It’s a new year. That means the 2023 tax year is officially over and Canadians can now file their tax returns. The deadline to file your tax return to avoid late penalties is Tuesday, April 30th.
While some people may wait until the last minute to start paying their taxes, I’m always a proponent of preparing ahead of time. This will save you time and help you take full advantage of the many tax breaks and deductions provided by the CRA.
Here’s a look at some of the most important tax breaks to consider this tax season. Major changes Compliant with the Canadian Tax Act 2024.
Important tax reliefs and credits you can claim
Although the CRA has not introduced any new tax credits this year, these are some of the most common tax credits and you may want to discuss them with your accountant or tax advisor to save more tax. yeah.
Individual basic amount
of Individual basic amount (BPA) for tax year 2023 is $15,000. This non-refundable tax credit is available to all taxpayers and is a great way to reduce (or eliminate) your income tax.
Taxpayers with incomes below $15,000 are exempt from paying federal income taxes because their annual gross income is below the threshold. People with incomes of $15,000 or more can use the personal base amount to reduce their total tax liability.
For example, if you have $60,000 in income, you can deduct $15,000 of BPA and only pay tax on the remaining $45,000.
home buyer
Introduced in 2009, home buyer amount Individuals with disabilities and/or first-time homebuyers can claim a $10,000 non-refundable tax credit when purchasing a qualifying home that falls into one of the following categories:
- detached house
- condominium
- detached house
- mobile home
- Duplex, triplex, fourplex, or apartment in an apartment building
- townhouse
If you recently purchased a home and have not previously claimed this tax relief, you may also apply retroactively. You can claim a $5,000 credit for homes purchased before 2021, and a full $10,000 credit for homes purchased in 2022 or 2023.
costs of working from home
The percentage of Canadians who work from home is tripled since 2010According to a report from Statistics Canada. Although working from home has many perks and benefits, it also increases the cost of a home office.
Small business owners can write off many of their home office costs. However, employees who work from home may also receive credits for additional expenses, such as:
- Public works (electricity, heat, water)
- home internet charges
- rent paid for your house
- Maintenance and repair costs
In late January 2024, the CRA Updated home office expense sheet This is to simplify the calculation of the deduction amount. If you are starting to work from home, please be careful about this.
moving expenses
By 2023, many Canadians will walked away Move away from expensive urban centers like Vancouver or Toronto to reduce the cost of living.
The good news is that if you move; over 40km If you move to accept a new job, position, or school, you can deduct many of the associated moving expenses.
Big changes to taxes in 2024
Although no new tax credits were introduced this year, there are some important changes to Canada’s tax code for the 2024 tax season. These won’t affect his 2023 tax return, but they could affect his earnings when he files next year’s taxes.
Here are some of the key changes that will impact your taxes in 2024, according to the latest report. Canadian Taxpayers Federation.
federal income tax increase
With the increase in payroll taxes, Canadian employees will face increased federal income taxes. The increase isn’t huge, but it’s still a gradual increase. Here’s how much you can expect to pay in federal income taxes next year, based on your income.
- $30,000 – $9 additional tax
- $40,000 – $12 plus tax
- $50,000 – $15 additional tax
- $60,000 – $18 plus tax
- Over $80,000 – Add $347 in tax
Increase in the maximum pension benefit (CPP)
The maximum CPP pension benefit will increase from $66,600 to $68,500, resulting in $113. CPP tax Both employers and employees will see an increase in the 2024 tax year.
Increase in employment insurance (EI) tax rates
In 2024, both employees and employers will be subject to higher EI taxes. The employee will pay a total of $1,049 in his EI taxes, and his insured income will be capped at $63,200, an increase of $47 from the 2023 tax year.
Increase in carbon and alcohol taxes
On April 1, 2024, the carbon tax will increase from $65 to $80 per tonne. This means taxpayers will pay 17.6 cents per liter of fuel at the pump (previously the rate was 14.3 cents per liter).
Additionally, the federal government plans to increase alcohol taxes by 4.7% in 2024. The Canadian Taxpayers Federation estimates that this alcohol tax increase will cost Canadians $100 million.
Bare Trust’s new rules
A bare trust is a special type of trust in which the trustee has no rights other than to do with the property as directed by the beneficiaries.
The trustee has legal title and the beneficiary has beneficiary ownership and full control over the trustee’s actions with respect to the property.
Traditionally, due to the tax treatment of bare trusts, there was no need to file a trust return in Canada, and assets could be transferred without triggering a tax event as long as the beneficiaries did not change.
of New reporting requirements Requires trustees of bare trusts to file annual T3 trust returns for taxable years ending on or after December 30, 2023.
This includes providing detailed information about stakeholders such as:
- director
- Beneficiary
- who can influence trust
While these changes are intended to increase transparency, Canadian CPAs express concern Many well-meaning taxpayers may be caught off guard and face tax penalties if they fail to meet the new filing requirements.
This change takes effect next tax season, so we recommend that trustees and beneficiaries of bare trusts familiarize themselves with the new requirements.
What is the best way to take advantage of tax breaks?
Filing your taxes has never been easier thanks to free and low-cost e-filing software. However, the downside is that many taxpayers do not take full advantage of their tax credits.
The easiest way to ensure you take all of your required vacation time is to seek the help of a trusted accountant or tax advisor. However, even if you decide to file on your own, you can still prepare by using a reliable tax filing software that looks at all the major tax deductions and guides you through all potential deductions.
Christopher Liew is a CFA certified and former financial advisor. He writes his personal money tips for thousands of daily Canadian readers on his blog. Wealth Awesome website.