TAX YEAR 2022 CHANGES AND NEW ADDITIONS:
• The annual TFSA limit for 2023 increases to $6,500. As such, if an individual has never contributed and has built room since the program’s inception in 2009, up to $88,000 can be contributed.
• Employees working from home in 2022 due to the COVID-19 pandemic will again have the option to claim a deduction against their employment income using the temporary flat rate method. The maximum claim will remain the same at $500.
• Ontario Staycation Credit – A one time tax credit of 20% of your stay in an Ontario hotel, cottage or campground, during 2022. Maximum credit $200 per individual or $400 per family. It is only claimable if the amount was paid to an GST/HST registrant.
• Did you know? About 30% of first-time homebuyers received financial help from family members. The average amount gifted was $82,000 but as high as $130,000 and $180,000 in Toronto and Vancouver. These informal agreements should be documented in writing to protect all parties, especially to clarify whether the funds are a gift, a loan (and repayment terms), or an equity investment in the property.
• The Underused Housing Tax (UHT) imposes a national annual 1% tax on the value of residential real estate considered to be vacant or underused that is owned on December 31st each year. While the government indicated that the tax would target property owned by non-Canadians, the scope of filing requirements extends to many Canadian corporations and individuals, including CCPCs, trustees of a trust and partners of a partnership. Affected taxpayers must file an annual declaration, even if they meet an exemption such that they do not need to pay the 1% tax. Legal ownership of real estate must be considered as of December 31, 2022, with filings and/or taxes first being due on May 1, 2023. Penalties for failure to file the return (even where no tax is payable) start at $5,000 for individuals and $10,000 for corporations. To assist you in navigating these new filing requirements, we can provide you with a Quick Reference Chart through email to help you determine if new rules apply to your circumstances.
• On June 19, 2022, individuals suffering from Type 1 diabetes became automatically entitled to the disability tax credit. This change is retroactive to 2021.
• The Seniors’ Home Safety Tax Credit is a temporary refundable tax credit, for eligible renovations expenses if they improve safety and accessibility, or help a senior be more functional or mobile at home. Maximum amount of credit is 25% of $10,000 in eligible expenses for principal residence in Ontario.
• As of July 1, 2021, GST/HST applies to all platform-based short-term accommodations in Canada (such as those on Airbnb and VRBO).
COVID-19 Assistance Payments
If you received COVID-19 benefits from the Canada Revenue Agency (CRA) in 2022, you will receive a T4A slip for the amounts you received. The slip will be issued if you received:
- Canada Emergency Response Benefit (CERB) (A T4E slip will be issued if you received CERB from Service Canada instead of the CRA)
- Canada Emergency Student Benefit (CESB)
- Canada Recovery Benefit (CRB)
- Canada Recovery Caregiving Benefit (CRCB)
- Canada Recovery Sickness Benefit (CRSB)
- Provincial or territorial COVID-19 related assistance payments
If there was tax withheld at source by CRA, it would be reported on box 022 of the T4A slip.
All COVID-19 related benefit payments from the CRA will be included in one T4A slip. You should verify the amounts reported on your T4A/T4E slip by comparing with what you have received in your bank account.
If you find a discrepancy, you should call CRA at 1-800-959-8281.
Employees who worked from home more than 50% of the time over a period of at least four consecutive weeks will be able to claim a portion their home office expenses. There are two ways of claiming home expenses in 2022:
The temporary flat rate method allows for a $2 per day deduction for each day the employee worked from home in 2022, up to a maximum of $500.
The detailed method allows taxpayers to claim a portion of their actual home expenses. Allowable expenses include:
- Rent paid
- Home internet access fees
- Maintenance and minor repair cost for designated office space
Commissioned employees are also allowed to claim a portion of their home insurance, property tax, and lease of their cell phone, computer, or tablet.
Employees can also claim a reasonable portion of their phone’s basic service plan and long distance calls made for work.
Digital News Subscription Expenses:
If you paid for a digital news subscription with a qualified Canadian journalism organization, you may be able to claim a non-refundable tax credit on your tax return. This credit is only available for 2020 – 2024 tax years.
Sale of Principal Residence: If you sold your home on or after January 1, 2016, for which you want to claim the principal residence exemption, you are required to report the disposition on your income tax return. While CRA does accept late filed designations, penalties do apply. Failure to report the sale on your tax return may result in a penalty up to $2,500.
Specified Foreign Property: Individuals have to file Form T1135 with CRA for every year they held foreign property with a cost exceeding $100,000. Please inform us if this requirement applies to you so we can advise on next steps. Failure to file this form along with your tax return may result in a penalty up to $2,500.
Keeping Track of All Tax Related Documents: We encourage you to take advantage of our new client portal to upload documents as you receive them. It will help you stay organized, and keep track of all your income slips and other receipts together, in a secure environment throughout the year. You can create your own subfolders within the taxation year, which you can easily review when you are ready to prepare your tax return.