1-Increase in unpaid tax penalty
The penalty for unpaid taxes has risen starting from 2024. Now, it stands at 10% of the unpaid tax at the deadline, plus an additional 2% for each full month the payment is delayed, capped at 20 months. Interest accrues daily on the outstanding amount, further augmenting the penalties for late payment. To minimize costs, it’s crucial to file and pay taxes on time.
2-COVID-19 benefits have expired
For the 2023 tax year, you can no longer claim the $500 deduction for work-from-home expenses due to COVID-19. Additionally, benefits like the Canada Worker Lockdown Benefit (CWLB) and the
Ontario Staycation Tax Credit, which provided relief during the pandemic, expired, and cannot be claimed for the 2023 tax season.
3-A new grocery rebate was introduced
The government has introduced a new Grocery Rebate to financially assist eligible Canadians coping with escalating food prices. Individuals who qualified for the GST/HST credit in 2021 are eligible for this rebate, equivalent to double the GST/HST credit received in January 2023. Those who filed taxes in 2022 received the rebate in July 2023.
4-Disability Tax Credit
Applying for the Disability Tax Credit has been simplified with the CRA’s digital process introduced in
2023. Via the My CRA Account platform, applicants can complete Part A of the application online. Once issued a reference number, they can share it with their medical practitioner, who can then complete Part B digitally, eliminating the need for paper forms.
5-The Basic Personal Amount (BPA) has been increased
The Basic Personal Amount (BPA) has been raised to $15,000 for the 2023 tax year. This adjustment will slightly increase tax returns for all Canadians, with the expectation of
further increases in subsequent years as part of government policy.
6-Tax brackets have shifted to account for inflation
To counteract inflation, tax brackets for 2023 have been adjusted upwards. This means Canadians may find themselves in lower tax brackets this year, potentially resulting in lower tax liabilities.
- $0 to $53,359 of income (15%)
- More than $53,359 to $106,717 (20.5%)
- More than $106,717 to $165,430(26%)
- More than $165,430 to $235,675 (29%)
- $235,675 and higher (33%)
7-The TFSA and RRSP limits have been increased
The TFSA contribution limit has been raised to $7,000 for the year, allowing Canadians to accumulate up to $95,000 in their TFSA if eligible. The RRSP annual dollar limit for 2023 is
$30,780, calculated as 18% of the previous year’s earned income.
8-New OAS limit amounts
OAS limits have been adjusted for the 2023 tax year. Those with taxable incomes over $81,761 may see reductions in their OAS payments, while those with incomes exceeding $134,626 may not receive any OAS payments. Seniors aged 75 and over received a 10% increase in their Old Age Security pension in July 2022.
9-Canada Pension Plan maximum contributions have been increased
Contributions to the Canada Pension Plan (CPP) and Québec Pension Plan (QPP) have increased by 6.5% for 2023, with maximum pensionable earnings set at $66,600. Self-employed individuals must consider both employer and employee contributions, with maximum contributions of $7,508.90 for CPP and $8,076.80 for QPP. Additionally, new earnings ceilings have been implemented for CPP contributions in 2024.
References:
https://www.canada.ca/en/revenue-agency.html
https://turbotax.intuit.ca/tips/9-biggest-tax-changes-canadians-need-to-know-in-2023-14386
