Important Tax Updates for Canadians in 2023

It’s that time of the year again—tax season. There have been several important changes to taxes that could affect you. To keep it straightforward, here’s a summary of the top 9 changes you need to be aware of for your 2023 tax filing.

Key Points to Note

Late tax payments now face a 10% penalty by the CRA.
Adjustments have been made to tax brackets and various limits to help with the cost of living and inflation.
The COVID-19 related tax credits, like the Work-From-Home credit and the Ontario Staycation Credit, are no longer available for this tax year.

Detailed Breakdown:

Higher Late Payment Penalties

Starting in 2024, if you don’t pay your taxes on time, you’ll face a 10% penalty on the amount you owe right when your return is due. Plus, for every month you’re late, an additional 2% gets tacked on for up to 20 months. These charges compound daily, and this is on top of any other late payment fees. So, filing and paying on time will save you money.

End of COVID-19 Benefits

For this tax year, you won’t be able to claim the $500 COVID work-from-home expense anymore. The Canada Worker Lockdown Benefit, which provided temporary financial aid during the pandemic, also ended in the previous tax year and can’t be claimed now. The Ontario Staycation Tax Credit was only for the 2022 tax year and isn’t available now either.

New Grocery Rebate

To help Canadians with the high cost of food, there’s a new Grocery Rebate. If you were eligible for a GST/HST credit after filing your 2021 tax return, you’re in line for this rebate. It’s worth double the GST/HST credit you received in January 2023. If you filed your taxes in 2022, you would have gotten this payment in July 2023.

Easier Access to Disability Tax Credit

Applying for the Disability Tax Credit is now less of a hassle thanks to a new digital process. Through your My CRA Account, you can fill out Part A of the application and get a reference number for your doctor to complete Part B online. No more printing and carrying forms to your doctor’s office.

Increase in Basic Personal Amount

The Basic Personal Amount has gone up to $15,000 for 2023, giving every Canadian a bit more money back on their return. Expect to see this number go up again next year as part of a continuing government policy.

Adjusted Tax Brackets

To help keep up with inflation, the government has shifted the tax brackets so that people might end up in a lower bracket and pay less tax. The new brackets range from 15% for incomes up to $53,359 to 33% for incomes over $235,675.

Higher TFSA and RRSP Limits

The limit for Tax-Free Savings Accounts (TFSAs) has increased to $7,000 for the year, bringing the total limit to $95,000 for long-term account holders. The RRSP limit is now $30,780, but remember, there’s an 18% cap based on your last year’s earned income.

Changes to OAS

The Old Age Security (OAS) pension might get reduced or even canceled if your income is above certain levels. Thanks to a 2022 plan by the CRA, seniors 75 and older saw a 10% increase in their OAS pension starting July 2022.

Canada Pension Plan Contributions Up

Contributions to the Canada Pension Plan (CPP) and Québec Pension Plan (QPP) have risen by 6.5%. The maximum earnings for 2023 are set at $66,600. For the CPP, both employees and employers have a max contribution of $3,754.45, and for the QPP, it’s $4,038.40. Self-employed individuals need to cover both sides of the contribution, totaling $7,508.90 for CPP and $8,076.80 for QPP. Starting in 2024, new earnings ceilings will apply, introducing additional contribution rates for higher income brackets.

These updates from the Orientum Group are crucial for your tax preparation this year. Understanding these changes can help you navigate your taxes more effectively and possibly save money.