Your Guide to 2023 Tax Updates: 21 Tax Changes Every Canadian Should Know for 2023

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As the snow melts and spring blossoms, so does tax season. 🌸📊 Whether you’re a seasoned tax-filer or a first-time filer, understanding the changes for the 2023 tax year is crucial. The Canada Revenue Agency (CRA) has been busy adjusting rules and rates, and we’re here to break it down for you.

Scroll all the way to the bottom for a TL;DR, if you don’t want to read through the whole blog.

Let’s dive into the exciting world of tax updates for 2023. Buckle up, because we’ve got 21 fresh changes coming your way

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1. The Multigenerational Home Renovation Tax Credit (MHRTC):

MHRTC is like adding a cozy nook to your home—a place where generations come together, share stories, and create memories. 🏠👵👨👩👦 

Claim up to $50,000 in qualifying expenses, with a maximum credit of $7,500 per eligible claim.‍‍

• Eligibility: If you own a dwelling, convert an extra room into a snug haven for a qualifying individual (think grandparents, parents, or that quirky aunt who tells the best jokes).
• Renovation Costs: The MHRTC covers expenses like structural changes, plumbing, and electrical work. Track those receipts!
• Refundable Tax Credit: It’s like finding a $20 bill in your winter coat pocket—unexpectedly delightful!

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2. Advanced Canada Workers Benefit

Automatic Advance Payments: If you received the Canada Workers Benefit (CWB) in the previous tax year, rejoice! The ACWB now issues advance payments automatically. No more paperwork or extra steps. 🎉

Goodbye, Form RC201: Say farewell to Form RC201, the Canada Workers Benefit Advance Payments Application.

RC210 Slip Reporting: Starting in 2023, report amounts from your RC210 slip on Schedule 6, Canada Workers Benefit. Why? To calculate the magic number you’ll enter on line 41500 of your return. It’s like solving a tax puzzle! 🧩

Choosing the Basic Amount: If you’re married or have a common-law partner, here’s a twist—you can choose who claims the basic amount for the CWB. It’s like a friendly tax tug-of-war, regardless of who received the RC210 slip for the basic amount. 🤝

TIP: File taxes on CloudTax, and the software will do the calculations automatically for you. It’s so easy that anyone can file their taxes.

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3. Unpaid Tax Penalty: A Costly Reminder

What’s New? The CRA has cranked up its unpaid tax penalty to 10%. If you’ve ever faced a late-filing penalty for 2020, 2021, or 2022 and received that stern letter demanding your return, brace yourself. Your late-filing penalty for 2023 will now be a hefty 10% of your balance owing.

‍Why It Matters: Picture this: you owe the CRA money, and they’re not in the mood for late-night negotiations. The penalty compounds daily, and it’s like adding salt to an already spicy curry. Filing on time and paying promptly will keep your costs down. 📅💰

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4. Electronic remittances or payments above $10,000

As of January 1, 2024, remittances or payments to the Receiver General of Canada should be made as an electronic payment if the amount is more than $10,000. Payers may face a penalty unless they cannot reasonably remit or pay the amount electronically.

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5. Deduction for Tools

Maximum Employment Deduction for Tools: Starting in 2023, the maximum employment deduction for tradesperson’s eligible tools has levelled up—from $500 to a cool $1,000. It’s like upgrading your toolbox to deluxe mode! 💼💪

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6. COVID-19 Benefit Repayments

If you repaid COVID-19 benefit amounts after December 31, 2022, you can claim these repayments as a deduction on line 23200 of your 2023 return.

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7. Unlocking Your First Home Dream: The FHSA

‍Deductible Contributions: Starting April 1, 2023, your contributions to the FHSA are generally deductible. It’s like getting a tax-friendly boost toward your down payment. 📈💡

Tax-Free Qualifying Withdrawals: When you’re ready to make that leap into homeownership, qualifying withdrawals from your FHSA to purchase a qualifying home are tax-free.

If you opened one or more FHSAs in 2023, complete Schedule 15, First Home Savings Account Contributions, Transfers, and Activities.

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8. Carbon Price Rebates: Yukon and Nunavut Take the Stage

What’s the Buzz? The spotlight is on the Yukon Business Carbon Price Rebate. It’s not just a solo act anymore—it includes both the Yukon general business carbon price rebate and the shiny new Yukon mining business carbon price rebate. If your business operates in the Yukon, pay attention—these rebates could be your encore.

Why It Matters: Carbon pricing is like the opening act for environmental responsibility. By understanding these rebates, you’re not only saving money but also contributing to a greener future. 🌿💰

‍And the Plot Twist: The Nunavut carbon credit has stepped into the limelight, replacing the old Nunavut carbon rebate. It’s like a tax credit makeover—same purpose, fresher look.

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9. Newfoundland and Labrador: Where Tax Credits Get Louder

Volume Up: The Physical Activity Tax Credit in Newfoundland and Labrador has cranked up its rate. If you’re breaking a sweat (or planning to), this credit is your cheerleader. 🏋️‍♂️🎉

Double Feature: The Newfoundland and Labrador Income Supplement and the Seniors’ Benefits have taken center stage, effective July 1, 2023. It’s their time to shine, providing extra support to those who need it most.

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10. British Columbia: Tax Credits in the Spotlight

‍Scene 1: Clean Buildings Tax Credit: Effective since February 23, 2022, this credit encourages energy-efficient buildings. If your home or business is eco-friendly, take a bow. 🏡🌟

Scene 2: Training Tax Credit Extended: The British Columbia Training Tax Credit gets an encore! It’s now playing until December 31, 2024. Keep learning, keep claiming. 📚💡

Scene 3: Farmer’s Food Donation Tax Credit: The applause continues—it’s extended until December 31, 2026. Farmers, your generosity feeds more than just crops. 🌽👏

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11. Alberta: Tax Credits Turn Up the Heat

‍High Note: The Maximum Adoption Expenses Tax Credit in Alberta has hit a new octave. If you’ve welcomed a new family member through adoption, this credit harmonizes with your joy. 🎶👶

Encore: Alberta introduces a fresh tune—the Charitable Donations Tax Credit Rate. It’s music to the ears of those who give back. 🎵🙌

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12. The Basic Personal Amount (BPA): A Taxpayer’s Anthem

The Anthem Rises: For the 2023 tax year, the Basic Personal Amount (BPA) takes center stage. It’s been amped up to $15,000. Translation: every Canadian gets a little extra love in their tax return. And rumor has it, this encore might repeat next year. 🎤💸

Behind the Scenes: The BPA is like the opening chords of a song—it provides a full reduction from federal income tax for all individuals below the BPA threshold. Even if you’re humming a higher income tune, it still offers a partial reduction. 🎶📉

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13. COVID-19 Credits Exit Stage Left

‍Curtain Call: The Work-From-Home Tax Credit and the Ontario Staycation Credit have taken their final bow. They were the stars of pandemic-era tax breaks, but alas, their showtime is over. 🎭👋

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14. British Columbia’s Renter’s Tax Credit

Scene: British Columbia sets the stage with a Renter’s Tax Credit. If you’re a low- or moderate-income individual or family with an adjusted income of $60,000 or less, get ready for a $400 credit. Even if your income falls between $60,000 and $80,000, you’ll receive a reduced amount. It’s like a standing ovation for renters! 🏠👏

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15. Federal Tax Brackets: The New Melody

Tax Tune-Up: The government fine-tuned tax brackets for 2023 to keep pace with rising living costs. Here’s the chorus:

• $0 to $53,359 of Income (15%): The opening notes for most Canadians.

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16. TFSA and RRSP Limits: Amplifying Savings

TFSA Crescendo: Canadians can once again amplify their tax-free savings accounts. In 2024, the TFSA contribution limits rise to $7,000. It’s the second-largest increase ever, with a memorable $10,000 bump in 2015.

RRSP Refrain: The RRSP contribution limit for 2024 harmonizes with your earned income from the previous year. Up to a maximum of $31,560, it’s your chance to compose a solid retirement plan.

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17. The Grocery Rebate: A Financial Interlude

Budget Symphony: As part of Budget 2023, the Government of Canada introduced a one-time Grocery Rebate. Its purpose? To provide targeted inflation relief to eligible Canadians. If you filed your 2021 tax return and qualified for the GST/HST credit, you’re in the spotlight. The rebate equals double the GST/HST credit amount you received in January 2023. A little extra in your grocery cart! 🛒💰

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18. Disability Tax Credit (DTC): A Digital Encore

Applying for the Disability Tax Credit (DTC) used to be like navigating a maze blindfolded. Paper forms, signatures, and endless waiting—it was a marathon. 

The Solution: In 2023, the CRA (Canada Revenue Agency) hit the digital switch. Now, via My CRA Account, the process is smoother.

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19. Property Flipping: New Rules for 2023

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Starting January 1, 2023, the Canadian tax landscape is doing a little dance, and property flippers are in the spotlight. 🏠💃

‍The 365-Day Rule: If you’ve owned a housing unit (including rental properties) for less than 365 consecutive days before selling it, listen up:

• Business Income: The gain from this quick flip is now deemed business income, not a capital gain. That means it’s fully taxable.
• No Capital Gains Perks: Forget the 50% capital gains inclusion rate or the Principal Residence Exemption. Those perks don’t apply here.

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20. Return of Fuel Charge Proceeds to Farmers Tax Credit

Attention, farmers and farming enthusiasts! 🌾🚜 The Canadian tax landscape has a fresh plot twist—the Return of Fuel Charge Proceeds to Farmers Tax Credit. 

Eligibility: A self-employed farmer or part of a partnership running a farming business in Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island or Saskatchewan. 

What’s in It for You?: If eligible, a portion of your fuel charge proceeds may come back to you. Cha-ching! 💰

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21. Tax Credits: The Vanishing Act

What’s Disappearing? Some tax credits have pulled a Houdini act for the 2023 tax year. Say goodbye to:

• Ontario Seniors’ Home Safety Tax Credit: It’s retired, sipping tea by the fireplace.
• Ontario Jobs Training Tax Credit: It’s taken an early retirement, leaving the training room empty.
• Ontario Staycation Tax Credit: It had a good run in 2022 but decided to stay home this year.
• Saskatchewan Home Renovation Tax Credit: It’s vanished into thin air, leaving no trace of its DIY magic.

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TL;DR

1. The Multigenerational Home Renovation Tax Credit lets you claim renovation costs for creating a secondary unit in your dwelling. Up to $50,000 in qualifying expenses, max credit of $7,500 per eligible claim.
2. The Advanced Canada workers benefit now issues automatic advance payments to eligible recipients.
3. Unpaid Tax Penalty: The CRA increased the penalty to 10% for late-filing in 2023.
4. Remittances or payments to the Receiver General of Canada must be made electronically for amounts exceeding $10,000.
5. The maximum deduction for tradesperson’s eligible tools jumps from $500 to $1,000.
6. If you repaid COVID-19 benefit amounts after December 31, 2022, claim them as a deduction on line 23200 of your 2023 return.
7. The First Home Savings Account (FHSA) is a new registered plan for first-time homebuyers, allowing deductible contributions and tax-free withdrawals for home purchases starting April 1, 2023.
8. Carbon Price Rebates: Yukon and Nunavut have revamped their carbon price rebates.
9. Newfoundland and Labrador: Tax credits like the Physical Activity Tax Credit and income supplements have increased.
10. British Columbia: New credits include the Clean Buildings Tax Credit, extended Training Tax Credit, and Farmer’s Food Donation Tax Credit.
11. Alberta: The Maximum Adoption Expenses Tax Credit has increased, and a new Charitable Donations Tax Credit Rate is in effect.
12. Basic Personal Amount (BPA): Raised to $15,000 for 2023, benefiting all Canadians.
13. COVID-19 Credits: Work-From-Home and Ontario Staycation credits are no longer valid.
14. In British Columbia, the Renter’s Tax Credit offers a $400 credit to low- or moderate-income individuals or families with an adjusted income of $60,000 or less, and even those earning between $60,000 and $80,000 receive a reduced amount.
15. The government adjusted tax brackets for 2023 to keep pace with rising living costs, with the opening notes for most Canadians set at 15% for income between $0 and $53,359.
16. The TFSA contribution limit rises to $7,000, and the RRSP limit harmonizes with your previous year’s earned income, up to $31,560. 
17. Canada introduced a one-time Grocery Rebate. The rebate equals double the GST/HST credit amount received in January 2023.
18. Digital DTC: Applying for the Disability Tax Credit is now digital via My CRA Account.
19. Property Flipping: Starting January 1, 2023, gains from selling a housing unit in Canada owned for less than 365 days are considered business income, not capital gains, unless it was already inventory or due to specific life events
20. The Return of Fuel Charge Proceeds to Farmers Tax Credit is now accessible to self-employed farmers and individuals who are part of a partnership operating a farming business with one or more permanent establishments.
21. Disappearing Tax Credits: Several tax credits are no longer available for 2023, including the Ontario seniors’ home safety tax credit and the Saskatchewan home renovation tax credit.

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Conclusion:

These are some of the key changes for the 2023 tax year. But fear not! You don’t have to navigate this path alone. Our user-friendly application at www.cloudtax.ca makes filing your taxes a breeze. And if you need that extra help, our live certified tax experts are ready to walk you through the process and answer any questions you may have. Happy filing! 🌟💰

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