2023 Personal Tax Update

COVID-19 credits 

The temporary flat rate method for Work-From-Home tax credit ($2/day, maximum $500) does not apply to 2023. Therefore, taxpayers looking to claim home office expenses for 2023 will be required to use the detailed method and get a completed Form T2200, Declaration of Conditions of Employment, from their employer. 

In addition, the Ontario Staycation Credits are no longer available.

Federal, provincial and territorial COVID-19 benefit repayments

Federal, provincial and territorial COVID-19 benefit repayments made after December 31, 2022 can be claimed as a deduction on line 23200 of your 2023 return.

First home savings account (FHSA)

The FHSA is a new registered plan to help individuals save for their first home. Starting April 1, 2023, contributions to an FHSA are generally deductible and qualifying withdrawals made from an FHSA to purchase a qualifying home are tax free. If you opened one or more FHSAs in 2023, complete Schedule 15, FHSA Contributions, Transfers and Activities. 

Advanced Canada workers benefit (ACWB)

Advance payments of the Canada workers benefit (CWB) are now issued automatically under the ACWB to those who received the benefit in the previous tax year. As a result, Form RC201, Canada Workers Benefit Advance Payments Application, has been discontinued.

Starting in 2023, amounts from your RC210 slip are to be reported on Schedule 6, Canada Workers Benefit, in order to calculate the amount to enter on line 41500 of your return. If you have an eligible spouse, you can choose who will claim the basic amount for the CWB regardless of who received the RC210 slip for the basic amount. 

Climate action incentive payment (CAIP)

The Government of Canada has announced its intention to double the rural supplement to 20% starting in April 2024. It also intends to continue using the census metropolitan areas determined by the 2016 Census for the 2023 and 2024 tax years. 

Deduction for tools (tradespersons and apprentice mechanics)

Starting in 2023, the maximum employment deduction for tradespersons’ eligible tools has increased from $500 to $1,000. As a result, the threshold for expenses eligible for the apprentice mechanics tools deduction has also changed. 

Multigenerational home renovation tax credit (MHRTC)

The MHRTC is a new refundable tax credit that allows an eligible individual to claim certain renovation costs to create a secondary unit within an eligible dwelling so that a qualifying individual can reside with their qualifying relation. If eligible, you can claim up to $50,000 in qualifying expenditures for each qualifying renovation completed, up to a maximum credit of $7,500 for each claim you are eligible to make. 

Property flipping

Starting January 1, 2023, any gain from the disposition of a housing unit (including a rental property) located in Canada, or a right to acquire a housing unit located in Canada, that you owned or held for less than 365 consecutive days before its disposition is deemed to be business income and not a capital gain, unless the property was already considered inventory or the disposition occurred due to, or in anticipation of certain life events. 

Grocery Rebate

To provide financial support to eligible Canadians, the government introduced a new Grocery Rebate to help alleviate financial strain due to rising food costs. If you filed a tax return in 2021 and you were eligible for a GST/HST credit at the time, you would qualify for the Grocery Rebate. The value of the rebate is equivalent to double the GST/HST credit amount you received in January 2023. If you filed your tax return in tax year 2022, you would have received the payment in July 2023. 

Disability Tax Credit

Applying for the Disability Tax Credit has been notoriously a lengthy process. In 2023, the CRA made this process easier by going digital! Now, via My CRA Account, individuals wanting to apply can complete Part A of the application and once issued a reference number, provide this to your qualified medical practitioner who can then complete Part B digitally for you.

There’s no need to print and bring the forms to your medical practitioner anymore. 

TSFA

The TFSA contribution limit has increased to $7,000 for 2024. 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 $95,000.

RRSP

The RRSP annual dollar limit for tax year 2023 is $30,780. Remember that your RRSP contribution limit is capped at 18% of your earned income in the previous year. This means the dollar limit is the maximum amount you can contribute regardless of your income.

Electronic remittances or payments above $10,000 

As of January 1, 2024, remittances or payments to the Receiver General of Canada should be made as an electronic payment if the amount is more than $10,000. Payers may face a penalty unless they cannot reasonably remit or pay the amount electronically. 

Bare trust reporting

Do you have any accounts where someone else’s name is on it but they are not involved in any way (including real estate transactions)? You may have a “bare trust” relationship to report to CRA.

You would need to (amongst other things):

- Have a trust document;

- A list of beneficiaries;

- Register for a trust number;

- File a T3 Return annually until the trust is terminated or wound up due 90 days after December 31 (this year it is March 30)

However, there are exemptions if it is considered a “listed trust” (this is not a comprehensive list):

- Trust has existed less than 3 months on December 31;

- Trust holds less than $50,000 in assets throughout the year consisting only of deposits and/or listed securities;

- Mutual funds or segregated funds; 

- Units are all listed on a designated stock exchange;

- Governed by registered plans including FHSA (see below);

- Lawyer trust accounts;

- Graduated rate estates and qualified disability trusts;

- NPO’s and charities