As first credit card bills come in after the holidays, it’s normal for finances to come to the fore. At Integrity Tree Financial, we encourage our clients to see this renewed focus on finances as an opportunity to dig in and set themselves up stronger for the year ahead–starting with making sure tax season 2023 goes smoother than ever.

Discover the dates and changes you need to know for tax season 2023 and learn best practices to set yourself up for easier taxes in the years to come.

When should I file my taxes?

In 2023, the deadline to file your taxes is May 1st unless you’re self-employed: in that case, your deadline is June 15th.

The least you can do is get everything in order to prevent filing your taxes late. Filing late can come with penalties, especially if you owe money to the government.

However, if you’re expecting a refund, you’re actually better to file early and get that tax-free loan you gave to the government back in your pocket as soon as you can! Just make sure you have all of the pieces you need to file an accurate return, including income slips or annual summaries from private health insurance. Sometimes these aren’t ready first thing in January, so you need to wait to be sure you have all the information you need.

In any case, if you do realize anything was missing from your return, simply be sure to go back and amend it or report it.

What do I need to know about tax season 2023 in Ontario?

There are both positive and negative changes that might impact your tax return this year. Armed with the information below, you can make the most of it.

• Claim up to $500 in work-from-home expenses again this year

If you’ve tracked your expenses, you can use that number to claim this tax credit (up to $500) or use the flat rate of $2 per day spent working at home.

• The Basic Personal Amount went up again in 2022

Everyone should get a boost to their returns this year as the Basic Personal Amount increased to $14,398 for 2022.

Keep in mind for next year that the yearly increases should reach the goal rate of $15,000, meaning another boost.

• Canada Pension Plan maximum contributions have increased

CPP maximum contributions for 2022 increased by 2.7%. The maximum pensionable earnings in 2022 are $64,900, with a basic exemption of $3,500.

So, the maximum possible contribution for an employer and employee is $3,039.30 each. If you’re self-employed, you would need to contribute both the employee and employer portion, totalling $6,078.60.

The contribution maximums are increasing yearly as part of the government’s CPP enhancement plan, which “Once mature… will increase the maximum CPP retirement pension by about 50%. It will also increase the survivor and disability pensions.”

• The Registered Retirement Savings Plan dollar limit increased

For your 2022 taxes, the RRSP dollar limit is $29,210. Keep in mind that you’re also capped at contributing 18% of your earned income in the previous year, so you may not reach $29,210.

• Tax brackets have shifted because of inflation

With the price of goods increasing, the government has adjusted tax brackets upwards for the 2022 tax season to maintain Canadians’ buying power. How does this impact you? Well, you might find yourself in a lower tax bracket this year and paying fewer taxes!

The new federal tax brackets for 2022:

• $0 to $50,197 of income (15%)
• More than $50,197 to $100,392 (20.5%)
• More than $100,392 to $155,625 (26%)
• More than $155,625 to $221,708 (29%)
• $221,708.01 and higher (33%)

You may (or may not) have to repay Covid-19 benefits

You’ll get a T4A tax slip for your tax return if you received any Covid-19 benefits from the CRA in 2022. These benefits could include the Canada Recovery Benefit (CRB), Canada Sickness Recovery Benefit (CSRB) or Canada Recovery Caregiving Benefit (CRCB).

There are a few reasons you might need to repay Covid-19 benefits, including if you received a payment in error or didn’t meet the eligibility criteria. In the case of the CRCB, another reason to repay is if you received “a payment for the same period as another member in your household.” You might need to repay the CRB in part or in full if your net income after certain adjustments was more than $38k in 2022.

Note that the CRA has provided interest-free repayment options if you can’t repay the Covid-19 benefits that you’re required to all at once.

Here are a few positives to note:

In 2022, if you repaid all or part of your COVID-19 benefits, you can claim the tax deduction for the repayment either for the year you received the benefit or the year you repaid it.

Also, remember that any one-time provincial payments connected to Covid-19 are not taxable, and you don’t have to report them on your 2022 tax return.

• New Old Age Security limits

The goal of the OAS is to provide supplemental income to support retirees. As of July 2022, seniors aged 75 and over received an automatic, permanent increase in their Old Age Security pension (10%) because of the CRA’s Affordability Plan. However, the limits did change this year as well.

In the 2022 tax year, if your taxable income was over $81,761, you will need to repay some of your OAS as the limits were reduced. On the other hand, if your taxable income was over $134,626, your OAS would have been wholly cancelled (i.e. you wouldn’t have received any OAS payments).

Here are 3 tax credits to note, especially for tax season 2023 in Ontario:

• The Seniors Home Safety Tax Credit:

Extended again this year, this refundable credit aims to help seniors make their homes safer and more accessible. Example expenses include (but aren’t limited to) installing grab bars, automatic garage door openers, and wheelchair ramps. The credit is worth 25% of up to $10,000 in eligible expenses. This means a maximum refund of $2500. The credit is applied per household rather than per person, meaning it’s shared by anyone living together.

• The Ontario Seniors Care at Home Tax Credit

The Ontario Seniors Care at Home Tax Credit is applied per person. However, it has limits dependent on family household income because it targets seniors with low to moderate incomes.

This tax credit offers 25% of up to $6,000 in eligible medical expenses (a maximum refund of $1,500). This amount is reduced by 5% if the family’s net income is over $35,000 and is fully removed by $65,000.

• The Ontario Staycation Tax Credit

The Ontario Staycation Tax Credit was a one-time offer to incentivize Ontario residents to spend money in-province on tourism and hospitality. It was part of a push to reinvigorate these industries post-Covid-19. This credit is available to all Ontario residents, regardless of age or income.

Ontarians can claim 20% of their 2022 accommodations in the province, ranging from hotels to vacation rentals to campgrounds. The stay must have been for leisure purposes and have taken place in the 2022 calendar year.

The maximum to claim for this tax credit is $1,000 for an individual or $2,000 for a family, which means a refund of $200 or $400, respectively. Only one family member can make the claim on their tax return, although they can include their spouse/common-law partner or children’s eligible expenses.

Here’s 1 new tax to note, specifically for the City of Toronto:

• Toronto’s new Vacant Home Tax

In 2022, if your Toronto property 1) was not your primary residence and 2) was unoccupied for 6 months or more, it will be considered vacant and subject to an additional tax of 1% of the property’s current value assessment. This new tax applies to Canadian residents, non-residents and non-Canadian property owners.

The idea behind the Vacant Home Tax is “to reduce the number of vacant residential properties that could otherwise be used to increase housing availability and affordability.” To that end, the revenue collected from the tax will be reinvested by the City into affordable housing projects.

Some exemptions can be declared annually along with supporting documentation: renovations, court orders, the death of an owner, and more. (Review the City of Toronto’s dedicated page for the complete list and other details).

How can I plan ahead for next year’s taxes?

Aside from watching for returning tax credits and planning for known, increasing limits like those of the CPP and RRSP, it’s essential to know about a new tax that will start in 2023:

• Canada’s new anti-flipping tax

Starting with any properties sold on or after Jan. 1st, 2023, residential properties (whether primary homes or rental properties) that are held less than 12 months before reselling will be considered “flipping” and taxed as business income. The government cites the impact of flipping on housing prices as one reason for implementing this new tax.

There are certain exceptions to the tax if the quick sale is caused by significant life changes. These include (but may not be limited to):

• A death
• A birth
• Divorce
• Disability
• Job change

A property sale audit will be conducted to decide whether a sale for these exceptions results in business income.

Speak to an advisor

1. 1. At Integrity Tree Financial, our best advice for tax season 2023 is twofold:
      Become educated, like you’ve just done by reading this blog post, and
   2. Ask for support to maximize your tax refund with the least stress possible.

   Our financial advisors can give you personalized advice and education on even the most complicated tax situations while considering your bigger financial picture and goals.

   We invite you to book a free consultation today and make tax season better this year!