TAX UPDATES FOR 2023
First Home Savings Accounts (FHSA): Legislation to create the new tax-free FHSA was recently passed, paving the way for it to be launched as early as April 1, 2023. This new registered plan gives prospective first-time homebuyers the ability to save $40,000 on a tax-free basis towards the purchase of a first home in Canada.
Like a RRSP, contributions to an FHSA will be tax deductible, but withdrawals to purchase a first home, including from any investment income or growth earned in the account, will, like a TFSA, be non-taxable. The new legislation confirms that a first-time homebuyer can use both the FHSA and the existing Home Buyers’ Plan to purchase their first home
Multigenerational Home Renovation Tax Credit: Jan. 1 also marks the beginning of this new credit, which is equal to 15 per cent of eligible expenses (up to $50,000) incurred for a qualifying renovation that creates a secondary dwelling to permit an eligible person (such as a senior or a person with a disability) to live with a relative.
The TFSA limit has been increased
The TFSA contribution limit has increased to $6,500 for the year. This means that if you’ve had an account since 2009, were 18 years of age and have been a resident of Canada throughout that period, the cumulative total you can have in your TFSA is now $81,500.
New OAS limit amounts
The OAS is designed to provide retirees with a source of income to support their retirement. However, if your income is over certain limit amounts, you might find your OAS amount reduced, and even canceled entirely.
For the 2022 tax year, if your taxable income was over $81,761, you would need to repay some of your OAS. Similarly, if your taxable income was over $134,626, you would not have received any OAS payments. Thanks to the CRA’s new Affordability Plan, seniors aged 75 and over received an automatic 10% increase of their Old Age Security pension, as of July 2022.
First-time home buyers’ tax credit – The amount used to calculate the first-time home buyers’ tax credit has increased to $10,000 for a qualifying home purchased after December 31, 2021.
Home accessibility tax credit – For 2022 and later tax years, the annual expense limit of the home accessibility tax credit has increased to $20,000.
Climate action incentive payment (CAIP) – If you are eligible, you will automatically get the CAIP four times a year. Since it generally takes two weeks to process electronic returns, we recommend that you and your spouse or common-law partner (if applicable) file your 2022 returns electronically by March 10, 2023, to help in receiving the April 14, 2023, issuance. If you don’t receive the April issuance, the payment will be included in a subsequent payment after your returns are assessed. For more information, go to Climate action incentive payment.
TAX CHANGES FOR 2022 - Rates and Limits
TAX BREAKS FOR PARENTS
HOME BUYERS' PLAN
COVID-19 - Credits & Benefits
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