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Tax News

Keeping up to date on the latest personal income tax changes

Here are some important updates and new provisions to keep in mind as you prepare your 2023 return

With tax season just around the corner, Canadians will soon be focused on preparing their 2023 tax returns.

“There have been some significant developments over the past year that taxpayers need to know when filing their returns,” says John Oakey, CPA, vice-president of taxation at CPA Canada.

Here is a brief summary of key changes that will impact taxpayers this year and into the future.


Multigenerational Home Renovation Tax Credit
A refundable tax credit of up to $7,500 has been introduced to provide a tax break for Canadians who renovate their home to accommodate a qualifying individual, such as a parent aged 65 or older. This new credit will allow taxpayers to deduct 15 per cent of qualifying expenditures on qualifying renovations, incurred on or after January 1, 2023, to a maximum amount of $50,000 for each qualifying renovation that is completed in the year, but take note: there is a lifetime limit of $50,000 in respect of any qualifying individual.

First Home Savings Account (FHSA)
The FHSA was introduced to help Canadians save to purchase their first home. As Oakey points out, “This is a key new financial incentive for first time homeowners.” Contributions are tax deductible, and income earned inside the registered plan from qualified investments will not be taxed. Effective April 1, 2023, FHSA contributions of up to $8,000 can be made annually, to a lifetime maximum of $40,000. Qualifying withdrawals from the plan will not be taxed.

Full taxation on residential real estate property bought and sold within 365 days
Beginning January 1, 2023, profits from the sale of residential real estate properties, including rental properties or personal use properties, that are owned for less than 365 consecutive days will be fully taxed as business income, and not treated as a capital gain, as part of the new “anti-flipping” rules. An exemption may apply if the sale is related to death, the breakdown of a marriage or common-law partnership, an eligible relocation or certain other life-changing events.

Doubling of tradesperson’s tools expenses
The deduction for a tradesperson’s tools expenses doubled from $500 to $1,000 in the 2023 taxation year. Employees can now deduct up to $1,000 annually for eligible tools of the trade required for employment.

Beneficial ownership reporting
New reporting requirements are in place for taxpayers who are trustees of a trust with a tax year ending on or after December 31, 2023. Those taxpayers must file an annual T3 Income Tax and Information Return, plus a Schedule 15 – Beneficial Ownership Information of a Trust, unless specific exclusions apply.

This requirement extends to bare trusts, in which a trustee holds legal title to property, but has no other duties, responsibilities or powers. Under a bare trust, for example, a family member might hold sole or joint ownership of a home or bank or investment account in trust for an aging relative, or for a minor child.

“Some taxpayers might be unaware that the joint ownership they hold constitutes a bare trust. I would advise individuals who are in a trust position to consult with a professional to determine their reporting responsibilities,” says Oakey. There are, he notes, serious financial penalties for non-compliance, although the Canada Revenue Agency (CRA) has announced that the late-filing penalty applicable to bare trusts for the 2023 taxation year will be relieved—provided the necessary reporting is subsequently completed and filed. Other penalties might apply if a failure to file is deliberate or due to gross negligence.


The temporary flat rate method of claiming a deduction for home office expenses is no longer available. Starting in the 2023 taxation year, employees who work from home must use the detailed method to calculate eligible home office expenses. “The special provision available to taxpayers who worked from home during the COVID years has been eliminated,” says Oakey.

Canadian taxpayers eligible to receive Climate Action Incentive Payments must file a tax return in order to receive this payment, even if they are not reporting any taxable income.

“Also, don’t forget that 2024 is a leap year, which will impact certain filing deadlines,” says Oakey.

For example, the 60-day deadline to make RRSP contributions that may be deducted in the 2023 taxation year is February 29, 2024, not March 1.

The trust filing deadline is 90 days after the trust’s tax year end, so the deadline for trusts with a December 31, 2023 year end would be March 30, 2024. However, as March 30 falls on a Saturday and Monday, April 1 is a public holiday (Easter Monday), the filing deadline advances to the next business day, Tuesday, April 2.


Capital cost allowance phased reduction for zero-emission vehicles
The temporary 100 per cent capital cost allowance (CCA) rate for eligible zero-emission automotive vehicles and equipment used for business purposes is being phased out. This phase-out period will reduce the CCA rate that can be claimed for vehicles and equipment that become available for use after 2023.

Other changes
Taxpayers who need to remit payments in excess of $10,000 to CRA must now do so electronically, or face a penalty of $100 per payment. The CRA has told CPA Canada that it expects to allow a grace period before this newly enacted legislation is enforced.

Indexation Adjustments
The indexation adjustment for personal income tax and benefit amounts in 2024 is 4.7 per cent.

The Old Age Security (OAS) pension repayment threshold based on net income for 2024 has been increased from $86,912 to $90,997. Repayment is based on 15 per cent of the individual’s net income in excess of the threshold up to the total amount of OAS payments received.

The maximum pensionable earnings (MPE) under the Canada Pension Plan (CPP) for 2024 are $68,500—up from $66,600 in 2023. Maximum employee and employer contributions are $3,867.50 each. Self-employed individuals pay both the employee and employer contributions. The 2024 taxation year also marks the beginning of phase 2 of the enhancements to the CPP, which include an additional maximum pensionable earnings (AMPE) ceiling of $73,200. Pensionable earnings above the MPE and up to the AMPE will be subject to an additional contribution at a rate of 4%, to a maximum of $188, for each of the employee and employer. Self-employed individuals pay both portions of this additional CPP as well.

The MPE and AMPE under the Quebec Pension Plan (QPP) for 2024 are the same as CPP with $68,500 and $73,200 respectively. Maximum employee and employer contributions are $4,160 each. Self-employed individuals pay both the employee and employer contributions. The additional contribution rate of 4% applied to pensionable earnings above the MPE and up to the AMPE will result in an additional maximum contribution of $188 for each of the employee and employer. Self-employed individuals pay both portions of this additional QPP as well.

The maximum employment insurance (EI) contribution premium for employees increased to $1,049.12 in 2024 from $1,002.45 in 2023, while maximum insurable earnings increased to $63,200 in 2024, up from $61,500 in 2023. Employers also contribute to EI at a rate of 1.4 times the amount contributed by the employee.

Maximum contribution changes for other registered plans are as follows:

  • The registered retirement savings plan (RRSP) dollar limit increased to $31,560 in 2024, up from $30,780 in 2023.
  • The tax-free savings account (TFSA) dollar limit increased to $7,000 in 2024 from $6,500 in 2023.
  • The annual money purchase limit for registered pension plans (RPP) increased to $32,490 in 2024 from $31,560 in 2023.
  • The defined benefit limit for RPPs increased to $3,610.00 in 2024 from $3,506.67 in 2023.
  • The deferred profit sharing plan (DPSP) limit increased to $16,245 in 2024 from $15,780 in 2023.

These tax changes and updated rates are important knowledge for tax season. “It always pays to stay on top of developments,” says Oakey. “Tax efficiency is a big part of financial planning.”


More details on these changes are available in CPA Canada’s tax blog, at What’s new for the 2024 tax season – CPA Canada. You can subscribe for blog updates by checking ‘Tax Blog’ under ‘My Subscriptions’ in your profile.

You will also find many resources on our page dedicated to financial literacy for small and medium businesses.

Photo caption: From new tax credits to trust reporting rules, there are several new developments that taxpayers need to be aware of when filing this year (Getty Images)