Top 6 Tax Changes Affecting 2023 Tax Season In Canada

At the beginning of the new year (2024), one of the last things we have to do to finalize the previous year (2023) is tax returns.

As the 2023 tax season is fast approaching with a deadline line of April 30, 2024, here are the Top 7 tax changes that could impact your 2023 tax return in Canada:

1. First Home Savings Account (FHSA): This is a program created to allow individuals to save for their first home. How this works is that starting April 1, 2023, the amount contributed to the account allows for a deduction to your income, which reduces the amount of tax you may need to pay. When the amount is withdrawn in order to buy your qualifying home, the withdrawal is not subject to tax.
   

2. Property Flipping: Starting January 1, 2023, if you sell a housing unit, including a rental property located in Canada and that property was owned for less than 365 consecutive days, the sale will be considered a business income and not a capital gain. This means that 100% of the income will be taxable. Note that this does not include a property you own as an inventory in a business.
   

3. Climate Action Incentive Payment (CAIP): Starting April 2024, the rural supplement for this payment will increase to 20%. This means that the CAIP will increase for those living in that area. More money in your pocket.

4. Deduction for tools (tradesperson and apprentice mechanics: Starting 2023, the maximum employment deduction for eligible tools will increase from $500 to $1,000. This allows for less income to be subject to tax for these workers.

5. COVID-19 Benefit Repayments: All payments made after December 31, 2022 can be deducted on line 23200 of 2023 return. It is important to keep record of all payments made.

6. Multigenerational Home Renovation Tax Credit (MHRTC): Eligible individuals may be able to claim renovation costs to create a secondary unit within an eligible dwelling to allow for qualified individuals to live with their qualifying relation. You may be able to claim up to $50,000 in qualifying expenditures for each qualifying renovation up to the maximum credit of $7,500

There are other changes in the CRA website that pertain to business. With these changes, you can see which applies to your situation and see how it impacts your 2023 tax return, future tax returns, and financial plans.

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