Tax Changes and UpdatesMarlene Alava
As tax season approaches, it can prove to be a complex task, particularly considering the recent modifications instituted by the Canada Revenue Agency. To alleviate the burden, we have put together a comprehensive list of 9 noteworthy updates and tax credits that individuals should be cognizant of prior to submitting your 2022 tax returns.
Tax brackets have changed
The Government of Canada has adjusted the federal tax brackets for 2022 to account for inflation. The revised tax brackets for the 2022 tax year are as follows:
- Income from $0 to $50,197 is taxed at a rate of 15%
- Income over $50,197 and up to $100,392 is taxed at a rate of 20.5%
- Income over $100,392 and up to $155,625 is taxed at a rate of 26%
- Income over $155,625 and up to $221,708 is taxed at a rate of 29%
- Income over $221,708.01 is taxed at a rate of 33%
Repaying COVID-19 benefits
Canadian residents who received COVID-19 benefits from the Canada Revenue Agency in 2022, such as the Canada Recovery Benefit, the Canada Sickness Recovery Benefit, and/or the Canada Recovery Caregiving Benefit, should expect to receive a T4A slip that contains all necessary details.
According to the Canada Revenue Agency (CRA), for the 2021 tax year and onwards, individuals diagnosed with Type 1 Diabetes are considered to have fulfilled the requirement of undergoing life-sustaining therapy for a minimum of two times and 14 hours per week.
Home accessibility tax credit
The Canada Revenue Agency has announced that the annual expense limit for the Home Accessibility Tax Credit has been increased to $20,000.
Work from home expenses
Canadian residents who had to work from home due to the COVID-19 pandemic may be eligible to claim reimbursement for their work-from-home expenses, up to a maximum of $500. The exact amount eligible for reimbursement will depend on the total expenses incurred. For individuals who did not keep a record of their expenses, a flat rate of $2 per day worked from home can be used for claiming purposes.
First-time home buyers’ tax credit
It is noteworthy for first-time homebuyers who purchased a qualifying home in 2022 to be aware that the First-Time Home Buyers’ Tax Credit has been increased to $10,000 for homes purchased after December 31, 2021.
RRSP limit increase
The annual Registered Retirement Savings Plan (RRSP) contribution limit for 2022 is set at $29,210.
It is important to note that this information is intended solely for general informational purposes and does not provide financial, investment, legal, tax or accounting advice.
TFSA limit increases
The contribution limit for Tax-Free Savings Accounts (TFSA) for Canadians was $6,000 until 2022, but has now been raised to $6,500 for the 2023 tax year.
Tax credit of air quality improvement
Self-employed individuals and members of partnerships in Canada who incurred ventilation expenses in 2022 to enhance the air quality of their place of business may be eligible to claim a refundable tax credit equal to 25% of the total expenses.
Ontario staycation tax credit
The government of Ontario has introduced a tax credit to support the recovery of the tourism sector in our province. The tax credit applies to any individual and/or their family members who travelled within Ontario in 2022, regardless of the date of payment. Ontario residents who resided in the province on December 31st, 2022 can claim their travel expenses on their Personal Income Tax and Benefit Return for 2022. Ontario residents are entitled to claim 20% of their accommodation costs for either one or multiple trips. The maximum amount that can be claimed is $1,000 for an individual or $2,000 per family unit, which includes a spouse, common-law partner or eligible children. For example, an individual who incurs $1,000 or more in accommodation expenses within Ontario can claim $200 as a refund. This amount is doubled for more than one person. If a family unit travels together, the limit is $2,000 with $400 eligible for a refund.