8 Canadian Tax Changes You Need to Know About in 2023

Tax season is right around the corner and there are a few changes that you should be aware of before filing your taxes for the 2022 year. These changes, including new or updated credits, were made to benefit Canadians and account for rising living costs. Read over the changes to see which adjustments affect you, so that you’re prepared when tax time comes!

Repaying Covid-19 Benefits

The Government of Canada offered a variety of financial aid packages to Canadians to help during the COVID-19 pandemic. If you received these benefits from the CRA in 2022, such as the Canada Recovery Benefit (CRB), Canada Sickness Recovery Benefit (CSRB) or Canada Recovery Caregiving Benefit (CRCB) you will receive a T4A slip with the required information you need for your tax return.

If you received the CRB and your net income is more than $38,000, then you may have to repay all or part of the benefits you received in 2022.

Any one-time provincial payments to help you through COVID-19 will not be taxable, and you don’t need to report them as income on your 2022 tax return.

Claim up to $500 for Work-from-Home Expenses

The work-from-home tax credit, introduced in 2022, is making its return this year. If you’ve been keeping track of your expenses, you can claim your calculated total. If you haven’t kept track of your expenses, you can use the flat rate method of $2 for each day worked from home during the pandemic.

The Basic Personal Amount (BPA) Has Been Increased

The Government of Canada increased its Basic Personal Amount (BPA), a non-refundable tax credit that anyone can claim, for the 2022 tax year to $14,398. This is part of the government’s policy to continue increasing the BPA yearly until it reaches $15,000 in 2023. What does this mean for you? Every Canadian will get a slight boost to their return this year.

Tax Brackets Have Been Shifted

The Government of Canada has adjusted tax brackets for 2022, and they are as follows:

• $0 to $50,197 (5%)

• More than $50,197 to $100,392 (20.5%)

• More than $100,392 to $155,625 (26%)

• More than $155,625 to $221,708 (29%)

• $221,708.01 and higher (33%)

Each bracket saw a slight increase from 2021, which means you might be shifted into a lower tax bracket and will therefore pay less taxes. This shift is to help with historic inflation highs Canadians are facing.

New OAS Limit Amounts

When filing your taxes, you may notice changes to your Old Age Security (OAS). The OAS is designed to provide retirees with a source of income to support their retirement. These changes have come into effect due to the CRA’s new Affordability Plan, which entitles seniors aged 75 and over to a 10% increase of their Old Age Security pension, as of July 2022.

For the 2022 tax year, the new thresholds are:

• Minimum income recovery threshold: $80,761

• Maximum recovery thresholds for ages 65-74: $134,626

• Maximum recovery threshold for ages 75 and above: $137,331

If you made more than the minimum amount, you will have to pay back some or all of your OAS. If your income is above the maximum amount for your age group, your OAS might be canceled.

Increase in Canadian Pension Plan Maximum Contributions

The Canadian Pension Plan (CPP) has increased by 2.7% with the maximum pensionable earnings being $64,900, with a basic exemption of $3,500 for 2022.

The new calculations are based on a CPP legislated formula that reflects the average growth rate of salaries and weekly wages earned across Canada.

Increase in RRSP Dollar Limit

The annual dollar limit for RRSPs, registered retirement savings plans, is $29,210 for the 2022 tax year. Keep in mind that your individual contribution limit is capped at 18% of your entire earned income from the previous year.

Changes to Tax Credits

There have been a few notable changes to federal tax credits for the 2022 tax year.

Air Quality Improvement Tax Credit

Eligible businesses can claim 25% of their qualifying ventilation upgrades to a maximum of $10,000, creating a $2,500 tax credit.

Automobile Income Tax Deduction Limits

The changes include:

• An increase in Capital Cost Allowance (CCA) ceiling limits for zero emission and passenger vehicles

• Deductible monthly leasing costs increased by $100

• The per kilometer rate paid by employers to employees who use their personal vehicle for work has increased by 2 cents per km from previous year

Home Accessibility Tax Credit (HATC)

If you’re 65 or older, are eligible for the disability tax credit, and have remodeled your home for safer access, you can claim up to $20,000 of your related HATC expenses.

Labour Mobility Deduction (LMD)

This new deduction allows tradespeople, apprentices, and employees working in construction to claim meals and lodging expenses paid to earn income at a temporary work location.