It is tax time: This is what it’s essential know for the 2023 submitting season

Jamie Golombek: This is what’s new on this yr’s return, plus another issues to remember

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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 remember as you get able to file.

The submitting deadline

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

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In both case, should you owe tax for 2023, any steadiness due should be paid by April 30. After that date, the Canada Income Company prices non-deductible arrears curiosity at a fee of 10 per cent, compounded each day. That is the highest fee in additional than 20 years.

Paper returns getting thinner

Greater than 90 per cent of Canadians file their returns electronically, however should you’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 observed, nonetheless, that this yr’s package deal is thinner than common. Based on the CRA, that’s as a result of the company is not printing line-by-line directions for the paper package deal. By making this transformation, the CRA has lowered 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 every year as soon as your tax return has been assessed. The NOA exhibits the date your return was processed (vital in case you need 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 chances are you’ll 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, should you’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 modifications to the T1 NOAs “to offer extra full info that’s simpler to know.” For instance, the CRA not too long ago up to date the registered retirement financial savings plan desk included as a part of your NOA.

Working from dwelling

For those who labored from dwelling in 2023, chances are you’ll be entitled to write off your home-office bills. For the 2023 tax yr, the CRA has acknowledged you’ll be certified to write down off your home-office bills if your private 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 at the least 4 consecutive weeks throughout 2023.

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

You’ll additionally have to get a signed copy of CRA type T2200 Declaration of Circumstances of Employment out of your employer. The T2200 shouldn’t be submitted along 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)

For those who 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 may select to deduct the whole contribution in your 2023 return, or chances are you’ll want to defer claiming the deduction to a future yr whenever you’re in a better 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 just opened up an FHSA in 2023 (step 1), that you just made a contribution final yr (step 2), that you just’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 dwelling (step 4).

Multigenerational dwelling renovation tax credit score

Among the many 2023 tax modifications that took impact for this yr is the brand new Multigenerational Dwelling Renovation Tax Credit score. 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 reside 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 private home that’s of an everlasting nature and integral to the house. The renovation should be undertaken to determine a secondary unit inside your private home during which your relative might reside. A secondary unit is a self-contained housing unit with a non-public entrance, kitchen, toilet amenities and sleeping space. It may be both newly constructed or created from an present residing house that didn’t already meet the native necessities to be thought-about a secondary dwelling unit.

If eligible, you may 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.

Really helpful from Editorial

Anti-flipping rule

Beginning Jan. 1, 2023, any acquire from the disposition of a housing unit (together with a rental property) positioned in Canada that you just owned or held for lower than a yr earlier than sale is deemed to be enterprise earnings, not a capital acquire. It’s additionally not eligible for the principal residence exemption. There are, nonetheless, sure exceptions to this rule, reminiscent of within the case of loss of life, incapacity, separation and work relocation.

Reimbursement of COVID advantages

In case your COVID-19 advantages had been denied and also you had 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 Non-public Wealth in Toronto.

For those who appreciated this story, join extra within the FP Investor publication.

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