As we dive into another tax season, we also dive into another set of annual changes and adjustments made by the CRA that may impact how you file your taxes! Remember that no two years are the same, and it’s crucial to understand what’s changing each year so you can adapt your tax strategy accordingly.

There are a number of important changes that have been implemented by the CRA for the 2023 tax year. Read our highlights below for an overview of the changes most likely to impact you.

Changes to federal and provincial tax brackets 2023

Both federal and provincial tax brackets were adjusted slightly for the 2023 tax year. While the changes were minimal compared to the 2022 tax year, be sure to review them and understand which tax bracket you fall into.

Remember that Canada uses graduated tax rates, meaning that only the portion of your income that falls into each tax bracket is taxable at the higher rate. For example, if you made $60,000 in 2023 as a resident of BC, you would only pay 28.2% tax on the income that exceeds $53,359. The income up to $53,359 benefits from the lower marginal rates.

British Columbia combined tax brackets:

Tax rate2023 Bracket2024 Bracket
20.06%$45,654 or less$47,937 or less
22.7%over $45,654 up to $53,359over $47,937 up to $55,867
28.2%over $53,359 up to $91,310over $55,867 up to $95,875
31%over $91,310 up to $104,835over $95,875 up to $110,076
32.79%over $104,835 up to $106,717over $110,076 up to $111,733
38.29%over $106,717 up to $127,299over $111,733 up to $133,664
40.70%over $127,299 up to $165,430over $133,664 up to $173,205
44.02%over $165,430 up to $172,602over $173,205 up to $181,232
46.12%over $172,602 up to $235,675over $181,232 up to $246,752
49.8%over $235,675 up to $240,716over $246,752 up to $252,752
53.50%over $240,716over $252,752

 

Introduction of the First Home Savings Account

The First Home Savings Account (FHSA) was introduced in 2023 as an additional tax-sheltered option to help Canadians save for a down payment on their first home.

Any qualifying individual can contribute up to $8,000 to an FHSA per year the account is open, up to a lifetime maximum of $40,000. The deadline to contribute is December 31 of each tax year. Contributions can be claimed as a deduction in the tax year they were made or carried over as a tax credit in a future year.

Learn more about FHSAs on the CRA website.

Change to claiming work from home expenses

The temporary flat rate method of claiming home office expenses is no longer an option as of the 2023 tax year. The CRA implemented the flat rate method in 2020 to accommodate the large number of workers who made a temporary switch to remote work due to the COVID-19 pandemic. It applies to the tax returns filed for 2020, 2021, and 2022.

Those wishing to claim home office expenses on their 2023 tax return will need to use the detailed method to do so.

Learn more about claiming home office expenses in 2023.

New multigenerational home renovation tax credit

If you are adding a secondary unit to your home for a relative to live in, you may be eligible for the new multigenerational home renovation tax credit (MHRTC). 

See the full eligibility details on Schedule 12, Multigenerational Home Renovation Tax Credit

Income from property flipping no longer considered capital gain

As of January 2023, any income made on the disposition of a property you owned for less than a year before selling is considered business income and not a capital gain. Said income will be taxed accordingly.

For more information on this change and possible exceptions, see the CRA’s residential property flipping rule

Other tax changes for the 2023 period

Including the changes that impact all or most taxpayers above, there are a number of other changes that may impact your 2023 return.

For a full list of changes to be aware of when filing your 2023 income tax return, see what’s new for 2023 on the CRA website.

And if you’re looking for assistance with your taxes this year, don’t hesitate to reach out to our team. We have specialists in a variety of corporate and individual tax-related matters that can help keep you up-to-date on the latest tax strategies and requirements.

Happy filing!

This post has been prepared for general information purposes. It is not advice. The information presented may not fit your unique situation, please consult one of our trusted business advisors at RHN CPA for further clarification and interpretation of your circumstances.