NEW YEAR, NEW NUMBERS..
Every year CRA releases annual limits, and amounts that are indexed to the cost of living. Here are a few:
Basic Personal Amount $15,000
This is the amount of income that an individual can earn without paying any federal income taxes.
The CPP contribution rate for both employees and employers for 2023 is 5.95% - up to earnings of $66,600
The EI contribution rate for employees is 1.63% for 2023 - up to earnings of $61,500
TFSA Annual Limit
The contribution amount has been increased in 2023 to $6,500 (from $6,000 for the last few years)
If your taxable income for 2023 is greater than $86,912, you will have to repay some or all of the OAS that you received in the year
TAX INFO #002
WHAT IS THE TAX-FREE FIRST TIME HOME SAVINGS ACCOUNT (FHSA)?
CRA has created a new registered plan to help prospective first time home buyers save for their first home.
Must be a first time home buyer, or must not have owned a home for a minimum of 4 years
Between the ages of 18 and 71
Annual calendar year contribution limit of $8,000
Can carry forward unused contribution room from one year to the next
Lifetime limit of $40,000
If the taxpayer meets the conditions, then the $40,000 can be withdrawn TAX FREE for the sole purpose of purchasing a home (unlike RRSP's which are always taxable upon withdrawal)
Any unused contributions can be transferred to an RRSP on a tax free basis. The existing RRSP contribution room is NOT a factor when completing this transfer.
The taxpayer can also make a transfer from their RRSP to a FHSA
TAX TIP #002
I AM SELLING A HOUSE THIS YEAR...DOES THIS APPLY TO ME?
Part of the 2022 Budget, this applies to all residential property sales after January 1st 2023
Under this new law, any gain on the sale of a residential property that has been owned by the same person(s) for less than 366 consecutive days, has to be reported on your income tax return (in the year of the sale) as business income.
No principal residence exemption, no capital gains tax treatment.
Exemptions exist if the home owner passes away during the year, along with some other fine print.
LRH Larry R Hemeryck
CPA Professional Corporation
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