As you prepare your 2023 taxes and consider the tax year ahead, here are the significant changes to personal taxes. You’ll want to stay up to date as many of these will keep more money in your pocket!
Learn more about:
- Advanced Canada workers benefit
- Canada Carbon Rebate
- Increased deduction for tradespersons
- First home savings account (FHSA)
- Multigenerational home renovation tax credit
- Property flipping
- New trust reporting requirements
- Increased TFSA and RRSP limits
- Electronic payments above $10,000
- COVID-19 benefit repayments
- Return of fuel charge proceeds to farmers tax credit
- Temporary flat rate method for home office expenses
- 2023 Alberta personal tax changes
Advanced Canada workers benefit
The Canada Workers Benefit (CWB) is a refundable tax credit to help individuals and families who are working and earning a low income. If you received the advanced Canada workers benefit (ACWB) last year, it will now automatically be deposited into your account — no more reapplying is needed.
Starting in 2023, amounts from your RC210 slip should be reported on Schedule 6, Canada Workers Benefit, 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.
Learn more about the Canada workers benefit.
Canada Carbon Rebate
The Canada Carbon Rebate program wants to double the rural supplement to 20% starting in April 2024. For the tax years 2023 and 2024, the Government of Canada plans to use the census metropolitan areas as defined by the 2016 Census.
For more information, see Canada Carbon Rebate.
Increased deduction for tradespersons
From 2023 onwards, the deduction limit for eligible tools used by tradespersons has been raised from $500 to $1,000. This means that employees can now claim up to $1,000 per year for approved work-related tools.
For more information about tool deductions for tradespersons and apprentice mechanics, refer to Guide T4044, Employment Expenses.
First home savings account (FHSA)
The first home savings account is a new registered plan to help Canadians save for their first home.
From April 1, 2023, you can deduct contributions of up to $8,000 per year to your FHSA. Any income generated from this registered plan is not subject to tax. Bonus: if you make eligible withdrawals from your FHSA to buy a qualifying home, these will also be tax-free.
For more information, see First Home Savings Account (FHSA).
Multigenerational home renovation tax credit
If you're adapting your home to accommodate multiple generations, you might be eligible for a new refundable tax credit. This credit offers up to $7,500 for Canadians who make renovations to their homes to suit the needs of a qualifying individual, like a parent aged 65 or older. This credit lets you deduct 15% of eligible expenses on suitable renovations made after Jan. 1, 2023. You can claim this for up to a maximum of $50,000 per renovation.
Learn more at Schedule 12, Multigenerational Home Renovation Tax Credit.
Property flipping
Beginning Jan. 1, 2023, if you sell a residential real estate property within a year of purchasing it, the profits will be taxed as business income. This applies to all residential properties, including those used for rental or personal purposes.
Previously, these profits might have been classified as capital gains. However, there are exceptions to this rule. If the sale of the property is due to death, divorce, separation, eligible relocation or certain significant life events, the profits may not be considered business income.
See the Residential Property Flipping Rule.
New trust reporting requirements
Canada’s trust reporting rules changed in 2023, meaning there’s more paperwork if you have a trust, including bare trusts.
Before Dec. 31, 2023, a trust wasn’t required to file a T3 income tax return unless it owed tax or sold its assets. Now, most trusts must file yearly. The deadline to submit the required forms for the 2023 tax year is April 2, 2024.
Learn more about 2023 trust reporting changes.
Increased TFSA and RRSP limits
The TFSA contribution limit increased to $7,000, and the RRSP annual dollar limit for the tax year 2023 is $30,780.
Electronic payments above $10,000
Starting Jan. 1, 2024, any taxpayer making payments above $10,000 to the CRA must remit these payments electronically. Failure to do so will result in a penalty of $100 for each non-electronic payment.
Learn more about payments to the CRA.
COVID-19 benefit repayments
Federal, provincial and territorial COVID-19 benefit repayments made after Dec. 31, 2022, can be claimed as a deduction on line 23200 of your 2023 return.
Return of fuel charge proceeds to farmers tax credit
The tax credit for the return of fuel charge proceeds is now accessible to independent farmers and those involved in a partnership-based farming business. This applies to those operating in Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island or Saskatchewan. If you qualify, you may receive back a portion of your fuel charge proceeds.
For more information, see line 47556.
Temporary flat rate method for home office expenses
The temporary flat rate method does not apply to 2023.
Employees working from home from the taxation year 2023 must use the detailed method for calculating their eligible home office expenses.
2023 Alberta personal tax changes
- The personal income levels used to calculate your Alberta tax have changed.
- The amounts for most provincial non-refundable tax credits have changed.
- The maximum adoption expenses tax credit has increased.
- A new tax credit rate for charitable donations is in effect.
Learn more at Alberta tax information for 2023
If you have questions about any of these changes or how to capitalize on them, please get in touch! Make this a stress-free tax season by hiring us to do your corporate and personal taxes this year.
