Navigating the upcoming tax season? Explore the latest 2023 tax year changes in Canada that you need to know, including new credits and deductions. We’ve simplified it all in a handy guide—check out the key updates for a smooth filing experience! 💸🤗
2023 Tax Year Changes for Canadians
Increased Tax Penalty 📈
Starting in 2024, the unpaid tax penalty gets higher. It’s now 10% of the unpaid tax when it’s due, plus an extra 2% for each month your return is late (up to 20 months).
Tax Bracket Shifts 📊
The Government of Canada has adjusted each tax bracket due to inflation. These rates come into play when it comes to your taxable income. And what exactly is taxable income? It’s the income left after all those deductions, credits, and exemptions. The 2023 income tax brackets are:
- $0 to $53,359 (15%)
- $53,359 to $106,717 (20.5%)
- $106,717 to $165,430(26%)
- $165,430 to $253,675 (29%)
- $235,675 + (33%)
Higher CPP Maximum 🚀
For 2023, the Canada Pension Plan (CPP) has a 6.5% increase, and the most you can earn for pension contributions is $66,600. There’s a basic exemption of $3,500. Both employees and employers contribute a max of $3,754.45 each. If you’re self-employed, remember you cover both sides, making your total CPP contribution $7,508.90 this year.
No More COVID-19 Benefit 🚫
For the 2023 tax year, the $500 COVID work-from-home expense claim is no longer available. The Canada Worker Lockdown Benefit and Ontario Staycation Tax Credit, which were available in 2022, cannot be claimed for 2023 taxes.
Increased BPA ⬆️
For the 2023 tax year, the Basic Personal Amount, a non-refundable tax credit available to all individuals, has been boosted to $15,000 by the Government of Canada.
Disability Tax Credit Going Digital 💻
Great news for those applying for the Disability Tax Credit in 2023! The CRA has gone digital, making the process easier. Go onto your My CRA Account, complete Part A, get a reference number, and let your medical pro handle Part B online. No more hassle with printing forms
OAS Limit Changes 💵
If your income is over $81,761, your Old Age Security Pension might be reduced. If it goes beyond $134,626, you won’t receive any OAS payments. On a positive note, seniors aged 75 and older saw a 10% increase in their OAS pension thanks to the CRA’s 2022 Affordability Plan
New Grocery Rebate 🛒
In response to the increased cost of living, there’s a Grocery Rebate available as a one-time payment for individuals with lower incomes. If you filed your 2021 tax return and were eligible for the GST/HST credit, you qualify for the Grocery Rebate (which you should have already received).
TFSA and RRSP Limit Increase 🏦
The TFSA contribution limit is now $6,500 for the year. The RRSP annual limit for 2023 is $30,780. Your RRSP contribution limit is 18% of your earned income from the previous year. $30,780 is the max you can contribute, regardless of your income.
Remember, change is a constant, and understanding these updates empowers us to make the most of our financial journey. So, let’s tackle the new tax year with confidence and positivity! 💪💰
