Every year tax season brings new changes that may impact most of our clients. To make things simple, we’ve provided a summary of how these changes will affect you.
FEDERAL TAX CHANGES
You can claim up to $500 for work-from-home expenses
Nothing new here. You can once again claim the work-from-home tax credit, either using the simplified flat rate method of $2 per day for a maximum of $500 per year, or the detailed method.
The Basic Personal Amount (BPA) has been increased
Basic personal amount has increased to $14,398. This means that every Canadian will get a slight boost to their return this year.
Tax brackets have shifted to account for inflation
$0 to $50,197 of income (15%)
More than $50,197 to $100,392 (20.5%)
More than $100,392 to $155,625 (26%)
More than $155,625 to $221,708 (29%)
$221,708.01 and higher (33%)
The TFSA limit has been increased
The TFSA contribution limit has increased to $6,500 for the year. This means that if you’ve had an account since 2009, were 18 years of age and have been a resident of Canada throughout that period, the cumulative total you can have in your TFSA is now $81,500.
New OAS limit amounts
The OAS is designed to provide retirees with a source of income to support their retirement. However, if your income is over certain limit amounts, you might find your OAS amount reduced, and even canceled entirely.
For the 2022 tax year, if your taxable income was over $81,761, you would need to repay some of your OAS. Similarly, if your taxable income was over $134,626, you would not have received any OAS payments.
Canada Pension Plan maximum contributions have been increased
The CPP and QPP have been increased by 2.7%, the maximum pensionable earnings are $64,900, with a basic exemption of $3,500 for 2022. For CPP, the Employee and employer maximum
Note that any self-employed individuals must account for both the employer and the employee sides of the contribution. For 2022, their maximum contribution amount for the CPP is $6,078.60 and for the QPP it is $6,999.60.
RRSP dollar limit is increased
The RRSP annual dollar limit for tax year 2022 is $29,210. Remember that your RRSP contribution limit is capped at 18% of your earned income in the previous year. This means the dollar limit is the maximum amount you can contribute regardless of your income.
Changes to tax credits you need to know
Some credits have been added, changed, reinstated, or expanded for the 2022 tax year.
Below are some of the Federal changes to tax credits:
Air Quality Improvement Tax Credit: Eligible businesses including sole proprietorships, can claim 25% of their qualifying ventilation upgrades to a maximum of $10,000, creating a $2,500 tax credit.
Automobile Income Tax Deduction Limits: The changes include an Increase in Capital Cost Allowance CCA ceiling limits for zero emission and passenger vehicles, deductible monthly leasing costs also increased by $100, and the per kilometer rate paid by employers to employees who use their personal vehicle for work has increased by 2 cents per km from last year and the immediate expensing of capital assets.
Home Accessibility Tax Credit (HATC): If you’re 65 or older, are eligible for the disability tax credit, and have remodeled your home for safer access, you can claim up to $20,000 of your related HATC expenses.
Labour Mobility Deduction (LMD): This new deduction allows tradespeople, apprentices, and employees working in construction to claim meals and lodging expenses paid to earn income at a temporary work location.
ONTARIO TAX CREDITS
The Ontario Staycation Credit: is a one time tax credit for Ontarians who’ll be able to claim 20% of their stay in an Ontario hotel, cottage or campground, during 2022 up to $1,000 individually or $2,000 as a family.
The Ontario Seniors Care at Home Tax Credit: is a refundable personal income tax credit to help seniors with eligible medical expenses, including expenses that support aging at home. The credit is equal to 25% of your eligible medical expenses up to $6,000, for a maximum credit of $1,500.
The Seniors’ Home Safety Tax Credit: is a new credit that supports seniors in making their homes safer and more accessible, with a credit of 25% up to a maximum of $10,000 in eligible expenses. The maximum credit is equal to $2,500 per year.
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