Personal Tax Letter

I hope that 2023 has treated you well.  There have been a few changes during the year.

Please read through this letter and the attached income and deductions checklist; use it to assemble your information for me.  If you had a proprietorship (self-employed income) or rental income, additional checklists are created just for you.  If you need either one, just let me know, and I’ll send it to you.

You can also download them here.

E-file Opens:                          February 19th (first date to file)

First 60 Days for RRSP:       ends February 29th

Standard Filing Date:            April 30th

Interest Start Date:               April 30th

(interest date for proprietorships owing tax or CPP)

Filing Date (self-employed):  June 17th (June 15th is a Saturday)

Personal tax brackets (Provincial and Federal), personal exemption and other tax credits (age, dependent, etc.) have been adjusted for inflation.

For example, the federal personal credit has been adjusted for inflation to $15,705 for 2024.  (an increase of $705.00 over 2023).

OAS clawback starts at 90,997 (86,912- 2023).  Age credit clawback starts at $ 44,325 ($ 42,335 – 2023)

The tax-free savings accounts (TFSAs) additional contribution room for 2024 is $ 7,000.  If you have not made any TFSA contributions to date, your total contribution room would be $95,000.  (and qualified for the account in the first year available) If you have made TFSA contributions in the past, please contact me to find out your current limit.  Any withdrawals made in 2023 will increase your 2024 limit.

A In 2024, Canada Pension Plan contributions will change for higher-income earners.  Up to 2024, there has been one rate for CPP on employment income above $ 3,500 per year, which applies to all earnings up to the CPP maximum.  For 2023, this limit was $ 66,600.  This increase for inflation rises to $ 68,500 in 2024.  

A new second bracket starts at $ 68,501 and runs to $73,200.  This bracket will have CPP at 4% rather than 5.95%.  This change will result in an additional $301.05 CPP deducted over 2023 amounts or double this amount for self-employed if income is at the top of the second rate or above.

Trust return is now required for all trusts (in the past, it was only required if income was earned during the year).  This includes bare trust agreements (this type of trust can come about by adding the child's name to the property's title (for estate planning) or the parent’s name to the property.  (for financing purposes)

Trust returns are due 90 days from December 31 so deadlines do not match the personal tax filings.

CRA has increased the interest rate on outstanding balances to 10% starting January 2024.

Several major changes to alternative minimum tax will affect tax planning, it will affect taxpayers with income above $ 173,205 in 2024.  If you meet this income threshold, donating securities to charity, charity donations, capital gains, qualifying small business shares gains, carrying charges, and moving and childcare costs could be less effective in reducing taxes payable. 

This calculation under the current or new program does not apply in the year of death, so high income in this period does not trigger the tax.

Give me a call if you would like additional details.

There are three designations for TFSA: Estate, Beneficiary and Successor holder.  Only a spouse (Married or Common Law) can be the successor holder.  This designation allows the transfer of the balance without impact to the TFSA room of the successor, so it is worth checking to ensure that this is set up correctly.