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It’s Tax Time - A List of Credits, Deductions and Refunds Available
Published on 14 Feb 2023
It’s that time again - tax time.
However, it’s not all bad if you take advantage of all the credits, deductions and refunds available to reduce your taxable income and get some money back in return.
This year's deadline to file your tax returns: May 1, 2023, but if you or your spouse are self-employed, you have until June 15, 2023. If you plan to get an RRSP refund back, you’ll have until March 1st to contribute.
So with the deadlines looming, there’s no better timing to learn about the key incentives the Federal government has in place to put more money back in your pocket that you can then use to offset the rising costs or even help you pay down your mortgage or buy a home sooner. Let’s dive in.
RRSP Refund
One of the main benefits of RRSPs is that contributions are tax-deductible. This means that you can claim the amount you contribute as a deduction on your taxes and reduce the amount of tax you owe. Plus, you’ll get a nice refund every year based on your tax bracket.
For example, if you are in the highest tax bracket and you contribute $10,000, you can expect a refund of approximately $5,000 paid to you (depending on the province in which you live). This refund can be used to help you pay down your mortgage faster or contribute to a down payment (Pineapple brokers can show you how!).
The deadline to contribute to your RRSP for the 2022 tax year is March 1, 2023. The RRSP contribution limit is 18% of earned income you reported on your tax return in the previous year, up to a maximum of $29,210. Hint: It’s also stated on your last year's Notice of Assessment.
Important to know: you will receive two separate receipts for your RRSP contributions (one for March 2 to December 31st and another for January 1 to March 1st contributions) and you must claim both amounts on your income tax return. However, the RRSP contributions made between January 1 and March 1st, can be carried forward to your 2023 tax return or another future year. So you have to claim it this year but you don’t have to deduct it.
RRSP Strategies for Homebuyers
RRSP Strategies for Homeowners and Investors
First-Time Homebuyers - How To Pay Less Tax And Save More With An RRSP
One-Time $500 Top-Up To The Canada Housing Benefit
When at least 30% of your income went to rent, and you have an adjusted net income of $20,000 or less, or $35,000 or less as a family, a tax-free payment of $500 is available to you. The deadline to apply is March 31, 2023 and you can apply right from your CRA account.
Home Accessibility Tax Credit
If you made some changes to your home to make it more accessible and/or functional for you or another qualifying individual, you can claim things like the building materials, professional work, equipment rentals and permits. The annual expense limit is $20,000, which would provide a tax credit of up to $3,000. Expenses are claimed on your personal tax return.
Home Office Expenses
The temporary flat rate of $2 per day (up to a maximum of $500) still applies if you worked more than 50% of the time from your home for at least four consecutive weeks due to the COVID-19 pandemic. Alternatively, you can claim the actual amounts paid vs. the flat rate fee using the completed and signed Form T2200/S from your employer. Deductions are claimed on your personal tax return and will reduce the amount of income you pay tax on.
Immediate Expensing of Certain Depreciating Property Deduction
Eligible unincorporated businesses, partnerships and individuals may now be eligible to claim a 100% deduction of the expenditure of up to $1.5 million if they acquired a capital property on or after January 1, 2022, and that property will be made available for use before 2025. These deductions are to be claimed on your tax return.
Canada Training Tax Credit (CTC)
Anyone who is between the ages of 26 and 66 and who has completed additional education or training during the tax year can claim their tuition, plus other course fees and receive a credit. This is a refundable tax credit that you will claim on your income tax return.
Eligible Educator School Supply Tax Credit
Teachers can claim up to $1,000 for eligible supplies and expenses, including remote learning tools, graphic calculators and digital timers. The maximum credit is $250, and the tax credit rate is 25%. These expenses are also claimed on your income tax return.
Canada Worker’s Benefit (CWB)
Canada Worker’s Benefit (CWB)
Anyone over the age of 19 who is earning $22,944 or less in adjusted net income are eligible to receive up to $1,395. Families with an income up to $42,197 are eligible for up to $2,403. There is also a disability supplement available up to $720. You can apply by filling out the forms on your CRA online account or by submitting a form by mail.
Canada Child Benefit (CCB)
Canada Child Benefit (CCB)
If you had a baby in 2022 you can now apply for a tax-free monthly benefit that provides up to $6,997 per year for each eligible child under the age of 6 and up to $5,903 each following year until the child turns 18. You can apply directly by filling out the forms online.
Disability Tax Credit (DTC) and Child Disability Benefit (CDB)
For those who have a “severe or prolonged impairment”, you or the person supporting you, can apply for the credit. If you qualify for the DTC you may also be eligible for the disability supplement that offers up to $720. If you have a child with a disability, you can also apply for the Child Disability Benefit (CDB) to receive an additional tax-free monthly payment. You can apply online or by mail, however, it is best to apply ahead of the tax filing or it may delay the return as part of the review process.
Canada Caregiver Credit (CCC)
If you are taking care of a dependent, spouse, common-law partner with a “physical or mental impairment”, you can claim up to $2350 to help with basic needs such as shelter, food and clothing, and in some cases, you can claim an additional $7,525 for those over the age of 18. To apply you will complete the appropriate sections on your income tax return.
Zero-Emission Vehicle Tax Credit
If you purchased a zero-emission vehicle (a fully electric, hydrogen-powered, or plug in hybrid with a 7kWh motor) after March 18, 2019 you can claim a tax deduction as a Capital Cost Allowance (CCA) on your tax form.
Provincial Tax Credits
Above mentioned are Federal designed credits and refund programs, don't forget to check your provincial tax options as well:
- Alberta
- British Columbia
- Manitoba
- New Brunswick
- Newfoundland and Labrador
- Northwest Territories
- Nova Scotia
- Nunavut
- Ontario
- Prince Edward Island
- Quebec
- Saskatchewan
- Yukon
To learn more about RRSP strategies to buy a home sooner or pay down your mortgage faster, let's connect.
To learn more about all the available tax credits, and benefits and how to apply, we recommend contacting your accountant today. If you need a recommendation, I’m happy to connect you with one of my trusted connections.
