It’s tax time: Here’s what you need to know for the 2023 filing season

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Tax season is formally upon us and Canadians can now file their 2023 private tax returns on-line. Right here’s what’s new for the 2023 return, and a few issues to bear in mind as you get able to file.

The submitting deadline

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This yr’s normal tax submitting deadline is April 30, 2024. Should you or your partner or associate have self-employment earnings, your submitting deadline, which is generally June 15, is prolonged by two further days in 2024 to June 17, since June 15 falls on a Saturday this yr.

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In both case, if you happen to owe tax for 2023, any steadiness due should be paid by April 30. After that date, the Canada Revenue Agency fees non-deductible arrears curiosity at a price of 10 per cent, compounded every day. That is the highest rate in more than 20 years.

Paper returns getting thinner

Greater than 90 per cent of Canadians file their returns electronically, however if you happen to’re one of many two million Canadians who nonetheless file a paper return, you must have already obtained your 2023 tax package deal within the mail.

You will have seen, nevertheless, that this yr’s package deal is thinner than traditional. Based on the CRA, that’s as a result of the company is now not printing line-by-line directions for the paper package deal. By making this transformation, the CRA has diminished every package deal by roughly 30 pages, or about 20 per cent. The road-by-line directions are nonetheless obtainable on-line.

Discover of Evaluation (NOA)

Your NOA is a abstract of your tax return that the CRA sends out annually as soon as your tax return has been assessed. The NOA reveals the date your return was processed (essential in case you wish to formally object to your evaluation by the deadline), and the main points of how a lot tax you owe or the quantity of refund you might be receiving. Final yr, greater than half of Canadians obtained a refund, with the typical quantity being $2,262.

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This yr, if you happen to’re anticipating a refund however you’re not signed up for direct deposit, you’ll obtain a paper T1 NOA and cheque individually. The CRA has additionally made adjustments to the T1 NOAs “to supply extra full data that’s simpler to know.” For instance, the CRA lately up to date the registered retirement financial savings plan desk included as a part of your NOA.

Working from house

Should you labored from house in 2023, you might be entitled to write off your home-office expenses. For the 2023 tax yr, the CRA has acknowledged you’ll be certified to jot down off your home-office bills if your own home workspace is the place you “principally” — which means greater than 50 per cent of the time — carried out your duties of employment for a interval of a minimum of 4 consecutive weeks throughout 2023.

Sadly, the CRA has scrapped the simplified technique for home-office bills which allowed workers working from house to assert $2 per day, as much as $500. For 2023, you’ll must calculate your precise home-office bills and pro-rate them in response to work use.

You’ll additionally must get a signed copy of CRA type T2200 Declaration of Situations of Employment out of your employer. The T2200 just isn’t submitted together with your return, however you’re required to maintain it in case the CRA asks to see it later.

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First Dwelling Financial savings Accounts (FHSA)

Should you contributed to or withdrew cash from the brand new FHSA in 2023, you must have obtained a T4FHSA (First Dwelling Financial savings Account Assertion) displaying the quantity you contributed or withdrew in 2023. The utmost contribution quantity was $8,000, and you’ll select to deduct your entire contribution in your 2023 return, or you might want to defer claiming the deduction to a future yr if you’re in the next tax bracket and the deduction could also be price extra.

To report FHSA actions in your 2023 return, there’s a brand new type, Schedule 15, FHSA Contributions, Transfers and Actions. This schedule is used to inform the CRA that you simply opened up an FHSA in 2023 (step 1), that you simply made a contribution final yr (step 2), that you simply’re claiming a deduction in 2023, or saving a few of that deduction for a future yr (step 3) and whether or not you made a qualifying withdrawal in 2023 to purchase your first house (step 4).

Multigenerational house renovation tax credit score

Among the many 2023 tax adjustments that took impact for this yr is the brand new Multigenerational Home Renovation Tax Credit. This refundable credit score was launched to help Canadians with the price of renovating a house to create a secondary unit so {that a} member of the family who’s greater than 65 years of age (or 18 in the event that they qualify for the incapacity tax credit score) can stay with you. The credit score is accessible for renovation bills incurred in 2023 and past.

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A “qualifying renovation” is a renovation, alteration or addition made to your own home that’s of an everlasting nature and integral to the house. The renovation should be undertaken to determine a secondary unit inside your own home wherein your relative might stay. A secondary unit is a self-contained housing unit with a non-public entrance, kitchen, rest room services and sleeping space. It may be both newly constructed or created from an current dwelling house that didn’t already meet the native necessities to be thought-about a secondary dwelling unit.

If eligible, you possibly can declare as much as $50,000 in qualifying expenditures for every qualifying renovation accomplished, as much as a most credit score of $7,500 for every declare you’re eligible to make. The declare is made on new Schedule 12, Multigenerational Dwelling Renovation Tax Credit score.

Anti-flipping rule

Beginning Jan. 1, 2023, any achieve from the disposition of a housing unit (together with a rental property) situated in Canada that you simply owned or held for less than a year before sale is deemed to be enterprise earnings, not a capital achieve. It’s additionally not eligible for the principal residence exemption. There are, nevertheless, sure exceptions to this rule, akin to within the case of loss of life, incapacity, separation and work relocation.

Compensation of COVID advantages

In case your COVID-19 benefits were denied and also you have been required to repay them in 2023, they are often claimed as a deduction on line 23200 of your 2023 return.

Jamie Golombek, FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Personal Wealth in Toronto. Jamie.Golombek@cibc.com.

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