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HomePERSONAL FINANCES2023 tax return: What you have to be doing proper now

2023 tax return: What you have to be doing proper now


Tax professional Jamie Golombek affords recommendations on CRA deadlines and modifications

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Tax season is quick approaching, however there are some things you have to be doing proper now to get a head begin.

A very powerful factor, tax professional Jamie Golombek mentioned, is to know your Registered Retirement Financial savings Plan (RRSP) contribution restrict.

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The managing director of tax and property planning at CIBC Personal Wealth Administration mentioned being conscious of your restrict is essential because the deadline to say an RRSP deduction in your 2023 tax return is Feb. 29. Canadians can nonetheless contribute to their RRSPs after that deadline, however they received’t be capable to declare the deduction till their 2024 tax return.

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The best method to discover out your contribution restrict is to take a look at the discover of evaluation in your 2022 tax return. In the event you don’t have that, you possibly can log into your account on the Canada Income Company’s web site.

“I’m an enormous fan of RRSPs,” Golombek mentioned in a latest interview with the Monetary Put up’s Larysa Harapyn. “An RRSP remains to be the best method to save for retirement.”

He mentioned most Canadians ought to maximize their RRSP contributions, however that doesn’t imply they need to take out a mortgage to take action. A mortgage on this case solely is sensible in “very restricted and uncommon conditions” the place you possibly can repay most, if not all, of it inside a couple of months, comparable to when you recognize you’ll quickly be getting a bonus, additional money or massive tax refund.

“The issue is in the event you can’t afford to pay it again, and this drags on for months, it turns into a really, very costly method to make an RRSP contribution,” Golombek mentioned.

Canadians who’ve been working from house on a full-time or hybrid foundation also needs to get a head begin on determining their home-office bills earlier than the April 30 tax submitting deadline. That’s as a result of the CRA’s simplified methodology of claiming work-from-home bills is now not out there for the 2023 tax yr.

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Between 2020 to 2022, staff had been allowed to say $2 per day for each day they labored from house, as much as a most of $500. Now, staff might be required to tally up and prorate their bills earlier than claiming the ensuing quantity as a deduction. Staff will even want a replica of kind T2200 from their employer.

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In the event you owe the CRA cash, it’s extra important “now than ever earlier than within the final 20 years” to pay the excellent steadiness by April 30, Golombek mentioned. That’s as a result of the CRA’s prescribed rate of interest for overdue or late taxes has hit 10 per cent for the primary time since mid-2001.

“For somebody in a prime tax bracket of fifty per cent or extra, you’d must earn a charge of return of over 20 per cent on an equal funding to be higher off than not paying your tax debt,” he mentioned.

• E mail: [email protected]

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