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  • Writer's pictureHilary M.K. Poff | CFA

Are You Ready for Tax Season?

It’s officially tax season, which means tens of millions of Canadians need to prepare and file their income taxes. For the 2023 tax season, more than 32 million returns were filed. Of those, 92% were filed electronically, and more than 18 million refunds were processed for an average return of $2,262.

The first day Canadians could start filing their 2023 tax returns online was February 14, 2024. For most Canadians, the deadline to file your tax return is April 30, 2024. That’s also the deadline to make a payment on any taxes you owe to avoid interest.

If you or your spouses or common-law partner is self-employed, however, the deadline to file your 2023 income tax return is June 15. But that’s just for filing. If you owe money to the CRA, it has to be paid by April 30, 2024.

What Are Some Tax Tips for the 2024 Tax Season?

Here are some important measures to keep in mind when preparing your 2023 taxes.

Keep Comprehensive Records

Keep all of your receipts. Losing or even forgetting about a receipt can mean missing out on tax deductions. Having hard copies of all receipts can make it easier should you ever get audited.

File Taxes on Time

As noted above, there are different tax deadlines. Most Canadians need to file by April 30, while self-employed Canadians have until June 15. If you owe money to the CRA, you need to pay your taxes by April 30 to avoid interest and penalties. And they can be steep. If you file after the deadlines, you’ll be hit with a 5% late penalty and 1% interest every month after that.

Keep Personal and Business Expenses Separate

Pay for personal and business expenses with a separate business credit or debit card. This will help simplify record-keeping and avoid any confusion or red flags with the CRA. Moreover, make notes on the receipts for how the expense relates to your business.

Invest in TFSAs and RRSPs

There are a number of ways you can invest for retirement and lower your tax bill. Two of the most popular are the Tax Free Savings Accounts (TFSA) and Registered Retirement Savings Plan (RRSP). Through an RRSP you can protect your savings from being taxed and with a TFSA you can earn and withdraw money without being taxed.

Are There Any Canadian Tax Changes I Should Be Aware of?

It can be difficult to keep up to date with the CRA’s ever-changing tax policies. And this year, there are several tax changes every Canadian should be aware of. Here are just some of the tax changes taking effect for 2023.

Home Office Expenses

From 2020 to 2022, eligible employees were allowed to claim a $2 flat rate for each day they worked from home due to the pandemic. Employers did not need to keep receipts to support their claims.

That all changes in 2023 and future years. Employees working from home need to follow the CRA’s detailed method of making any claims. This includes having a Form T2200, Declaration of Conditions of Employment, signed by their employer.

Federal, Provincial, and Territorial COVID-19 Benefits Repayments

Federal, provincial, and territorial COVID-19 benefit repayments made in 2023 can be claimed as a deduction on line 23200 of your 2023 tax return. You should have received a Statement of Employment Insurance and Other Benefits from the CRA with the repayment amount.

First Home Savings Account (FHSA)

The FHSA is a new registered account that helps Canadians save for their first home. Starting in the 2023 tax year, contributions to an FHSA are deductible and the income earned in a FHSA is not taxable. On top of that, qualifying withdrawals from an FHSA to buy or build a qualifying home are tax-free.

Multigenerational Home Renovation Tax Credit (MHRTC)

The MHRTC is a new refundable tax credit that allows eligible individuals to claim a certain amount of renovation costs to a secondary unit for a senior or adult eligible for the disability tax credit.

Sharp Asset Management – Helping You Reach Your Financial Goals

If you live in Toronto or the GTA and are looking for tax strategies that can help maximize your tax return and minimize potential tax burdens, speak with the certified wealth management professionals at Sharp Asset Management.

Our retirement planning professionals are not affiliated with any financial institution, securities firm, or mutual fund company, and our investment decisions are unbiased. All of our investment counsellors are charter financial analysts, have the highest level of achievement, and have over 10 years of experience managing portfolios.

To learn more about how Sharp Asset Management can help you this tax season, contact us today.

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