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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:

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:

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.

The information on this website, and the use of this website, are both provided without warranty of any kind. Income tax rules change every year and some information may be out of date. All readers wishing to take advantage of the information offered here should consult a qualified income tax preparer. In no event will Brad Howland, Howland Tax Services, or this website be liable for any damages, including lost profits, arising out of the information offered on this website, or the usage of this website. All material on this website Copyright © 2001-2023 by Howland Tax Services, Inc. Please contact us for permission to use this material in any form. Website designed and maintained by Brad Howland.