What is the Tax-Free First Home Savings Account?
The Tax-Free First Home Savings Account (FHSA) is a registered savings account that became available on April 1, 2023. First-time home buyers can save up to $40,000 tax-free and earn tax-free investment income within the account. Contributions of up to $8,000 annually for five years are tax-deductible, just like Registered Retirement Savings Plan (RRSP) contributions. Withdrawals for a first-home purchase are tax-free, just like a general Tax-Free Savings Account (TFSA). For more details, check out our blog post on the subject.
Why do you need my spouse’s SIN and Net Income?
Your spouse’s Name, SIN and Net Income are required to ensure that tax returns are correctly completed. Tax credits for one spouse can be transferred to the other spouse, and there are rules about who can make claims for specific items like childcare.
Couples should do their taxes together as there are some opportunities for minimizing overall tax for the couple by optimizing credit allocations. Please do this correctly to avoid re-assessments by CRA and additional tax bills (plus interest).
Why do I need to file with my spouse?
Some tax credits are allocated based on whether a person is an individual or in a relationship (married or common-law). Individuals filing individually may miss opportunities or inappropriately claim credits they aren’t entitled to. CRA is well aware of these situations and gets your tax address. Don’t be surprised if you get reassessed because you filed as individuals when you should have filed as a couple.
Why do I need a Mileage Logbook?
In Canada, the onus of proof is on the taxpayer regarding tax deductions. Vehicles are where people frequently try to gain an inappropriate tax advantage – and CRA is aware of this. If you are selected for review and cannot produce your mileage logbook, CRA will almost certainly disallow the expense claims and reassess you.
For more information about claiming vehicle expenses, check out our blog post!
How do I claim Home Office Expenses?
With more people working in Hybrid or Work-from-Home environments, home office expenses are relevant to a broader group of Canadians. The onus of proof is on the taxpayer, so it’s a good idea to prepare a simple spreadsheet to outline your claim and why it’s justifiable.
You can deduct a percentage of your home’s expenses based on the home’s size and the dedicated workspace’s size. The expenses that can be claimed vary depending on if you’re self-employed or an employee. Employees’ expenses can vary depending on whether they receive a commission and what is included in the T2200 the employer provides. Note that an employee must have a T2200 to claim home office expenses.
For more information about claiming home office expenses, check out our blog!
When will I get my refund?
It’s important to remember that not all tax filers are entitled to a refund. If you are entitled to a refund but are not up to date with your tax filings or owe the CRA money, you probably won’t receive the refund until you’ve caught up on your taxes. The government has the right to transfer refunds to amounts owing by the taxpayer, so if you owe money, you may not get the refund you expect, or you may not get a refund at all.
You’ll get your refund faster if you are all up to date and registered for direct deposit with CRA. Refunds usually arrive within two weeks if you filed online (8 weeks if you filed by paper).
How do I pay my taxes?
The best and easiest way to pay taxes is through online banking using your SIN as the account number. Your financial institution can help you navigate the specifics of their system to get your taxes paid.
Do I really need to pay my tax installments?
Yes. After filing your taxes last year, you must pay installments if you owe more than $3,000. If you fail to pay tax installments on the installment deadlines, you will be assessed installment interest. Should your situation change, these installments can be reduced, but if, in the end, you owe more than $3,000, you will be assessed installment interest.
Installments can be paid through your online banking portal.
How do I change my address with CRA?
The best way to change your address is through CRA My Account. We highly recommend it if you haven’t registered for CRA My Account. It will allow you to find information and make changes to your account. It will enable you to do things easier and faster.
I got an email saying I have mail from CRA, but nothing arrived; what happened?
Once you’ve signed up for online mail with CRA, these emails are sent to you. CRA does not email you attachments, so never click on an attachment from CRA (It’s a trap!)
Log into your CRA My Account portal to check the mail you received.
Standard Updates for 2023
Having a CRA My Account allows you to quickly look up many items, including those that would have appeared on your 2022 Notice of Assessment. We highly recommend registering.
Your RRSP contribution room will increase your income to your RRSPs by 18% to a maximum of $30,780 for 2023. Check your Notice of Assessment from 2022 to understand how much you could contribute in 2023.
In 2023, your TFSA contribution room went up $6,500. Check your contribution room on your 2022 Notice of Assessment to determine how much you could contribute.
If you qualify and open an FHSA in 2023, your contribution limit is $8,000.
CPP deductions from our paychecks increased significantly in 2023, so you probably noticed less take-home pay. If you are self-employed, you must pay both portions of the CPP as part of your tax filing (your share and the employer’s share).
Tax brackets increased significantly for 2023, by over 8% for each tax bracket. That means you’ll pay less tax on the same earnings as last year.
It’s a good idea to have a plan ready BEFORE December 31st, as your contribution room will be affected by the timing of your contributions. Remember, topping up RRSPs is not the best tax plan for everyone. Know what’s right for you, and if you don’t know, get help. Accountants and Financial Planners can help you get and stay organized and understand what’s best for you in the long run.
ALL Tax payments are due April 30th, 2024. That includes self-employed individuals (and their GST/HST), employed individuals, pensioners and any individual owing tax for 2023.
Remember, if installments were required, they should have been paid by the installment deadlines.
Self-employed individuals and their spouses are required to file by June 15th. However, that falls on a Saturday this year, making the deadline June 17th, 2024. We’d still advise you to file before the 15th so you aren’t considering your taxes that weekend.
All other personal tax filings are due April 30th, 2024.
Ready to file your 2023 personal taxes? Ask us for more information!