Tax season 2023: Changes for homeowners, medical expenses and more – National | 24CA News
The official begin to tax season begins on Monday, Feb. 20, this 12 months because the Canada Revenue Agency (CRA) opens its portal for Canadians to file.
Before you name up your accountant or wade into the taxation trenches your self, there are just a few modifications you must find out about for the 2022 tax 12 months.
Read extra:
Filing taxes by yourself for the primary time? Here’s what to know
Read subsequent:
Here’s how rates of interest may have an effect on Canada’s housing market in 2023
Bruce Ball, vice-president of tax for CPA Canada, tells Global News that it wasn’t a blockbuster 12 months for modifications to tax laws.
“There are some new things to keep in mind, but there weren’t maybe large changes like there have been in other years,” he says.
For Canadians with medical bills, those that acquired COVID-19 advantages and a few householders, there are some expanded advantages and different submitting modifications this 12 months which may tip you in the direction of a tax return on the finish of the method.
Here’s what consultants like Ball are flagging to their shoppers about submitting taxes in 2023.
When is the tax submitting deadline in 2023?
In a standard 12 months, the deadline for many Canadians to file their taxes is April 30 — however this 12 months, that date falls on a Sunday.
As a outcome, you’ll have till May 1, 2023, to file your 2022 tax return.
There’s a later deadline of June 15, 2023, for these with self-employment revenue to report.
But Jamie Golombek, managing director of tax and property planning at CIBC Private Wealth, notes there’s a caveat for anybody in that class. If you owe cash in your taxes, the deadline to pay that’s nonetheless the sooner May 1 date.
One ultimate be aware on dates: If you’re planning to contribute to a Registered Retirement Savings Plan (RRSP) to scale back your taxable revenue for 2022, your deadline is March 1, 2023.
Read extra:
As the RRSP deadline approaches, right here’s what to know as you save for retirement
Read subsequent:
Windfall tax on giant Canadian firms wanted to get better public funds: report
Changes to COVID-19 profit repayments
Ball says there’s a brand new type to fill out for anybody who acquired and needed to repay COVID-19 help, such because the Canada Emergency Response Benefit (CERB) or Canada Recovery Benefit (CRB).
If you repaid these advantages in 2022, type T1B would allow you to amend earlier returns to file the reimbursement in a 12 months that you simply really acquired the preliminary help, be that for 2020 or 2021.
“Essentially, the CRA will go back and adjust the prior year if you choose to claim it in the year you received that rather than the year you repaid it,” Ball explains.
This will apply the related deduction to a earlier 12 months’s return routinely, probably affecting an earlier 12 months’s tax return.
Tax modifications for householders
Two main advantages for householders have been doubled for the 2022 tax 12 months.
The first-time homebuyer’s tax credit score is now value $10,000 for many who bought a house after 2021, up from the earlier $5,000.
The annual expense restrict for the house accessibility tax credit score, which permits seniors and householders with a incapacity to offset prices put in the direction of making their residences extra accessible, can also be now doubled to $20,000.
One main change to the tax code is a brand new anti-flipping tax concentrating on householders who promote their properties with out dwelling in them for greater than a 12 months.
Golombek notes that whereas this new laws went into impact on Jan. 1, 2023, it won’t apply to properties offered in 2022. Those who purchased a house final 12 months, whether or not they supposed to flip the house rapidly or not, might want to hold the brand new guidelines in thoughts if they should promote in 2023.
He says that the brand new guidelines on flipping imply that anybody trying to promote their residence after lower than a 12 months of dwelling in it should see their internet earnings totally taxed as if it have been skilled revenue. The major residence exemption, which permits for a keep on taxes once you promote your individual residence, won’t apply, he says.
“In other words, you’re going to be taxed on it as 100 per cent business income, not even a capital gain, which is 50 per cent taxable.”
Ball notes that there’s some “good news” for Canadians who discover themselves having a sudden change in housing state of affairs for an explainable purpose, equivalent to a sudden dying within the household or profession transfer that takes you out of your metropolis.
The authorities will take these explanations into consideration and will nonetheless permit the first residence exemption to use in case you show your extenuating circumstances, he says.
Certain medical bills now eligible for claims
Some Canadians paying for sure medical bills out-of-pocket will be capable of declare these on their taxes thanks to a couple new modifications, in response to the CRA web site.
As it pertains to fertility, some bills associated to surrogacy or acquiring donor sperm or eggs can now be claimed.
Type-1 diabetics are additionally now eligible to have their situation acknowledged for compensation below the incapacity tax credit score. This change applies retroactively to the 2021 tax 12 months and later.
Have a watch on subsequent 12 months’s taxes, consultants say
Canadians flipping by their bills for the previous 12 months as they put together their tax returns would possibly really feel a second wave of ache from the decades-high ranges of inflation hitting their pocketbooks in 2022.
But Golombek says there shall be a silver lining to these inflationary woes — finally. Since tax brackets are listed to inflation, subsequent 12 months’s marginal tax charges can have grown at a a lot greater fee than in some earlier years.
As a outcome, even when your revenue is regular from 2022 to 2023, you’ll find yourself paying much less tax in your highest earnings quantities subsequent 12 months because the brackets transfer greater.
“So you won’t notice much on the 2022 return. But certainly in 2023, your tax should be less, even if your income is flat,” he says.
Golombek and Ball each say that other than RRSP contributions and a few attainable revenue splitting along with your partner, there’s little you are able to do at this level within the 12 months to have an effect on your 2022 tax return.
Rather, each counsel getting an early begin on 2023 tax planning.
Ball says it’s clever to discover a place to retailer and observe deductible bills like charitable donations and medical prices as they arrive up so that they’re not forgotten when it comes time to assert them the next 12 months.
“The big thing is to start early and start accumulating,” he says.
Golombek notes that for many who haven’t purchased a house but, 2023 will see the introduction of the Tax-Free First Home Savings Account.
Read extra:
When will Ottawa finish blind bidding? Still no timeline for Home Buyers’ Bill of Rights
Read subsequent:
Alberta to pilot oil and fuel royalty breaks for legally required properly cleanup
This will permit potential homebuyers to place away $8,000 yearly — tax deducted, like an RRSP or different registered account — and have that cash invested and develop tax-free for 15 years to a most of $40,000 per particular person. At any level, these financial savings could be withdrawn tax-free for a downpayment on a primary residence.
The forthcoming account is a “wonderful opportunity” for these trying to plan their taxation and financial savings methods whereas trying to break into the housing market within the years to return, Golombek says.
