A lot can change year to year, and you need to stay on top of things to avoid tax and penalty surprises! Here are the most important updates for 2024 that could affect your personal taxes.
1. Higher penalties for missed filing deadlines
Missed deadlines are getting more expensive. The Canada Revenue Agency (CRA) has increased penalties for missed deadlines. Remember, penalties are one-time fees for missing filing deadlines, and interest is charged on missed payment deadlines. Interest accrues from the date the payment was due until the payment is made.
- Late-filing penalty (perfect filing record): 5% of the balance owing, plus 1% for each whole month your return is late (up to 12 months).
- Late-filing penalty: If you missed any filing deadline in any of the prior three years, the penalty jumps to 10%, with an additional 2% per month (up to 20 months).
To avoid extra costs, make sure you file on time.
2. Interest on late CRA payments:
These are set quarterly by the CRA and currently sit at 8%.
Interest rates for the first calendar quarter - Canada.ca
3. Adjusted tax brackets
Tax brackets have shifted:
- 15% on income up to $55,867
- 20.5% on income over $55,867 up to $111,733
- 26% on income over $111,733 up to $173,205
- 29% on income over $173,205 up to $246,752
- 33% on income over $246,752
If your income has increased, you may move into a higher tax bracket, so plan accordingly.
4. Higher TFSA and RRSP contribution limits
- TFSA: The 2024 contribution limit remains $7,000, bringing the total room to $102,000 for those eligible since 2009.
- RRSP: The contribution cap increased to $31,560, or 18% of your 2023 earned income, whichever is lower.
Maxing out these accounts can help you reduce taxable income and build long-term savings.
5. Canada Pension Plan (CPP) enhancements
If you contribute to the CPP, changes in 2024 mean higher payments now — but better benefits later:
- First ceiling: Raised to $68,500, with a 5.95% contribution rate.
- Second ceiling: New limit at $73,200, designed for higher-income earners.
The maximum CPP will now cost $4,034.10 for the employee and employer for a total cost of $8,068.20.
If you're self-employed, remember that you pay both the employer and employee portions of CPP contributions.
6. Lifetime capital gains exemption (LCGE) increase
If you’re planning to sell your business, you’ll now benefit from a higher tax-free capital gains exemption. The limit increased from $1 million to $1.25 million (as of June 25, 2024) for qualifying small business shares, farms or fishing properties. Starting in 2026, this amount will be indexed to inflation.
7. Stricter rules on short-term rental deductions
If you rent out a property on Airbnb or another platform, you can’t deduct expenses unless you comply with all provincial and municipal rules.
To keep your deductions, ensure your rental meets local licensing and permit requirements by December 31, 2024.
8. Capital gains reporting
If you’ve sold investments or business assets, you’ll need to track capital gains differently this year.
- Before June 24, 2024: Capital gains are still taxed under the previous 50% inclusion rate.
- After June 24, 2024: These gains were initially set to be taxed at a higher 67% inclusion rate. However, the government has since postponed this change to January 1, 2026.
Despite the delay, tax software updates had already been made to reflect the higher rate. That means you may see unexpected calculations in your return. Be sure to review any capital gains closely and consult a tax professional if needed.
Important tax reminders for 2024
While some things have changed, many key tax reporting requirements remain the same. Here’s what you need to know:
Information you must report on your tax return
Make sure your return includes updates on:
- Personal details: New address, marital status, and consent to share information with Elections Canada.
- Trusts: If you’re a settlor, trustee, or beneficiary of a trust (including bare trusts), you must report it.
- Foreign income & assets: If you earned income abroad or paid taxes to a foreign country, report those details. Also, if you own foreign assets worth more than $100,000, they must be disclosed.
- Investment income: If you hold non-registered accounts, you need to report investment gains, losses, dividends, and interest.
- Underused housing: If you own residential property that is vacant or underutilized, you may need to file an Underused Housing Tax return.
What your accountant can access from the CRA
If these forms were properly filed and submitted by the issuing entity, your accountant can retrieve them directly from the CRA:
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T3 – Trust distributions
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T4 – Employment income
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T5 – Dividend income
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T5008 – Investment proceeds (summary of investment income)
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T5018 – Partnership distributions
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T4RSP / T4 FHSA – RRSP or FHSA contributions/withdrawals
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T4A / T4A(P) / T4A(E) – Pension, EI, or commission income
What you’ll need to enter manually
Some income and deductions require manual entry, including:
- Self-employment income (T2125)
- Rental income
- Capital gains from selling investments or property (Schedule 3)
- RRSP contributions (RRSP slips)
- Medical expenses, donations, childcare costs, and professional dues
- T5008 review: Sometimes, T5008 slips don’t include the cost base, so double-check for accuracy.
Deductions vs. credits: Understanding the basics
Here’s a simple breakdown of how personal taxes are calculated:
- Total income
- Minus deductions (e.g., RRSP contributions, self-employment expenses)
- Equals net income (total taxable income)
- Multiply taxable income by your marginal tax rate = Total tax payable
- Minus tax credits (e.g., medical expenses, donations)
- Minus any tax installments you’ve already paid
- Equals your final tax balance (amount payable or refund owed)
- Deductions: These reduce your taxable income directly. For example, a $5,000 RRSP contribution lowers your taxable income by $5,000.
- Credits: These reduce the amount of tax you owe, similar to tax installments already paid.
Staying informed about these tax details can help you stay compliant and potentially save money. If you’re unsure about any of these, working with a tax professional is always a smart move.
Learn more about changes at Alberta tax information for 2024.
Read more articles about Personal Taxes and income tax in Canada.