Table of Contents Contents
Before you start filing your taxes, though, you should know that the first day you were able to start filing was February 19. You now have until April 30 to file your taxes. The only exception to this is for those who are self-employed. They have until June 15 to file their taxes. Any amounts owed, though, have to be paid by April 30.
When filing in 2024 for the 2023 tax year, there are quite a few changes you need to consider. These changes may or may not affect you, but it’s good to know since they will be this way going forward.
Income Tax Packages
As of 2024, the income tax and benefit packages from the Canada Revenue Agency have gotten smaller. These packages no longer include line-by-line instructions. That said, the What’s New section of the package is still included. By removing the line-by-line instructions, the package is now around 20 percent smaller. About 30 pages have been removed.
Advanced Canada Workers Benefit
Form RC201 is no longer required to receive advanced Canada worker's benefits. If you received this benefit for the previous tax year, the payments will not be automatically issued.
Deduction for Tools
For tradespersons and apprentice mechanics, the maximum employment deduction has increased. It used to be $500, but that amount has now increased to $1000. This also means that the threshold for expenses eligible for deductions has also changed.
COVID-19 Benefit Repayments
If you made any repayments to federal, provincial or territorial COVID-19 benefits in 2023, you can claim them. These can be claimed as a deduction on line 23200 when you file your return.
FHSA Accounts
FHSAs, also referred to as First Home Savings Accounts, are registered accounts that allow you to save for your first home. Because these accounts are registered, they’re also tax deductible. If you opened or made contributions to your FHSA in 2023, you can claim these on your tax returns.
Home Office Expenses
2023 was the last year you could use the temporary flat rate method to deduct home office expenses. Now, you’re required to file using the detailed method of form T2200, Declaration of Conditions of Employment. The employer must also sign this.
Multigenerational Home Renovation Tax Credit
This is a new refundable tax credit that allows those who are eligible to claim certain costs of creating a secondary unit in an eligible dwelling for a qualifying individual (senior or an adult who qualifies for the disability tax credit) so they can live with their qualifying relation. If you do qualify, you can claim up to $50,000 in qualifying expenditures for each renovation that qualifies and get up to a maximum of $7,500 for each qualifying renovation.
Residential Property Flipping Rule
As of January 1, 2023, one of the new tax measures is that any profits you gain from selling a home you owned for less than a year are considered business income instead of capital gains. The only exceptions are if the property was considered inventory of the taxpayer or if the sale occurred due to life events.
Farmer's Tax Credit Changes
The return of fuel to farmers tax credit is now available to self-employed farmers. It’s also available to individuals who are members of a partnership owning a farming business. That said, they have to have at least one permanent establishment in Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, PEI, or Saskatchewan.
Tax Increases for 2024
For 2024, there are some increases that you need to be aware of. The first is the increase in EI premiums. The Canada Employment Insurance Commission sets this rate every year and has been set to $1.66 per $100 for the earnings of workers and $2.32 for the earnings of employers.
There’s also the new alternative minimum tax. These taxes ensure that high-income individuals still pay a minimum amount of tax. Currently, there is a $40,000 exemption and an alternative minimum tax rate of 15 percent.
New Benefits in 2024
For 2024, the new benefit is the Canada Revenue Agency’s Canada Dental Benefit. Instead of just being available for dental services to children, it’s becoming available to all eligible Canadians starting in 2024. Many Canadians will start receiving instructions on how to apply. That said, this program will become available as of May 2024.
With this program coming out soon, it’s important to know who this program is available to. In order to qualify, you’ll have to have no dental insurance and an Annual Family Net Income below $90,000. Those who are 87 or older should have received information on applying in December of 2023. Those between 77 and 86 should receive application information in February of 2024, and those 70 or older should start receiving information in March. After that, other eligible individuals will start receiving information.
2024 Income Tax Brackets
Just like every year, the 2024 federal tax brackets have risen. These marginal rates dictate how much tax you pay based on your annual income. Let’s take a look.
| Taxable Income Amounts | Marginal Tax Rate |
| On the portion of the income from $0 - $55,867 | 15% |
| On the portion of income, that’s $55,867 - $111,733 | 20.5% |
| On the portion of income that’s $111,733 - $173,205 | 26% |
| On the portion of income that’s $173,205 - $246,752 | 29% |
| On the portion of income, that’s $246,752 plus | 33% |
Personal Exemption for 2024
Another thing that has changed in 2024 is the personal exemption amount, also referred to as a basic personal amount. What exactly is this, though? Well, the basic personal amount is a non-refundable tax credit that everyone can claim. It provides a full reduction for those who have an income below the basic personal amount and a partial reduction for those who have an income above the basic personal amount. For 2024, this amount is $15,705.
Contribution Limits
Another change for the 2024 year is the contribution limits for RRSPs, TFSAs and FHSAs. All of these accounts are registered accounts and, therefore, have annual and lifetime limits. The limits will change depending on which type of account you have. Let’s take a look at each one.
RRSPs
RRSPs, also known as Registered Retirement Savings Plans, are tax-deferred registered accounts that allow you to save money for retirement. Any funds you contribute to your RRSP are tax-free until you start withdrawing. Since your annual income will likely be lower when you retire than when you’re working, the tax you pay on your RRSP income will also likely be lower.
When it comes to RRSPs, though, there are contribution limits. These limits are based on your annual income. You can put up to 18 percent of your annual income in RRSPs. That said, though, for 2024, that amount can’t exceed $32,490. Any contributions above that will be subject to a penalty of 1% per month on contributions that exceed your limit by more than $2,000.
TFSAs
TFSAs, also known as Tax-Free Savings Accounts, are registered accounts where you can save your money and earn interest without having to pay any taxes. Unlike other registered accounts, though, you can withdraw funds from your TFSA whenever you like. However, there are annual limits as to how much you can contribute.
For TFSAs, the annual limit for 2024 is $7,000. If you have any unused contributions from previous years, though, you’re able to carry those forward from the previous tax year. For any contributions that exceed your contribution limit, there is a penalty of 1 percent per month on the highest excess amount.
FHSAs
FHSAs, also known as First Home Savings Accounts, are new registered accounts as of 2023. These accounts allow Canadians who haven’t purchased a home to save funds to purchase their first home. The annual contributions for this account are $8,000, with a lifetime limit of $40,000.
With FHSAs, all contributions are tax-free. As long as these contributions are used for eligible withdrawals, then the withdrawals are also tax-free. Once the contributions have been on an eligible withdrawal, then the account must be closed within a year from your first eligible withdrawal. The account must also be closed 15 years from the time you open the account or the year you turn 71 years of age. When you close the account, though, you don’t have to withdraw the funds. You can transfer them to an RRSP or a RRIF.
CPP Changes 2024
Another thing to know for 2024 is that the maximum pensionable earnings is $68,500 for CPP, and the amount of the basic exemption will stay at $3,500. However, there’s also a second earnings ceiling of $73,200. This is used to determine CCP2 contributions. Incomes between $68,500 and the maximum insurable earnings ceiling of $73,200 will be subject to CCP2 contributions. High-income earners above $73,200 aren’t able to make contributions on pensionable earnings on amounts over and above.
Overview
For 2024, quite a few different changes have occurred when it comes to taxes and government benefits. There’s also the addition of FHSAs, which allow first-time home buyers to save funds tax-free. There’s the addition of the Canada Dental Plan and a change in Marginal Tax Rates and the Basic Personal Amount. Before you tackle your annual tax and benefit return, it’s a good idea to brush up on these changes in order to get the most from your return.
