On October 3, 2016, the Minister of Finance tabled a Notice of
Ways and Means Motion to amend the principal residence exemption
rules in the Income Tax Act (Canada). These amendments not only, as
advertised, restrict the ability of non-residents to claim the
principal residence exemption, but also restrict the ability of
certain trusts to do so, and eliminate the Canada Revenue
Agency's policy of not requiring taxpayers to report
dispositions of principal residences in certain circumstances.
The "One-Plus" Rule
The "one-plus" rule, which is designed to allow a
taxpayer to claim the principal residence exemption on both the
house he/she sells in a year and the house he/she buys in the same
year, will be amended to preclude a taxpayer who is not a resident
of Canada during the year in which he/she buys a house from using
that rule to claim the house as a principal residence in that
year.
