The top tax changes to know about when filing your return this year
As you prepare to file your taxes, take note of recent changes that could affect your 2023 tax return.
Jamie Golombek
Mar. 28, 2024
6-minute read
Tax season is officially upon us, and Canadians can now file their 2023 personal tax returns online.
Here’s what’s new for the 2023 return, and some things to keep in mind as you get ready to file.
This year’s general tax filing deadline is April 30, 2024. If you or your spouse or partner have self-employment income, your filing deadline, which is normally June 15, is extended by 2 extra days in 2024 to June 17, since June 15 falls on a Saturday this year.
In either case, if you owe tax for 2023, any balance due must be paid by April 30. After that date, the Canada Revenue Agency (CRA) charges non-deductible arrears interest at a rate of 10%, compounded daily. This is the highest rate in over 20 years.
Writing off work from home expenses could require more paperwork
If you worked from home in 2023, you may be entitled to write off your home office expenses. For the 2023 tax year, the CRA has stated you will be qualified to write off your home office expenses if your home workspace is where you “principally” — meaning more than 50% of the time — performed your duties of employment for a period of at least 4 consecutive weeks during 2023.
Unfortunately, the CRA has scrapped the simplified method for home office expenses which allowed employees working from home to claim $2 per day, up to $500. For 2023, you’ll need to calculate your actual home office expenses and prorate them according to work use.
You’ll also need to get a signed copy of CRA form T2200 Declaration of Conditions of Employment from your employer. Form T2200 is not submitted with your return, but you’re required to keep it in case the CRA asks to see it later.
Tax deductions for First Home Savings Account (FHSA) contributions
If you contributed to, or withdrew money from, the new FHSA in 2023, you should have received a T4FHSA First Home Savings Account Statement, showing the amount you contributed or withdrew in 2023. The maximum contribution amount was $8,000. You can choose to deduct the entire contribution on your 2023 return, or you may wish to defer claiming the deduction to a future year when you’re in a higher tax bracket, and the deduction may be worth more.
To report FHSA activities on your 2023 return, there’s a new form: Schedule 15 - FHSA Contributions, Transfers and Activities. This schedule is used to tell the CRA:
- That you opened up an FHSA in 2023
- If you made a contribution last year
- If you’re claiming a deduction in 2023 or saving some of that deduction for a future year
- Whether you made a qualifying withdrawal in 2023 to buy your first home
The anti-flipping rule applies to homes sold in 2023 or later
Starting January 1, 2023, any gain from the disposition of a housing unit — including a rental property — located in Canada, that you owned or held for less than a year before sale, is deemed to be business income and not a capital gain. It’s also not eligible for the principal residence exemption. There are certain exceptions to this rule, such as in the case of death, disability, separation and work relocation.
Tax deductions for repayment of COVID-19 benefits
If you received COVID-19 benefits that you were not eligible for, and you were required to repay them in 2023, they can be claimed as a deduction on line 23200 of your 2023 return.
The Multigenerational Home Renovation Tax Credit (MHRTC) has arrived
Among the 2023 tax changes that took effect for this year is the new Multigenerational Home Renovation Tax Credit (MHRTC). This refundable credit was introduced to assist Canadians with the cost of renovating a home to create a secondary unit that allows a qualifying individual — a senior or an adult who is eligible for the disability tax credit — to live with a qualifying relation. The credit is available for renovation expenses incurred in 2023 and beyond.
A “qualifying renovation” is a renovation, alteration or addition made to your home that must be of an enduring nature and integral to the home. The renovation must be undertaken to establish a secondary unit within your home in which your relative may live. A secondary unit is a self-contained housing unit with a private entrance, kitchen, bathroom facilities and sleeping area. It can either be newly constructed or created from an existing living space that didn’t already meet the local requirements to be considered a secondary dwelling unit.
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’re eligible to make. A claim can be made on the new Schedule 12 - Multigenerational Home Renovation Tax Credit.
Paper returns getting thinner
While 93% of Canadians file their returns electronically, some taxpayers still file on paper. If you’re one of the 2 million Canadians that still file a paper return, you should have already received your 2023 tax package in the mail. However, you may have noticed that this year’s package is thinner than usual. According to the CRA, that’s because the Agency is no longer printing line by line instructions in the paper package. By making this change, the CRA has reduced each paper package by approximately 30 pages, or about 20%. The line by line instructions are still available online.
Next comes your notice of assessment (NOA)
Your NOA is a summary of your tax return that the CRA sends out each year once your tax return has been assessed. The NOA shows the date your return was processed. This is important in case you want to formally object to your assessment by the deadline. It also shows the details of how much tax you owe or the amount of refund you may be receiving. Last year, more than half of Canadians received a refund, with the average refund amount being $2,262.
This year, if you’re expecting a refund but you’re not signed up for direct deposit, you’ll receive a paper NOA and cheque separately. The CRA has also made changes to the NOAs “to provide more complete information that is easier to understand.” For example, the CRA recently updated the Registered Retirement Savings Plan (RRSP) table included as part of your NOA.
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Jamie Golombek
Managing Director, Tax and Estate Planning, CIBC Private Wealth