Budget 2024

Fall Economic Statement 2023

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The federal government tabled its 2023 Fall Economic Statement (FES 2023) on November 21, 2023, which was presented by Deputy Prime Minister and Minister of Finance Chrystia Freeland.

FES 2023 focuses on housing and affordability and proposes several new tax measures, including changes to exclude certain Canadians from the Underused Housing Tax (UHT), make short-term rental properties less lucrative, and make certain health care services more affordable.

Fiscal update

FES 2023 includes three scenarios for numerous economic indicators: the baseline projection, an upside scenario, and a downside scenario. The upside scenario factors in a faster than expected fall in underlying inflation, while the downside scenario forecasts a shallow recession in Canada factoring in the impacts of persistent inflation.  

The following table outlines key economic indicators in all three scenarios:  

Projected amounts 

















Deficit—upside scenario








Deficit—downside scenario








Debt as % of GDP









Debt as % of GDP—upside scenario








Debt as % of GDP—downside scenario








The projected deficit for 2023-24 is reduced to $40 billion in the baseline projection, is $35.2 billion in the upside scenario, or is increased to $45 billion in the downside scenario, in comparison to a deficit of $40.1 billion projected for the same period in Budget 2023 [ 1526 kb ]

Tax measures related to housing

FES 2023 introduces the following housing-related measures that could affect businesses and individuals.  


FES 2023 excludes certain owners from UHT filing obligations. If enacted, the following types of owners will be exempt from UHT filing obligations starting with 2023 returns:

  • a specified Canadian corporation
  • a trustee of a specified Canadian trust
  • a partner of a specified Canadian partnership 

Currently, these types of owners are among those required to file an annual return for each Canadian residential property they own, for UHT purposes. Generally, these owners would be eligible to claim an exemption from the UHT on each return. This measure would apply as of January 1, 2023; therefore, these types of owners would still be required to file any 2022 UHT returns (if they haven’t already done so).

FES 2023 announces the government’s intention to expand certain definitions, including specified Canadian partnership and specified Canadian trust, to provide UHT filing and tax relief to additional Canadian owners.

FES 2023 also reduces the minimum failure to file penalty to $1,000 (from $5,000) for individuals and $2,000 (from $10,000) for non-individuals. This amendment would apply retroactively to 2022 UHT returns. 

Denying deductions for certain short-term rental properties

FES 2023 denies income tax deductions for certain expenses incurred for earning short-term rental income (e.g., interest expenses, property taxes, and repair costs) in areas that have prohibited short-term rentals. In certain geographical areas, such deductions are also denied where short-term rental operators aren’t compliant with the applicable provincial or municipal licensing, permitting, or registration requirements. This measure will deny any expenses incurred on or after January 1, 2024.

Business tax measures

Canadian journalism labour tax credit 

FES 2023 increases the maximum annual labour cost for the Canadian journalism labour tax credit to $85,000 (from $55,000) per eligible employee of a “qualified Canadian journalism organization”. The refundable tax credit rate will also temporarily increase to 35% (from 25%) for four years.

These changes would apply to qualifying labour expenditures incurred on or after January 1, 2023.

Concessional loans 

FES 2023 excludes bona fide concessional loans (i.e., no-interest loans or loans with below-market interest rates) from government authorities with reasonable repayment terms from being considered government assistance for income tax purposes. If they qualify, such loans would not be taxable (or reduce the capital cost of a related property).

This measure would be effective November 21, 2023.

International shipping income 

FES 2023 exempts international shipping income earned by Canadian resident shipping companies from Canadian corporate income tax, which is consistent with the Pillar Two global minimum tax proposals.  Previously, only certain non-resident shipping companies were exempt from corporate income tax on international shipping income earned. Specifically, international shipping income was tax exempt for certain non-resident companies if they were from a country that had similar exemptions for Canadian companies or for companies managed in Canada but incorporated in another country that has a reciprocal exemption and meets other conditions.

This measure would apply to taxation years that begin on or after December 31, 2023. 

Sales tax measures

GST/HST exemption on certain health care services  

FES 2023 expands the list of health care practitioners exempt from GST/HST to include psychotherapists and counselling therapists. Specifically, services rendered to individuals by these providers will be exempt from GST/HST. 

Changes to joint venture elections

FES 2023 introduces new joint venture (JV) election rules to allow more joint venture participants access to the benefits of making an election. The new rules will require:

  • all electing participants to be GST/HST registrants; 
  • JV elections to be filed with CRA; and 
  • the JV activities to be all or substantially all commercial activities as set out in the GST/HST legislation.

There will also be updates on the deeming provisions to make them more focused on tax accounting.

Under the proposed rules, a “qualifying joint venture” will continue not to be a “person” for GST/HST purposes. It will operate under an agreement that outlines the activities, obligations, and entitlements of the co-venturers with the revised condition that the activities must be all or substantially all (i.e., 90% or more) commercial activities. A “qualifying operator” and a “qualifying participant” in a “qualifying joint venture” could jointly make or revoke the election. There can be more than one “qualifying participant’ but only one “qualifying operator” for an election.

Similar to the current JV election, the proposed JV election will require the JV operator to account for any tax payable to the Receiver General. However, all electing co-ventures are jointly and severally liable for all GST/HST obligations related to activities carried on under the JV agreement. Supplies by the JV operator to a JV participant may be deemed to be made for no consideration for GST/HST purposes subject to the proposed conditions.

Finally, Input Tax Credit (ITCs) entitlement between the JV operator and JV participant will depend on the party who acquires or imports property or services and whether it is for use or supply all or substantially all during the course of JV activities. Some adjustments may need to be made between the parties as a result. The tax adjustment measures will be revisited further in the consultation stage.

GST rebate on new rental construction

FES 2023 expands the eligibility for the 100% GST rebate on the construction of new purpose-built rental housing to include co-op housing projects that provide long-term rental accommodation. Please see our tax alert for more details on this GST rebate.

Previously announced tax measures

Finance reaffirms its intention to implement certain previously proposed measures, subject to modification resulting from consultations with stakeholders.

The list is extensive, but some key measures include: 

Other notable measures

Housing initiatives 

In response to housing challenges across Canada, FES 2023 introduces the following initiatives:

  • Introduce the Canadian Mortgage Charter to ensure financial institutions provide mortgage relief for borrowers in financial difficulty. This includes temporary extension of the amortization period, waiving certain fees, and allowing borrowers to make lump sum payments without prepayment penalties.
  • Provide $4 billion to the Housing Accelerator Fund to allow municipalities to remove zoning barriers for building new homes.
  • Provide $25 billion in low-cost financing for multi-unit rental construction, $15 billion new loan funding for the Apartment Construction Loan Program starting in 2025-2026, and $1 billion to the Affordable Housing Fund for constructing over 7000 non-profit, co-op, and public housing units.

Affordability initiatives 

To address affordability challenges, FES 2023 announces the following initiatives: 

  • Eliminate ‘junk fees’, such as updates on steps to reduce ‘insufficient funds’ charges by banks, investigating international mobile roaming rates, and eliminating opportunities for airlines to charge fees for seating children with their accompanying adults.
  • Introduce a new 15-week shareable employment insurance (EI) adoption and surrogate parent benefit starting in 2023-2024.

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The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.