Updates for 2023 Taxes
Tax season is quickly approaching and here are some of the changes that will apply to this year’s filings:
This year taxes are due for individuals on April 30, 2024, and for self employed individuals on June 17, 2024. Here are some changes and new measures for the 2023 tax year:
Advanced Canada Workers Benefit Payment: Individuals will no longer need to apply for advanced payments of the Canada Workers Benefit (CWB) when filing their income tax returns. These payments will now be automatically made to entitled individuals based on their previous tax year.
Deduction for tool for tradespersons: Beginning in 2023 the maximum employment deduction for a tradesperson’s eligible tools has increased from $500 to $1,000.
First Home Savings Account (FHSA): The FHSA is a new registered plan to help individuals save for their first home. Starting April 1, 2023, contributions to an FHSA are deductible and any income earned in the account is non-taxable. Qualifying withdrawals made from the FHSA to purchase a first home are non-taxable.
Multigenerational Home Renovation Tax Credit (MHRTC): The MHRTC is a new refundable tax credit that will allow individuals to claim certain renovation costs to create a secondary unit within their home so that a qualifying relative can reside at the home. Eligible individuals can claim up to $50,000 in expenses for a qualifying renovation and can receive a maximum tax credit of $7,500.
Property Flipping: Beginning on January 1, 2023, any gain from the sale of a housing unit, including rental proprieties, located in Canada, and owned for less than 365 consecutive days will be deemed to be business income and will not be eligible for capital gain treatment. There are exemptions for death, breakdown of a marriage/common-law partnership, eligible relocation, and other life events.
Deduction for working from home: The temporary flat rate method that was introduced during the pandemic will no longer be available for individuals working from home. To claim home office expenses for 2023 individuals will need to use the detailed method and get a completed Form T2200, Declaration of Conditions of Employment, from their employer.
Short-Term Rentals: The federal government has stated that beginning on January 1, 2024, individuals operating short-term rentals who are non-compliant with existing provincial and municipal rules will be denied the ability to claim expenses against their income.
Trusts: Trusts that have a tax year ending after December 30, 2023, are required to file a T3 income tax return. This includes bare trusts which were previously exempt of this requirement. Additionally, trusts will be required to disclose beneficial ownership information. The deadline to file T3 income tax returns is April 2, 2024.
Underused Housing Tax (UHT): As part of the 2023 Fall Economic Statement changes have been proposed to the UHT rules. The proposed changes are to change the definition of “excluded owners” for UHT purposes to include specified Canadian corporations, partners of specified Canadian partnerships, and trustees of specified Canadian trusts. Once the changes are finalized these new excluded owners will no longer have a UHT reporting obligation for 2023 and future tax years.
Registered Retirement Savings Account (RRSP): The RRSP deadline for the 2023 tax year for contributions is February 29, 2024.
When filing your taxes if unsure about the reporting of these items or any others you should consult a professional.