There are a number of tax changes for 2023 that residents should be aware of when filling out their income tax.
First, the federal tax brackets have been expanded. Those making between zero and $53,359 will pay 15 per cent in federal taxes, above $53,359 to $106,717 pay 20.5 per cent, above $106,717 to $165,430 pay 26 per cent, above $165,430 to $235,675 pay 29 per cent. Anything above that is taxed at 33 per cent.
Saskatchewan income tax is 50 per cent of what you are paying in federal taxes.
“Essentially what they've done is they've taken the parameters of the two bookends, and they've expanded out and say, hey, we're going to allow you a little bit more income in this particular bracket before we jack you up to the next one,” explained Aaron Ruston of Purposed Financial.
The basic personal amount has been increased to $15,000, meaning you can earn up to that amount before paying federal income tax.
The Multigenerational Home Renovation Tax Credit began at the beginning of 2023. Ruston explained how it works.
“If you have to make renovations to your house to accommodate mom and dad or grandpa and grandma for their physical needs, then you can write off 15 per cent of those expenses up to $50,000,” he said.
New anti-flipping rules also came into effect starting this year. If you have owned a home for less than one year and the value has gone up on it, all of that value is declared as 100 per cent business income and will not be eligible for personal exemptions.
Lastly, the First Home Savings Account will allow you to put away money to buy your first home tax-free.
“It's really a combination like an RRSP, where the money you put in you get a deduction for and all of the growth, like a TFSA, is completely tax-free and you can draw it out as long as it's being used to buy your first home after five years,” Ruston explained.
The First Home Savings Account allows homebuyers to save up to $40,000 on a tax-free basis to purchase a first home in Canada.