Another year is here which means tax season is upon us. AKA my favorite time of year.
Each year things tweak and change as line numbers get updated, and credits/deductions get added and taken away.
This year is no different. These are the important updates and dates you need to know when you're preparing your 2023 tax return.
What's New
Basic Personal Amount Increases
The basic personal amount credit for 2023 is $15,000 and it has increased to $15,705 for 2024. This is how much income you can make before you pay tax.
Changes to Canada Pension Plan (CPP) & CPP2
The Canada Pension Plan has changed in 2024 to increased yearly contribution maximus depending on your income. There are now 3 tiers of income, called 'earning ceilings', that are related to how much CPP you are required to contribute.
If you earn $68,500 or less there will be no changes to your rates. The base CPP rate from $0-68,500 is 5.95% of your earned income for CPP1.
If you earn between $68,500 and $73,200 you will pay an additional 4% on their second tier earnings as a CPP enhancement aka CPP2 contributions in 2024.
If you make $73,200 or more you will be contributing an extra $300 in 2024.
You can find more information about CPP2 and the CPP enhancement HERE.
Increase the the RRSP Maximum Contribution Room
The maximum RRSP contribution room is $31,560.
RRSP contribution room is based on 18% of your earned income. This 18% tops out at $175,333 for 2024.
New T4FHSA for the First home savings account (FHSA)
First Home Saving Account contributions and withdrawals are recorded on the new T4FHSA tax slip. This will de recorded on the new Schedule 15, FHSA Contributions, Transfers and Activities on your T1 tax return.
If you contributed money to your FHSA in 2023 or if you withdrew money from your FHSA in 2023 you will receive a T4FHSA tax slip showing these transactions. Like RRSP contributions you can choose when you apply the deduction from your FHSA contributions. The FHSA deduction can be carried forward indefinitely-even after you close your FHSA.
Climate Action Incentive Payment (CAIP)
The Government of Canada has announced its intention to double the rural supplement to 20% starting in April 2024. It also intends to continue using the census metropolitan areas determined by the 2016 Census for the 2023 and 2024 tax years. You can find more information HERE.
Deduction for Tools (Tradespersons & Apprentice Mechanics)
Starting in 2023, the maximum employment deduction for tradespersons’ eligible tools has increased from $500 to $1,000. As a result, the threshold for expenses eligible for the apprentice mechanics tools deduction has also changed.
Federal, Provincial & Territorial COVID-19 Benefit Repayments
Federal, provincial and territorial COVID-19 benefit repayments made after December 31, 2022 can be claimed as a deduction on line 23200 of your 2023 return.
Multigenerational Home Renovation Tax Credit (MHRTC)
The MHRTC is a new refundable tax credit that allows an eligible individual to claim certain renovation costs to create a secondary unit within an eligible dwelling so that a qualifying individual can reside with their qualifying relation. If eligible, you can claim up to $50,000 in qualifying expenditures for each qualifying renovation completed, up to a maximum credit of $7,500 for each claim you are eligible to make. You can find more information HERE.
Advanced Canada Workers Benefit (ACWB)
Advance payments of the Canada workers benefit (CWB) are now issued automatically under the ACWB to those who received the benefit in the previous tax year. As a result, Form RC201, Canada Workers Benefit Advance Payments Application, has been discontinued.
Starting in 2023, amounts from your RC210 slip are to be reported on Schedule 6, Canada Workers Benefit, in order to calculate the amount to enter on line 41500 of your return. If you have an eligible spouse, you can choose who will claim the basic amount for the CWB regardless of who received the RC210 slip for the basic amount.
Property Flipping
Starting January 1, 2023, any gain from the disposition of a housing unit (including a rental property) located in Canada, or a right to acquire a housing unit located in Canada, that you owned or held for less than 365 consecutive days before its disposition is deemed to be business income and not a capital gain, unless the property was already considered inventory or the disposition occurred due to, or in anticipation of certain life events. You can find more information HERE.
Return of Fuel Charge Proceeds to Farmers Tax Credit
The Return of fuel charge proceeds to farmers tax credit is now available to self-employed farmers and individuals who are members of a partnership operating a farming business with one or more permanent establishments in Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island or Saskatchewan. If eligible, a portion of your fuel charge proceeds may be returned to you. For more information, see line 47556.
Electronic Remittances or Payments Above $10,000
As of January 1, 2024, remittances or payments to the Receiver General of Canada should be made as an electronic payment if the amount is more than $10,000. Payers may face a penalty unless they cannot reasonably remit or pay the amount electronically. For more information, go to Payments to the CRA.
Individuals and families.
Provincial & Territorial Changes
Each province also has tax updates for 2023. To read the what is new for 2023 specific to your province click the link below.
Important Dates
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