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.