Based on the relatively high inflation that Canada experienced in 2022, many significant tax figures, rates, and rules have been updated for 2023.
Find changes to federal and Albertan tax brackets and rates, and updates to basic personal amounts, the CPP contribution rate, and Canada Child Benefit here.
2023 Updates to TFSA Limit
The 2023 TFSA contribution limit will increase for the first time since 2019 to $6,500 (from $6,000). The cumulative TFSA limit is now $88,000 for someone who has never contributed to a TFSA, who is a resident of Canada, and who was at least 18 years of age since 2009.
2023 Updates to RRSP Dollar Limit
The registered retirement savings plan dollar limit for 2023 is $30,780, up from $29,210 in 2022. Of course, the amount you can contribute to your RRSP is limited to 18% of your 2022 earned income, which includes employment and rental income, less any pension adjustments, up to the current annual dollar limit.
2023 Updates to Old Age Security
If you receive OAS, the repayment threshold for 2023 is set at $86,912, meaning your OAS will be reduced in 2023 if your taxable income is above this amount.
First Home Savings Accounts (FHSA)
After being announced as part of the 2022 federal budget update, the First Home Savings Account will be available April 1, 2023. This new registered plan gives prospective first-time homebuyers the ability to save $40,000 on a tax-free basis towards the purchase of a first home in Canada.
Like an RRSP, contributions to an FHSA will be tax deductible, but like a TFSA, withdrawals to purchase a first home, including from any investment income or growth earned in the account, will be non-taxable. The new legislation confirms that a first-time homebuyer can use both the FHSA and the existing Home Buyers’ Plan to purchase their first home.
Multigenerational Home Renovation Tax Credit
A new credit is now available to help home owners complete renovations to create a secondary dwelling for an eligible person (such as a senior or a person with a disability) to live in. The credit is equal to 15% of eligible expenses (up to $50,000).
New Anti-flipping Rules
New anti-flipping rules for residential real estate are now in effect. They are designed to “reduce speculative demand in the marketplace and to help cool excessive price growth.”
The principal residence exemption will not be available on the sale of your home if you’ve owned it for less than 12 months (with certain exceptions). Instead, the gain will be 100-per-cent taxable as business income.
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