2023 Tax Season: What You Need to Know
The 2023 tax season will bring some changes that taxpayers need to be aware of to make sure they are compliant with their filing obligations. You can file your 2022 tax return starting on February 20, 2023. The deadline for most Canadians to file their 2022 income tax and benefit returns is April 30, 2023 but you have until May 1 this year as April 30 falls on a Sunday. If you or your spouse or common-law partner had self-employment income in 2022, you have until June 15, 2023 to file your return(s). In either case, any taxes owing must be paid on or before May 1, 2023. Here are some key changes for the 2023 tax season that may have an impact on your situation, including new credits and deductions that you may be eligible for. We have summarized the most important changes for you below.
If you received COVID-19 benefits from the CRA in 2022, such as the Canada Recovery Sickness Benefit (CSRB), Canada Recovery Caregiving Benefit (CRCB), Canada Recovery Benefit (CRB) or Canada Worker Lockdown Benefit, you will receive a T4A slip with the information you need to fill out for your tax return.
In certain situations, you may end up owing additional tax on the COVID-19 benefits that were received as taxes withheld on the benefits may not have been enough. In addition, some benefits may need to be repaid if your net income is above a certain threshold. For example, if you received the CRB and your net income after certain adjustments is more than $38,000, then you may have to repay all or part of the benefits you received in 2022.
Work from home expenses
Similar to 2021, if you worked from home in 2022 due to COVID-19, you may be eligible to claim a deduction of up to $500 using the flat rate method, provided you worked more than 50% of the time from home for a period of at least four consecutive weeks due to Covid-19. If you have been keeping track of your expenses, you may be able to claim your actual expenses using the detailed method. To do this, you employer will need to provide you with a completed Form T2200 or Form T2200S.
Eligible expenses include utilities, home internet, rent, and maintenance and repair costs. Commission employees can also claim home insurance, property taxes, and the lease of electronics such as cellphone, laptop, tablet, etc.
Digital news subscription tax credit
For 2020 to 2024, if you paid for a digital newspaper app or website, you may be able to claim the digital news subscription tax credit which is worth 15 per cent on qualifying expenses up to $500. The amounts must have been paid to a qualified Canadian journalism organization for a digital news subscription with content that is primarily written news. A list of qualifying digital news subscriptions can be found here.
Rates and limits
To keep up with inflation and maintain the buying power of Canadians, several tax rates and limits have been changed in 2022.
- Federal Tax Brackets: the new federal tax brackets have been adjusted. The adjustment upwards means that Canadians might find themselves shifted into a lower tax bracket and pay less taxes because of it. The new federal tax brackets for 2022 are as follows:
- $0 to $50,197 of income (15%)
- More than $50,197 to $100,392 (20.5%)
- More than $100,392 to $155,625 (26%)
- More than $155,625 to $221,708 (29%)
- $221,708.01 and higher (33%)
- Basic Personal Amount (BPA): the government has increased the basic personal amount to $14,398. This means that all taxpayers can claim the BPA as a tax deduction up to this amount.
- Employment Insurance: effective January 1, 2023, the maximum insurable earnings will increase from $60,300 to $61,500 for 2023. Employment Insurance (EI) premiums are also increasing from 1.58% to 1.65% in 2023.
- Canada Pension Plan (CPP): the maximum pensionable earnings under the CPP for 2023 will be $66,600—up from $64,900 in 2022. The basic exemption amount for 2023 remains at $3,500. The employee and employer contribution rates for 2022 will be increasing to 5.95%, up from 5.70% in 2022 (6.4% for the Quebec Pension Plan), up from 5.70% in 2022. The employee’s and employer’s maximum contribution for CPP is $3,754.45 and $4,038.40 for QPP.
- RRSP: The maximum RRSP contribution limit for 2022 is $29,210. For 2023, the limit has been increased to $30,780.
- Old Age Security (OAS): If you receive OAS, the repayment threshold for 2022 and 2023 is $81,761 and $86,912 respectively, meaning your OAS will be reduced if your taxable income is above this amount.
- Canada Child Benefit (CCB): CCB will continue to be indexed to inflation. For the 2022-2023 benefit year, the maximum a parent can receive is $6,997 for children under age 6 and $5,903 for children ages 6 to 17.
- Child Disability Benefit: For parents of disabled children under the age of 18, the Child Disability Benefit has increased to $2,985 for the July 2022 to June 2023 benefit period.
Changes in Tax Credits
Below are some of the Federal and provincial (Ontario) tax credit changes for the 2022 tax year:
Automobile Income Tax Deduction Limits: There is an increase in the Capital Cost Allowance (CCA) ceiling limits for zero-emission and passenger vehicles. The deductible monthly leasing costs have also increased by $100. In addition, the per kilometer rate paid by employers to employees who use their personal vehicle for work has increased by 2 cents per km from last year.
|Ontario Staycation Credit: This is a one time tax credit for Ontarians who are able to claim 20% of their stay in an Ontario hotel, cottage or campground, during 2022 up to $1,000 individually or $2,000 as a family.|
|Home Accessibility Tax Credit (HATC): The HATC is a non-refundable tax credit that is available for expenses incurred in connection with alteration of a home to make it more accessible for a qualifying individual, which includes an individual who is over 65 years old or one who is entitled to the disability tax credit. Starting in 2022 and subsequent taxation years, this credit has been increased to $20,000. This means that eligible individuals can receive a tax credit of up to $3,000 (previously $1,500).||Ontario Seniors Care at Home Tax Credit: This is a refundable personal income tax credit to help low-income seniors with eligible medical expenses, including expenses that support aging at home. The credit is equal to 25% of your eligible medical expenses up to $6,000, for a maximum credit of $1,500. The credit is reduced when family net income is over $35,000 and eliminated at $65,000|
|Labor Mobility Deduction (LMD): For 2022 and subsequent years, a new deduction is available for certain tradespersons or apprentices (Eligible Workers (EW) who work in temporary work locations. This credit allows eligible workers to deduct certain travel and relocation expenses incurred to earn income at a temporary work relocations.||Seniors’ Home Safety Tax Credit: This is a new credit that supports seniors in making their homes safer and more accessible, with a credit of 25% up to a maximum of $10,000 in eligible expenses. The maximum credit is equal to $2,500 per year.|
|Air Quality Improvement Tax Credit: This is a refundable credit, where eligible entities that incurred expenditures between September 1, 2021 and December 31, 2022, can claim up to 25% of their qualifying ventilation and air filtration system upgrades to a maximum of $10,000 per qualifying location and a maximum of $50,000 across all qualifying locations. The tax credit is available to sole-proprietors and Canadian-controlled private corporations(but not trusts), and members of a partnership that are qualifying corporations or individuals (other than trusts).|
|Medical Expense Tax Credit for Surrogacy and Other Expenses: For 2022 and subsequent taxation years, medical expense credit has expanded to include a variety of expenses related to the areas of surrogacy, sperm, ova or embryo donations.|
|Home Buyers’ Tax Credit: For 2022 and subsequent tax year, the non-refundable tax credit of $5,000 for first -time home buyers has been increased to $10,000. The enhanced credit will provide up to $1,500 in tax relief to eligible first-time home buyers. This measure will apply to homes purchased on or after January 1, 2022.|
The 2023 tax season is quickly approaching and it's important to be prepared for the changes that may come with filing your 2022 tax return. Reach out to our tax experts for help if you need assistance with filing your taxes this 2023 tax season. We will ensure that we maximize your refund or minimize your tax liability through utilization of all applicable tax credits and deductions. If you require further information about any of the above credits or you would like to know whether you meet the eligibility criteria, please contact us.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting/tax professionals. NBG Chartered Professional Accountant Professional Corporation will not be held liable for any problems that arise from the usage of the information provided on this page.