Jamie Golombek: This is what’s new on this 12 months’s return, plus another issues to bear in mind
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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 12 months’s common tax submitting deadline is April 30, 2024. If you happen to or your partner or associate have self-employment revenue, 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 12 months.
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In both case, for those who owe tax for 2023, any stability due should be paid by April 30. After that date, the Canada Income Company costs non-deductible arrears curiosity at a fee of 10 per cent, compounded every 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 for those who’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 could have observed, nonetheless, that this 12 months’s package deal is thinner than typical. In keeping with 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 modification, the CRA has decreased every package deal by roughly 30 pages, or about 20 per cent. The road-by-line directions are nonetheless out there 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 (vital in case you wish to formally object to your evaluation by the deadline), and the small print of how a lot tax you owe or the quantity of refund chances are you’ll be receiving. Final 12 months, greater than half of Canadians obtained a refund, with the common quantity being $2,262.
High Tales
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This 12 months, for those who’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 grasp.” For instance, the CRA lately up to date the registered retirement financial savings plan desk included as a part of your NOA.
Working from residence
If you happen to labored from residence in 2023, chances are you’ll be entitled to write off your home-office bills. For the 2023 tax 12 months, the CRA has said you’ll be certified to put in writing off your home-office bills if your house 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 no less than 4 consecutive weeks throughout 2023.
Sadly, the CRA has scrapped the simplified methodology for home-office bills which allowed workers working from residence 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 based on work use.
You’ll additionally have to get a signed copy of CRA kind T2200 Declaration of Situations 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)
If you happen to 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 your entire contribution in your 2023 return, or chances are you’ll want to defer claiming the deduction to a future 12 months if 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 kind, 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 12 months (step 2), that you just’re claiming a deduction in 2023, or saving a few of that deduction for a future 12 months (step 3) and whether or not you made a qualifying withdrawal in 2023 to purchase your first residence (step 4).
Multigenerational residence renovation tax credit score
Among the many 2023 tax adjustments that took impact for this 12 months 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 stay with you. The credit score is on the market for renovation bills incurred in 2023 and past.
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A “qualifying renovation” is a renovation, alteration or addition made to your house that’s of a permanent nature and integral to the house. The renovation should be undertaken to determine a secondary unit inside your house through which your relative could stay. A secondary unit is a self-contained housing unit with a non-public entrance, kitchen, lavatory amenities 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 of 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.
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Anti-flipping rule
Beginning Jan. 1, 2023, any acquire from the disposition of a housing unit (together with a rental property) situated in Canada that you just owned or held for lower than a 12 months earlier than sale is deemed to be enterprise revenue, not a capital acquire. It’s additionally not eligible for the principal residence exemption. There are, nonetheless, sure exceptions to this rule, resembling within the case of dying, incapacity, separation and work relocation.
Reimbursement of COVID advantages
In case your COVID-19 advantages have been 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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