject to T3 reporting requirements. Taxpayers utilizing bare trust arrangements will now have to consider the additional costs of compliance. This includes those commonly used in joint ventures, real estate holdings, or probate planning.
See our Tax Alert for full details.
T4/T4A reporting for Canada Dental Plan
Starting with the reporting year, the CRA will request information on dental coverage from employers. Employers must provide information on dental coverage made available to their employees or any of the employees’ family members on December 31 of the reporting calendar year. New fields have been added on T4 (Statement of Remuneration Paid) and T4A (Statement of Pension, Retirement, Annuity, and Other Income) forms.
This information will be used to help determine eligibility for the Canada Dental Benefit. Contact your payroll service provider with any questions or concerns about these new reporting obligations. Further details are available here.
Canada Pension Plan (CPP) enhancement: Second additional CPP contributions
Beginning January 1, 2024, second additional CPP contributions (CPP2) are required to be deducted on earnings above the annual maximum pensionable earnings.
For 2024, pensionable earnings between $68,500 and $73,200 will be subject to CPP2 at an employer and employee rate of four percent to a maximum contribution of $188 each.
For self-employed individuals, the 2024 CPP2 contribution rate will be eight percent to a maximum contribution of $376.
Visit the CRA website for more information.
Electronic filing of GST/HST and QST returns
Returns must be filed electronically with the CRA by all GST/HST registrants for GST/HST reporting periods that begin in 2024. Charities and selected listed financial institutions are exempt from this requirement.
As of January 1, 2024, Revenu Québec will also require GST/HST and QST registrants (except charities) to file their consumption tax returns electronically.
Penalties can apply for failure to file electronically.
U.S. beneficial ownership information reporting
New U.S. beneficial ownership information reporting will begin in 2024. This requires certain U.S. and non-U.S. entities (reporting companies) to disclose certain beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
A reporting company generally includes any entity — including a Canadian corporation — that has filed formation or registration documents with a state in the United States. Some exceptions apply.
Reporting companies are required to provide certain identification information on beneficial owners, which are individuals who directly or indirectly exercise substantial control of a reporting company. Beneficial owners also include those who own or control at least a 25 percent interest in a reporting company.
Reporting companies created or registered in 2023 and earlier must file the BOI disclosure by January 1, 2025. Reporting companies created or registered after 2023 must file within 90 days of creation or registration.
If there is any change to the required information about a reporting company or its beneficial owners in a BOI report that has already been filed, an updated report must be filed no later than 30 days after the date of the change. Significant monetary and criminal penalties can apply for failure to file the BOI disclosure.
Further details are available here. Your legal counsel should be consulted to assist with the filing of the report.
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