Ateet Kapadia Insider Tips for Mastering Tax Code: Understanding Tax Changes

By Ateet Kapadia, LLP Chartered Professional Accountants, Listen to Podcast

Ateet Kapadia explained that in 2023, inflation is affecting Canadian taxes, leading to substantial increases in important tax figures. To keep up with the inflation, federal income tax brackets have been indexed to inflation by 2.4% and in Alberta, the tax bracket thresholds and credit amounts have been adjusted by 2.3%. As a result of these changes, people can expect lower tax withholds from their first paycheques of the year.

Tax Changes in 2023: Relief for Retirees amidst Inflation-

With the indexation increase of 6.3 percent, federal taxes will see a significant departure from the typical increase of two to 2.5 percent. This provides Canadians the opportunity to increase their purchasing power.

According to JeffreyHerzog, a chartered professional accountant and assistant lecturer at the University of Alberta's school of business, this will particularly benefit retirees. They can withdraw a little bit more from their registered retirement income fund (RRIF) without being taxed more, which will provide them some relief amidst the high inflation.

Boosting Homeownership and Financial Security-

The increased credit for first-time home buyers and the doubled credit for home accessibility show the government's commitment to making homeownership more accessible and affordable for Canadians. Additionally, the increase in the federal basic personal amount is a positive step in increasing financial security for Canadians and reducing the burden of taxes on low-income earners. Overall, these changes in tax policies can help Canadians deal with the impact of inflation and make it easier for them to achieve their financial goals.

The Canadian government has introduced several measures aimed at alleviating the financial burden of its citizens, especially those who are low- and modest-income earners. One of these measures is the increase in the GST/HST tax credits which began in November of 2022. The credits range from $234 to $628 and are dependent on the size of the family. This is a significant boost for families who have struggled to make ends meet, especially with the high inflation experienced in 2022.

In addition to the increased GST/HST tax credits, the Canadian government has introduced a new dental benefit program that will provide families with up to $1,300 per child over two years. This is based on the family's income level and will help provide families with access to dental care, which can be expensive. The new multigenerational home renovation tax credit is another measure aimed at supporting families. This tax credit can cover up to $7,500 for families who wish to add a secondary suite to accommodate a senior family member or a family member with a disability.

New Tax Measures to Help First-Time Homebuyers and the Rise of Free Tax Clinics-

The tax-free first home savings account is another new measure aimed at helping first-time home buyers save up for a new home. This account allows first-time home buyers to save up to $8,000 per year for up to five years, with a maximum total of $40,000. The contributions they make to this account are deductible and withdrawals from this account are non-taxable. This is a great opportunity for first-time home buyers to save up for a home without incurring tax costs.

With the changes to the tax laws and increased financial burden, many people are turning to free tax clinics for help in filing their tax returns. The Bissell Centre's financial empowerment program is one such community volunteer income tax clinic that has seen a noticeable increase in the number of clients it serves. The organization operates all year long and can file up to ten years worth of taxes. In the past year alone, they have filed over 3,000 years' worth of taxes, which has resulted in over $5,300,000 being returned to individuals in poverty or low income in the form of tax refunds, GST, climate action rebates, and the Canada child benefit.

In conclusion, the Canadian government has introduced several measures aimed at alleviating the financial burden of its citizens, especially those who are low- and modest-income earners. The increase in GST/HST tax credits, the introduction of a new dental benefit program, and the new multigenerational home renovation tax credit are just a few of the measures that have been put in place to help families. The tax-free first home savings account is another great opportunity for first-time home buyers to save up for a home without incurring tax costs. With the growing need for free tax clinics, the Bissell Centre's financial empowerment program is one such community volunteer income tax clinic that has seen a noticeable increase in the number of clients it serves.

Ateet Kapadia explained the importance of financial plan

Ateet Kapadia defined a financial plan as a document that details how a business will achieve its financial goals. It is important for businesses to have a financial plan in place in order to make informed decisions about where to allocate their resources. Without a financial plan, businesses may find themselves struggling to meet their financial obligations or failing to achieve their desired financial results. He explained creating a financial plan can be a complex process, but it is important for businesses to take the time to develop one that is tailored to their specific needs and goals. Doing so can help them to avoid financial difficulties and to ensure that they are on track to achieve their long-term objectives.

State your Business Goals-

Setting financial goals is an important part of any business plan. Without financial goals, your business will have no direction and no way to measure success. Financial goals should be SMART: specific, realistic, and time-based. Ateet Kapadia explained there are a few different types of financial goals that businesses can set. The first type is profit goals, which are target profits that you want your business to achieve. The second type is revenue goals, which are target sales figures that you want your business to reach. Finally, there are expense goals, which are targets for how much you want to spend on certain expenses. No matter what type of financial goal you set, it is important to make sure that it is specific, measurable, attainable, realistic, and time-based. By following these guidelines, you can be sure that your financial goals will help to keep your business on track and moving in the right direction.

Determine the best way to use its financial resources-

There are a few different ways that a business can use its financial resources. Kapadia explained the best way to use financial resources depends on the specific goals and needs of the business. By carefully evaluating the options, businesses can make the best decisions.  Financial planning enables a corporate organization to employ its financial resources at the proper time and location while also ensuring that they are neither wasted nor underutilized. 

 Below are a few examples of how businesses can use their financial resources.

1. Invest in advertising and marketing. This is a great way to reach new customers and grow the business.

2. Invest in research and development. This can help the business create new products or services and stay ahead of the competition.

3. Invest in new equipment or machinery. This can help the business improve its efficiency and productivity.

4. Invest in employee training. This can help the business attract and retain the best employees.

5. Invest in new technology. This can help the business improve its operations and stay up-to-date with the latest trends.

Monitor its financial performance-

Monitoring a company's financial performance is important for shareholders and potential investors. With a financial plan, tracking a company's financial performance usually goes easier. Since they can see how well it is doing and make informed decisions about whether or not to invest.

Kapadia explained a few key indicators of financial performance that investors look at, including:

1. Revenue: This is the total amount of money that a company brings in from its operations. It is important to track because it shows how much money the company is making and how fast it is growing.

2. Earnings: These are the profits that a company generates from its operations. It is important to track because it shows how well the company is doing and how much money it is making.

3. Debt: This is the amount of money that a company owes to its creditors. It is important to track because it shows how much financial risk the company is taking on.

Make informed decisions about financial matters-

Kapadia explained making informed decisions about financial matters can be difficult, especially if you don't have a lot of experience with money and a Proper financial plan. However, there are some basic things you can do to help you make better decisions.

First, make sure you understand the different types of financial products and services available. There is a lot of information out there, and it can be overwhelming. However, if you take the time to learn about the different options, you'll be better prepared to make informed decisions.

Second, one of the best ways to make informed decisions about financial matters is to use a financial planner. A financial planner can help you understand your options and make the best choices for your situation. They can also help you stay on track and make sure that you are making progress toward your financial goals.

About Ateet Kapadia-

Ateet Kapadia is a financial planner with a mission to help businesses of all sizes reach their financial goals. With over multi years of experience in the financial services industry, Kapadia has gained a reputation for providing expert advice on a wide range of issues, from debt repayment to investing in a business. He has helped hundreds of clients with their financial plans, from start-ups to established companies. Kapadia’s expertise has enabled him to provide advice on saving for retirement, reducing debt, protecting loved ones, and starting a business. He understands that each of his client’s goals and needs is unique, and strives to provide tailored advice that meets their individual requirements. In addition to helping clients with their finances, Kapadia also provides education and guidance on financial topics, helping them to gain the knowledge and confidence to make informed decisions.

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