Here's what Canadians need to know for the 2023 tax season
As you prepare to file your taxes, take note of recent changes that could affect your return.
Feb. 22, 2023
3-minute read
Tax time is the perfect opportunity to take stock of your finances. Although many parts of your annual personal tax return will be similar year over year, there are often adjustments that can affect your tax filing. Here are some things you may want to know to prepare your 2022 tax return.
Your basic personal amount is higher than last year
Every Canadian taxpayer can claim a tax credit called the basic personal amount (BPA) which might reduce the taxes you owe or increase your refund. In 2020, the federal government began phasing in increases to the BPA, considering current inflation rates. For 2022, the BPA is $14,398, up more than $1,100 from the 2021 rate. For 2023, it jumps to $15,000. The BPA is reduced with taxable income in the second-highest federal tax bracket and is $12,719 ($13,521 for 2023) with taxable income in the highest-federal tax bracket.
Your tax bracket may have changed
Every year, the federal government indexes tax brackets to account for the rising cost of living. Accordingly, the 2022 thresholds were bumped up, meaning Canadians may have more of their income taxed at lower rates.
The new federal tax brackets for 2022 are as follows:
| Income |
Tax bracket |
| $0 to $50,197 |
15% |
| $50,197 to $100,392 |
20.5% |
| $100,392 to $155,625 |
26% |
| $155,625 to $221,708 |
29% |
| More than $221,708 |
33% |
Contribution limit increases
The annual maximum TFSA contribution has increased
In 2023, the TFSA dollar limit is $6,500 — the first increase since 2019. If you have never contributed to a TFSA and have been at least 18 years old and a resident of Canada since 2009, your TFSA contribution room for 2023 is $88,000.
Canada Pension Plan maximum contribution has increased
Both in 2022 and 2023, employees and employers will see increases of 0.25% in contribution rates while self-employed individuals will pay 0.5% more.
The annual contribution limit for RRSPs has increased
For 2022, Canadians can contribute up to 18% of their earned income in the previous year or $29,210, whichever is less, plus any unused RRSP contribution room from previous years.
Your OAS pension monthly payment may change
Available to Canadians aged 65 and older, the old age security (OAS) pension is a monthly benefit. Starting in July 2022 as part of Canada's Affordability Plan, the OAS was permanently increased by 10% for those aged 75 and older.
Seniors with higher incomes may have to pay an OAS pension recovery tax. For the 2022 tax year, if your taxable income was over $81,761, you would need to repay some of your OAS pension. If your taxable income was over $134,626 ($137,331 if you were age 75 or older on July 1, 2022), you would not have been eligible for any OAS pension.
Check your federal tax credits
You may be able to claim tax credits and deductions to reduce your taxable income. Here are some tax deductions and credits to note for your 2022 tax return.
Simplified work-from-home tax credit
If you worked from home in 2022 due to the COVID-19 pandemic, you may claim a deduction of up to $500. If you worked from home for reasons other than the pandemic, you may still be able to claim work-from-home expenses in some circumstances.
Labour Mobility Deduction (LMD)
This new deduction allows eligible tradespeople, apprentices and employees working in a range of construction activities to claim a deduction on up to $4,000 of allowable transportation, meal and lodging expenses paid to earn income at a temporary work location.
Eligible educator school supply tax credit
If you're an educator who buys teaching supplies, you may be able to claim a 25% refundable credit on up to $1,000 in eligible expenses, including things like books, electronic educational toys, calculators, software and even containers.
Check your provincial tax credits
Canada's provinces and territories also offer tax credits to eligible residents. If you live in Ontario, for example, there's a jobs training tax credit available. British Columbians may be eligible for the home renovation tax credit for seniors and persons with disabilities. Those in Nova Scotia could claim the sport and recreational expenses for children tax credit.
Looking for more tax tips?
Discover ways that can help you make the most of your tax savings with the latest articles from Jamie Golombek.
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