1- Increase in unpaid tax penalty.
From 2024, late tax returns are penalized. The penalty is 10% of the unpaid tax when due, plus 2% for each complete month the return is late (up to 20 months). Interest and other penalties apply. File and pay on time to keep costs down.
2- COVID-19 benefits have expired.
You can’t claim the COVID work-from-home expense or the Canada Worker Lockdown Benefit for the 2023 tax year. The Ontario Staycation Tax Credit only applied to tax year 2022 and hasn’t been extended to 2023.
3- A new grocery rebate was introduced.
The Canadian government introduced a Grocery Rebate to provide financial support to eligible citizens due to rising food costs. If you qualify for a GST/HST credit, you may be eligible for the rebate which is equivalent to double the credit amount you received in January 2023.
4- Disability Tax Credit
Applying for the Disability Tax Credit is now easier! Now, via My CRA Account, individuals can complete Part A of the application online and obtain a reference number to provide to their medical practitioner who can then complete Part B digitally. No need to print and bring forms anymore!
5- The Basic Personal Amount (BPA) has been increased.
The government increased the Basic Personal Amount to $15,000 for the 2023 tax year. This will lead to a slight boost in returns for Canadians.
6- Tax brackets have shifted.
The new federal tax brackets for 2023 are as follows:
$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 $253,675 (29%)
$235,675 and higher (33%)
7- The TFSA & RRSP limits have been increased.
The TFSA contribution limit is now $6,500, bringing the cumulative total to $81,500 for eligible individuals.
The RRSP annual limit for tax year 2023 is $30,780. Your contribution limit is 18% of the previous year’s earned income. The dollar limit is the maximum amount you can contribute.
8- New OAS limit amounts.
OAS provides retirement income, but if your income is too high, your OAS amount may be reduced or cancelled. For 2023, taxable income over $81,761 requires OAS repayment, while over $134,626 cancels OAS payments. Seniors aged 75+ received a 10% increase in their OAS pension via the CRA’s 2022 Affordability Plan.
9- CPP maximum contributions have been increased.
The maximum pensionable earnings for CPP and QPP have been increased by 6.5% for 2023. The basic exemption is $3,500 and the maximum contribution for employees and employers is $3,754.45 for CPP and $4,038.40 for QPP. The maximum contribution for self-employed individuals is $7,508.90 for CPP and $8,076.80 for QPP. Quebecers can choose to increase their QPP premiums for a higher pension premium.