TAX UPDATES FOR 2024
Working Tax Payers:
Maximum RRSP contribution: The maximum contribution for 2024 is $31,560; for 2023, it’s $30,780. The 2025 limit is $32,490.
TFSA limit: In 2024, the annual limit is $7,000, for a total of $95,000 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009. The annual limit for 2023 is $6,500, for a total of $88,000 in room available in 2023 for someone who has been eligible since 2009.
Maximum pensionable earnings: For 2024, the maximum pensionable earnings amount is $68,500 (up from $66,600 in 2023), and the basic exemption amount remains $3,500. New for 2024, earnings between $68,500 and $73,200 will subject to a second tranche of CPP contributions.
Maximum EI insurable earnings: The maximum annual insurable earnings (federal) for 2024 is $63,200, up from $61,500 in 2023.
Prescribed rates: The prescribed rate on loans to family members will be 6% in Q1 2024, and the interest rate Canadians must pay on overdue tax will be 10%. That’s up from 5% and 9%, respectively, in Q4 2023.
Lifetime capital gains exemption: The lifetime capital gains exemption is $1,016,836 in 2024, up from $971,190 in 2023.
Home buyers’ amount: A client who bought a home may be able to claim up to $10,000 of the purchase cost, and get a non-refundable tax credit of up to $1,500.
Medical expenses threshold: For the 2024 tax year, the maximum is 3% of net income or $2,759, whichever is less. For 2023, the max is 3% or $2,635.
Basic personal amount: The basic personal amount for 2024 is $15,705 for taxpayers with net income of $173,205 or less. At income levels above $173,205, the basic personal amount is gradually clawed back until it reaches $14,156 for net income of $246,752. The basic personal amount for 2023 ranges from $13,520 to $15,000.
Elderly Tax Payers:
Age amount: Clients can claim this amount if they were aged 65 or older on Dec. 31 of the taxation year. The maximum amount they can claim in 2024 is $8,790, up from $8,396 in 2023.
OAS recovery threshold: If your client’s net world income exceeds $90,997 in 2024 or $86,912 in 2023, they may have to repay part of or the entire OAS pension.
Lifetime ALDA dollar limit: The limit is $170,000 for 2024 and $160,000 for 2023.
TAX PAYERS WITH DEPENDANTS
Canada caregiver credit: A client with a dependant younger than 18 who’s physically or mentally impaired may be able to claim up to an additional $2,616 in 2024 and $2,499 in 2023 in calculating certain non-refundable tax credits. For infirm dependants 18 or older, the amount for 2024 is $8,375 and the 2023 amount is $7,999.
Disability amount: This non-refundable credit is $9,872 in 2024 ($9,428 in 2023), with a supplement up to $5,758 for those under 18 ($5,500 in 2023) that is reduced if child care expenses are claimed.
Child disability benefit: The child disability benefit is a tax-free benefit of up to $3,322 in 2024 ($3,173 in 2023) for families who care for a child under 18 with a severe and prolonged impairment in physical or mental functions.
Canada child benefit: In 2024, the maximum CCB benefit is $7,787 per child under six and up to $6,570 per child aged six through 17. In 2023, those amounts are $7,437 per child under six and up to $6,275 per child aged six through 17.
Federal bracket thresholds will be adjusted higher in 2024 by 4.7%.
Previous Updates:
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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