Subsection 67.7(1)
Non-Compliant Amount
Articles
Joint Committee, "Subject: Proposed section 67.7 of the Income Tax Act", 5 February 2024 Joint Committee Submission
Wording of non-compliant amount does not reflect different timing for various deductions
- The wording, “outlays made, or expenses incurred, in the taxation year” does not reflect the timing or amount of deductions such as prepaid expenses, CCA, and issue expenses on a non-made or incurred basis may not be properly reflected in the formula.
Inclusion of bad debt expenses
- It would seem inappropriate to include bad debt expenses in the non-compliant amount since the effect is to impose tax on more than the revenues collected.
Residential Property
Administrative Policy
9 October 2025 APFF Financial Planning Roundtable Q. 9, 2025-1071451C6 F - Règle sur les reventes précipitées et location à court terme
The definition of a “flipped property” in s. 12(13)(a) refers to a “housing unit;” whereas the definition of “non-compliant short-term rental” in s. 67.7(1) depends on the concept of a “residential property” (also defined in s. 67.7(1)).
What is the difference? For example, would the latter include a bedroom or a section of a residence, such as a basement?
CRA indicated that the term “housing unit” used in the flipped property rules was restricted to a single housing unit.
As a “residential property,” as defined, referred to all or any part of a house, apartment, condominium unit, cottage, etc. (whose use for residential purposes was permitted by the municipal and provincial law), a room or basement would qualify as a residential property for such purposes.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(13) - Paragraph 12(13)(a) | “housing unit” is restricted to a single housing unit | 100 |
Short-Term Rental
Articles
Joint Committee, "Subject: Proposed section 67.7 of the Income Tax Act", 5 February 2024 Joint Committee Submission
Limiting to short-term rentals by the taxpayer
- It would seem appropriate to add the limitation that the short-term rental definition refers to short-term rentals by the taxpayer to address, for example, situations where the taxpayer leases the property on a long-term basis, but the tenant subleases it on a short-term basis.
90 days v. 30 days
- Most, if not all, municipalities and provinces, that have restrictions for short-term rentals use 30, not 90, consecutive days.
Subsection 67.7(2)
Articles
Joint Committee, "Subject: Proposed section 67.7 of the Income Tax Act", 5 February 2024 Joint Committee Submission
Advantage to non-residents
- Non-residents who are not subject to Part I tax have a tax advantage over Canadian residents regarding the taxation of non-compliant short-term rentals.
Subsection 67.7(4)
Articles
Joint Committee, "Subject: Proposed section 67.7 of the Income Tax Act", 5 February 2024 Joint Committee Submission
Unlimited assessment period
- Quaere whether it is necessary to provide no time limit on CRA assessments under s. 67.7.