Canadian Tax Change Highlights for 2022-2023
Filing due date extended, claiming deductions for COVID-19 repayments, new provincial credits for Ontario and Nova Scotia, First Home Savings Account (FHSA), Multi-Generational Home Renovation Tax Credit, 2023 inflation adjustments.
Due Date of Return
April 30 falls on a Sunday this year, so the deadline to file 2022 Canadian individual income tax returns will be May 1, 2023. Self-employed taxpayers and their spouses have until June 15, 2023 to file without late penalties, but if you have a balance owing for 2022 a payment should be made by April 30 to avoid interest.
Claiming Deductions for COVID-19 Repayments
You will receive a T4A slip reporting any COVID-19 benefits received in 2022. If during 2022 you had to repay some or all of your COVID-19 benefits, you can either:
- claim a deduction on your 2022 tax return;
- claim a deduction on your tax return for the year you received the benefit (2020 or 2021); or
- split the deduction between your tax returns.
Canada Revenue Agency has announced that a new form will be available in January 2023, for use when claiming 2022 repayments as a deduction in a previous tax year. Form T1B, Request to Deduct Federal COVID-19 Benefits Repayment in a Prior Year will be filed with your 2022 tax return.
Ontario Staycation Tax Credit
This temporary provincial credit aims to encourage Ontario families to explore the province, while helping the tourism and hospitality sectors recover from the financial impacts of the COVID-19 pandemic. Ontario residents can claim 20% of their eligible 2022 accommodation expenses, for example, for a stay at a hotel, cottage or campground, when filing their personal income tax return for 2022. You can claim eligible expenses of up to $1,000 as an individual or $2,000 if you have a spouse, common-law partner or eligible children, to get back up to $200 as an individual or $400 as a family.
New Nova Scotia Credits
The province of Nova Scotia is introducing the following credits for 2022:
- The Children's Sports and Arts Tax Credit is a $500 refundable tax credit for eligible expenditures on artistic, cultural, and physical activities for children under the age of 19. The credit is available for organized physical activities and programs, as well as programs in literary arts, visual arts, performing arts, music, media, languages, customs, and heritage.
- The Rebate for Fertility Treatments, Surrogacy-related Medical Expenses is a refundable tax credit equal to 40% of the cost of fertility treatments provided by a Nova Scotia-licensed medical practitioner or infertility treatment clinic and for surrogacy-related medical expenses. There is no limit on the number of treatments that an individual can claim, but the maximum annual claim is $20,000 in eligible costs for a maximum annual tax credit of $8,000.
First Home Savings Account (FHSA)
The government is working on this new tax sheltered account that is a cross between an RRSP and TFSA. You will be able to contribute up to $8,000/year for five years (2023-2027), to a maximum of $40,000. Contributions will be tax deductible, and earnings inside the FHSA will grow tax-free. The icing on the cake: you will be able to withdraw funds tax-free from the FHSA to purchase an eligible home.
There are some qualifications to be aware of. For example, a taxpayer must not have owned a home in which they lived during the part of the year before the withdrawal is made, or at any time in the preceding four calendar years. It is recommended that interested taxpayers keep an eye out for announcements on the Department of Finance or Canada Revenue Agency websites.
Multi-Generational Home Renovation Tax Credit
This new refundable tax credit that came into effect on Jan. 1, 2023 is meant to help build a self-contained suite for a family member who is a senior or adult with a disability. The credit will be equal to 15% of eligible expenses up to a maximum of $50,000, which means a refundable tax credit of up to $7,500 can be claimed on your 2023 tax return, depending on the amount of your construction or renovation expenses.
2023 Inflation Adjustments for Personal Amounts
Canada Revenue Agency indexes certain personal income tax and benefit amounts to inflation each year, and the 2023 amounts are going up an historic 6.3%. For example, the first tax bracket threshold for 2022 is $50,197, meaning the federal rate on taxable income above this amount increases from 15% to 20.5%. This threshold will increase to $53,359 for 2023. Another example: the Canada child benefit (CCB) base benefit base benefit for a child under age 6 will increase from $6,997 in 2022 to $7,437 in 2023.