10 Popular Canadian Tax Deductions and Credits in 2023

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CDAE
CDAE

10 Popular Canadian Tax Deductions and Credits in 2023

The season for tax filing is here CDAE. There are several new changes for the coming tax year. Taxes can be painful when you are not prepared. That’s why you need to know the updates concerning 2023.

While some of the changes may not affect you, others will have an impact on your condition. These include deductions and credits you and your family may benefit from.

With good records of spending this year, many Canadians can benefit from different tax breaks.

This guide offers you a list of a few changes in taxes in 2023.

Updates On Canadian Taxes for 2023

Below are ten tax changes in Canada for 2023

Student loan interest

Students can now add a significant amount to their tax refund. This is determined by the amount in your student loan as well as the interest you’ve already paid on it.

It’s therefore important that you get a record of the interest you have paid only on student loans. With this, students will be able to claim them on their taxes.

CDAE
CDAE

Medical expenses

If you are not able to cover your healthcare expenses, you can claim them on your taxes.

Expenses like therapy animals and ambulance services are also covered.

Buying a home for the first time

A sizeable tax credit is granted to anyone buying a home for the first time in Canada.

First-time homebuyers can get about $750 back from the government for buying a home in the country, during the tax year.

However, it doesn’t include other grants for home buyers from the provincial government. But if this is your first time buying a house, it will include property tax grants, property transfer tax grants, and many more.

You can check with your provincial government to see what kinds of credits and grants are available. Check if you are eligible as a first-time home buyer.

Update on OAS limit amounts

Retirees get a source of income via the OAS. This helps them support their retirement. However, for those whose income exceeds certain thresholds, the amount of OAS may be reduced or canceled.

People with taxable income above $81,761 in 2022’s tax year will need to repay some of their OAS.

Also, those with taxable income above $134,626, won’t receive any OAS payment.

The new plan (Affordability Plan) by the CRA is helpful. Seniors who are 75 years and older will automatically get a 10 percent increase in their Old Age Security pension. This has been in effect since July 2022.

Claim $500 for work-from-home expenses

You can claim up to $500 for the work-from-home tax credit.

However, this is for those keeping records of their expenses. If you do, then you can claim the total calculated.

If you don’t keep a proper record, then utilize the flat rate strategy of $2 for everyday you worked from home, especially during the pandemic.

Child care deduction

It’s quite expensive to be a parent in Canada. Everywhere you look, there is one major expense after another.

With that being said, you can now deduct about $8,000 every year per kid under 6. For every child between the ages of 7 and 15, the deduction is up to $5,000. They are eligible for any child care – including nannies, preschools, babysitters, daycares, and many more.

Donations

When it’s tax time, you’ll get some dough from charitable donations.

However, the precise amount will vary. It’s determined by how much is donated during a tax year. The province you live in and the year you apply for will also determine it.

There are also cases where you can receive up to a quarter of what’s donated.

Increase in Canada Pension Plan 

The maximum contributions of the CPP (Canada Pension Plan) are now higher. The same goes for the QPP (Québec Pension Plan). They have increased by nearly 3%.

As of 2022, $64,900 is the maximum pensionable earnings. The basic exemption is $3,500. The maximum QPP contribution for both employees and employers is $3,315 per year. For CPP, it’s $3,039.

Extra contributions are also allowed by Quebecers to their QPP premiums. This enhances the plan for future retirees. There will be an increase in pension premiums, from 25% to 33.3%.

Self-employed individuals must account for the employer and employee aspects of their contribution.

In 2022, the maximum contribution amount for the QPP is $6,999.60. For CPP, it’s $6,078.60.

Tax credits updates 

Certain credits have been changed, added, expanded, or reinstated for the tax year, 2022.

These are some of the tax credit changes on the federal level.

Automobile income deduction limits. The monthly leasing cost deductible has now been increased by $100; the CCA ceiling limits for passenger vehicles and zero-emission vehicles have been increased, and the per-kilometer rate paid by employers to employees when they use vehicles for work (now increased by $2 per km).

Air quality improvement tax credit. Businesses that are eligible for this are sole proprietorships. They can claim 25 percent of the qualified upgrades in ventilation, up to a maximum of $10,000. This creates about $2,500 in tax credits.

Shift in tax brackets to account for inflation

In 2022, the tax brackets will have been adjusted by the government. The purpose is to maintain the purchasing power of Canadians as the prices of goods keep increasing slowly. Below are the new federal tax brackets:

  • $0 to $50,197 of income (15%).
  • Between $50,197 and $100,392 (20.5%).
  • Between $100,392 and $155,625 (26%).
  • Between $155,625 and $221,708 (29%).
  • $221,708.01 and more (33%).

If adjustments are upward, it means Canadians on the edge of the tax bracket may be shifted to a lower bracket. They will also pay less in taxes as a result of this.

Conclusion

Tax deductions
Tax deductions

 

Tax deductions and benefits have been changing for years. However, your credits and savings can also add up every year.

Ensure that your family takes advantage of everything that applies to it, especially the ones you are eligible to. They’ll help your family decrease certain financial strains. Finally, CDAE provides some tax relief for companies that want to integrate e-business to their operations.

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