These 5 Income Tax Act provisions need to be amended or eliminated altogether
The Department of Finance on Dec. 20, 2023, released the short-term rental draft legislation as part of a small package of taxation proposals. For those who need a reminder, short-term rental owners/operators that are operating in a municipality that prohibits such rentals are apparently evil and need to be punished to the extreme from an income tax perspective.
The legislative proposals confirm the fall economic statement that expense deductions for such operators will be denied. These operators, from an income tax perspective, are apparently worse than criminal drug dealers who do not have such an expense deduction prohibition (if they choose to report their taxable criminal receipts at all).
How this will solve or mitigate Canada’s housing woes is a mystery to me. Instead, I believe it will encourage some operators to not report their income for tax purposes (the vast majority report currently do).
Sigh. Canada needs a much better way to introduce sound income tax policy rather than knee-jerk political responses that complicate the Income Tax Act and pander to the governing party’s voter base.
It got me thinking, again, that if I had my way, what other silly provisions in the Income Tax Act would I eliminate?
Well, there’s too many to document here, but, ideally, Canada would undergo comprehensive tax review/reform that would make cherry-picking amendments or eliminations unnecessary. Unfortunately, our current government has no interest in comprehensive tax review/reform, notwithstanding it is necessary and overdue.
With that in mind, here are the Top 5 Income Tax Act provisions I would eliminate or amend.
Some of my colleagues and peers will likely disagree with me on this one. The small business deduction is the
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