As it is now time to prepare your 2022 personal income tax return, we are highlighting some important new tax measures and tips.
WHAT’S NEW FOR 2022 PERSONAL TAX RETURNS
- First-time home buyers’ tax credit: The amount used to calculate the first-time home buyers’ tax credit has increased to $10,000 (from $5,000) for a qualifying home purchased after December 31, 2021.
- Home accessibility tax credit: This non-refundable tax credit is available for eligible home renovation or alteration expenses that allow a qualifying individual to:
- Gain access to, or be mobile or functional within, an eligible dwelling, or
- Reduce the risk of harm to a qualifying individual when inside a dwelling or accessing it.
- For 2022, the annual expense limit increased to $20,000.
ONTARIO RESIDENTS
- Staycation tax credit
- Ontario residents who spent their vacation within the province and stayed at short-term accommodations (hotel, motel, resort, lodge, vacation rental, etc.) can claim the expenses incurred for such lodging as a refundable tax credit.
- The maximum amount you can claim is $1,000 for single individuals and $2,000 for families. The credit rate is set at 20% of the eligible expenses.
KEY REMINDERS FOR 2022 TAX RETURNS
Although the following measures are not new for 2022, they should be kept in mind when preparing 2022 returns:
- Climate action incentive payment
- Residents of Alberta, Saskatchewan, Manitoba and Ontario must file a tax return to be eligible for this payment, even if they did not earn income in the year. These payments will be received quarterly but no longer as part of the personal tax return.
- Home office expenses
- Employees who worked from home due to the COVID-19 pandemic in 2022 can continue claiming home office expenses using the same rules that applied in 2021. In particular, if the conditions are met, you can still use the flat-rate method to deduct $2 for each day that you worked from home during 2022 due to COVID-19, to a maximum of $500.
LOOK AHEAD: 2023 TAX CHANGES FOR INDIVIDUALS
The following tax changes for individuals should be considered for 2023
- Tax-free first home savings accounts
- Rules to enable this new type of account will take effect on April 1, 2023.
- Residential property flips
- Budget 2022 proposed a new rule from flipping residential real estate are deemed subject to full taxation.
- Starting on January 1, 2023, profits from dispositions of residential property (including rental property) that was owned for less than 12 months would be deemed to be business income, subject to exemptions for death, breakdown of a marriage or common-law partnership, eligible relocations and other life events.
- TFSA
- For 2023, the tax-free savings account (TFSA) annual contribution limit increases to $6,500 and any unused contribution room will carry forward.
- Contributions to a TFSA aren’t tax deductible and when money is withdrawn, the accumulated contributions and income received are not taxable.