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Jamie Golombek: This is what’s new on this 12 months’s return, plus another issues to remember
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Tax season is formally upon us and Canadians can now file their 2023 private tax returns on-line. Right here’s what’s new for the 2023 return, and a few issues to remember as you get able to file.
The submitting deadline
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This 12 months’s basic tax submitting deadline is April 30, 2024. When you or your partner or accomplice have self-employment earnings, your submitting deadline, which is often June 15, is prolonged by two further days in 2024 to June 17, since June 15 falls on a Saturday this 12 months.
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In both case, in case you owe tax for 2023, any stability due have to be paid by April 30. After that date, the Canada Income Company expenses non-deductible arrears curiosity at a fee of 10 per cent, compounded day by day. That is the highest fee in additional than 20 years.
Paper returns getting thinner
Greater than 90 per cent of Canadians file their returns electronically, however in case you’re one of many two million Canadians who nonetheless file a paper return, it is best to have already acquired your 2023 tax package deal within the mail.
You might have seen, nevertheless, that this 12 months’s package deal is thinner than normal. In response to the CRA, that’s as a result of the company is not printing line-by-line directions for the paper package deal. By making this modification, the CRA has decreased every package deal by roughly 30 pages, or about 20 per cent. The road-by-line directions are nonetheless out there on-line.
Discover of Evaluation (NOA)
Your NOA is a abstract of your tax return that the CRA sends out annually as soon as your tax return has been assessed. The NOA exhibits the date your return was processed (necessary in case you wish to formally object to your evaluation by the deadline), and the main points of how a lot tax you owe or the quantity of refund it’s possible you’ll be receiving. Final 12 months, greater than half of Canadians acquired a refund, with the common quantity being $2,262.
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This 12 months, in case you’re anticipating a refund however you’re not signed up for direct deposit, you’ll obtain a paper T1 NOA and cheque individually. The CRA has additionally made modifications to the T1 NOAs “to offer extra full info that’s simpler to know.” For instance, the CRA lately up to date the registered retirement financial savings plan desk included as a part of your NOA.
Working from residence
When you labored from residence in 2023, it’s possible you’ll be entitled to write off your home-office bills. For the 2023 tax 12 months, the CRA has acknowledged you’ll be certified to jot down off your home-office bills if your own home workspace is the place you “principally” — that means greater than 50 per cent of the time — carried out your duties of employment for a interval of not less than 4 consecutive weeks throughout 2023.
Sadly, the CRA has scrapped the simplified methodology for home-office bills which allowed staff working from residence to say $2 per day, as much as $500. For 2023, you’ll have to calculate your precise home-office bills and pro-rate them in response to work use.
You’ll additionally have to get a signed copy of CRA type T2200 Declaration of Situations of Employment out of your employer. The T2200 isn’t submitted together with your return, however you’re required to maintain it in case the CRA asks to see it later.
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First House Financial savings Accounts (FHSA)
When you contributed to or withdrew cash from the brand new FHSA in 2023, it is best to have acquired a T4FHSA (First House Financial savings Account Assertion) exhibiting the quantity you contributed or withdrew in 2023. The utmost contribution quantity was $8,000, and you may select to deduct the complete contribution in your 2023 return, or it’s possible you’ll want to defer claiming the deduction to a future 12 months if you’re in a better tax bracket and the deduction could also be price extra.
To report FHSA actions in your 2023 return, there’s a brand new type, Schedule 15, FHSA Contributions, Transfers and Actions. This schedule is used to inform the CRA that you simply opened up an FHSA in 2023 (step 1), that you simply made a contribution final 12 months (step 2), that you simply’re claiming a deduction in 2023, or saving a few of that deduction for a future 12 months (step 3) and whether or not you made a qualifying withdrawal in 2023 to purchase your first residence (step 4).
Multigenerational residence renovation tax credit score
Among the many 2023 tax modifications that took impact for this 12 months is the brand new Multigenerational House Renovation Tax Credit score. This refundable credit score was launched to help Canadians with the price of renovating a house to create a secondary unit so {that a} member of the family who’s greater than 65 years of age (or 18 in the event that they qualify for the incapacity tax credit score) can dwell with you. The credit score is obtainable for renovation bills incurred in 2023 and past.
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A “qualifying renovation” is a renovation, alteration or addition made to your own home that’s of a permanent nature and integral to the house. The renovation have to be undertaken to ascertain a secondary unit inside your own home by which your relative could dwell. A secondary unit is a self-contained housing unit with a non-public entrance, kitchen, toilet amenities and sleeping space. It may be both newly constructed or created from an current residing house that didn’t already meet the native necessities to be thought-about a secondary dwelling unit.
If eligible, you may declare as much as $50,000 in qualifying expenditures for every qualifying renovation accomplished, as much as a most credit score of $7,500 for every declare you’re eligible to make. The declare is made on new Schedule 12, Multigenerational House Renovation Tax Credit score.
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Anti-flipping rule
Beginning Jan. 1, 2023, any achieve from the disposition of a housing unit (together with a rental property) positioned in Canada that you simply owned or held for lower than a 12 months earlier than sale is deemed to be enterprise earnings, not a capital achieve. It’s additionally not eligible for the principal residence exemption. There are, nevertheless, sure exceptions to this rule, equivalent to within the case of dying, incapacity, separation and work relocation.
Reimbursement of COVID advantages
In case your COVID-19 advantages have been denied and also you have been required to repay them in 2023, they are often claimed as a deduction on line 23200 of your 2023 return.
Jamie Golombek, FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Non-public Wealth in Toronto. [email protected].
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