Awa Sow
The tax filing season has already started, and a number of new changes that may affect your situation have been implemented for the 2022 tax year, including new credits and deductions that you might qualify for.
To make things clearer, we’ve broken down how these changes will impact you and compiled the top 7 changes you need to be aware of when filing your return in 2023.
1. RRSP dollar limit increase
For the 2022 tax year, the annual limit for registered retirement savings plans, or RRSPs, has increased to $29,210 from $27,830 in 2021. Keep in mind, though, that the maximum individual contribution remains 18% of your total earned income.
2. First time home buyer’s tax credit
The First-Time Home Buyers’ Tax Credit or HBTC is a federal government attempt to make homeownership more accessible for some Canadians.
After a new legislation was passed in December 2022, qualifying first-time home buyers are able to claim a $10,000 non-refundable income tax credit, which is a twice the previous amount. This may result in a tax savings of up to $1,500.
No application or approval is required for the HBTC; simply enter the $10,000 home buyer’s amount on Line 31270 of your income tax return. Your unpaid taxes will be refunded as a result of the credit.
3. Basic personal amount
Everybody who pays income taxes in Canada is eligible to claim the Basic Personal Amount, sometimes known as the BPA. The BPA aims to provide full income tax deductions to people who make less than a specified limit. Those who earn more than this limit will see their payments partially reduced.
The Basic Personal Amount will rise to $14,398 for the 2022 tax year according to a goal stated by the Canadian government in December 2019. As a result of this gradual implementation, the BPA will also be changed to $15,000 for the tax year 2023.
4. New tax bracket
The federal government has changed the tax brackets for the 2022 tax year in order to assist Canadians in keeping up with inflation, which has been at historic highs for more than a year. From 2021 levels, each bracket got a little boost, which can mean paying a lower rate on more of your income. The new tax rates and brackets are:
15% tax is applied to income up to $50,197.
The tax rate for income between $50,197 and $100,392 is 20.5%.
A 26% tax rate applies to income between $100,392 and $155,625.
Between $155,625 and $221,708 in income, there is a 29% tax rate.
A 33% tax rate applies to income beyond $221,708.
5. Old age security income limits changed
A government program called Old Age Security, or OAS, was established to give elderly Canadians a source of income to support them during their retirement. However, some seniors who earn too much income may be required to repay some of their OAS.
The following are the new thresholds for the 2022 tax year:
$80,761 is the minimum income recovery level.
Ages 65 to 74 maximum recovery thresholds: $134,626.
For people aged 75 and above, the maximum recovery threshold is $137,331.
You may be required to repay some or all of your OAS if your earnings were higher than the minimum. Your OAS may be cancelled if your income exceeds the maximum for your age group.
6. Covid-19 benefit repayment
The Canadian government offered financial assistance in the form of COVID-19 benefits during the pandemic. They comprised:
Benefit for Canadian Emergency Response (CERB)
Emergency Student Benefit Canada (CESB)
For those who received such COVID-19 benefits in 2022, a T4A slip will be provided with all the necessary data for their tax return.
Those with incomes over $38,000 may be required to repay all or a portion of the benefits they received. The Canada Revenue Agency may retain all or part of future payments, including tax refunds and/or GST/HST credits, if you refuse to pay back what you owe. The CRA may work with you to set up a payment plan if you are unable to make the entire amount.
7. Claim up to $500 for work from home expenses
You can reapply for the work-from-home tax credit if you submitted a return from the previous year. You may submit your total calculated expenses if you’ve been keeping track of your outgoing costs. Alternatively, you might use the $2 flat rate option for each day of the pandemic that you work from home.
