2023 tax return: What you ought to be doing proper now

Tax skilled Jamie Golombek presents tips about CRA deadlines and adjustments

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Tax season is quick approaching, however there are some things you ought to be doing proper now to get a head begin.

Crucial factor, tax skilled Jamie Golombek stated, is to know your Registered Retirement Financial savings Plan (RRSP) contribution restrict.

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The managing director of tax and property planning at CIBC Personal Wealth Administration stated being conscious of your restrict is essential for the reason that deadline to say an RRSP deduction in your 2023 tax return is Feb. 29. Canadians can nonetheless contribute to their RRSPs after that deadline, however they received’t be capable to declare the deduction till their 2024 tax return.

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The best technique to discover out your contribution restrict is to have a look at the discover of evaluation to your 2022 tax return. When you don’t have that, you may log into your account on the Canada Income Company’s web site.

“I’m a giant fan of RRSPs,” Golombek stated in a latest interview with the Monetary Publish’s Larysa Harapyn. “An RRSP remains to be the best technique to save for retirement.”

He stated most Canadians ought to maximize their RRSP contributions, however that doesn’t imply they need to take out a mortgage to take action. A mortgage on this case solely is sensible in “very restricted and uncommon conditions” the place you may repay most, if not all, of it inside just a few months, comparable to when you recognize you’ll quickly be getting a bonus, further money or huge tax refund.

“The issue is in the event you can’t afford to pay it again, and this drags on for months, it turns into a really, very costly technique to make an RRSP contribution,” Golombek stated.

Canadians who’ve been working from dwelling on a full-time or hybrid foundation also needs to get a head begin on determining their home-office bills earlier than the April 30 tax submitting deadline. That’s as a result of the CRA’s simplified methodology of claiming work-from-home bills is not obtainable for the 2023 tax yr.

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Between 2020 to 2022, staff have been allowed to say $2 per day for daily they labored from dwelling, as much as a most of $500. Now, staff might be required to tally up and prorate their bills earlier than claiming the ensuing quantity as a deduction. Workers may even want a duplicate of kind T2200 from their employer.

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When you owe the CRA cash, it’s extra important “now than ever earlier than within the final twenty years” to pay the excellent stability by April 30, Golombek stated. That’s as a result of the CRA’s prescribed rate of interest for overdue or late taxes has hit 10 per cent for the primary time since mid-2001.

“For somebody in a prime tax bracket of fifty per cent or extra, you’d need to earn a price of return of over 20 per cent on an equal funding to be higher off than not paying your tax debt,” he stated.

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