• Thu. May 23rd, 2024

Here are some changes you need to know for the 2024 tax season

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Mar 15, 2024 #season, #TAX

With tax season upon us, there are several tweaks to the filing process this year that Canadians need to be cognizant of before it’s time to submit that paperwork. (Getty Images) (RobMattingley via Getty Images)

With tax season upon us, there are several tweaks to the filing process this year that Canadians need to be cognizant of before it’s time to submit that paperwork.

Understanding this year’s changes is crucial to filing taxes properly and making sure Canadians receive the biggest cheque back in returns.

“Largely, there’s not really a big, centrepiece tax credit this year,” Laura Whiteland, certified financial planner and owner of Inclusive Financial Planning, said in an interview with Yahoo Finance Canada. “It’s a lot of minor adjustments. There are some technical changes, like alternative minimum tax, but that doesn’t affect a huge number of people.”

Yahoo Finance Canada spoke to Whiteland and David Christianson, certified financial planner and portfolio manager at Christian Wealth Advisors at National Bank Financial, to go through some of the biggest tax changes that Canadians should be aware of this year.

Work from home? Filing for expenses is more complicated this year

During the COVID-19 pandemic, the federal government made it easy for Canadians to claim home office expenses, but that system has now changed.

As Canadians increasingly worked from home during the pandemic lockdowns, Ottawa introduced a temporary flat-rate method, allowing workers who spent more than 50 per cent of their working hours at home to easily claim $2 per day up to $400 in 2020, and $500 in 2021 and 2022.

Now, Canadians looking to claim home office expenses will need to get their employer to sign form T2200. Eligible employees will be able to deduct some home office expenses if they worked from home more than 50 per cent of the time for a period of four consecutive weeks in the year. Expenses that can be claimed include electricity, heat, water, and rent, but not mortgage interest or principal mortgage payments and furniture.

“If you’re working from home still, you need to get the form filled out from your employer,” Whiteland said. “Through (COVID-19), you didn’t have to have that, you could just take that smaller deduction. Basically, all the (COVID-19) stuff is largely over at this point.”

Changes for first-time home buyers

For Canadians looking to save for their first home, Canada’s First-Home Savings Account (FHSA) could have tax implications.

Canadians in the market for a new home are able to contribute $8,000 annually to an FHSA, to a maximum of $40,000, to go towards a downpayment. The FHSA includes features from a Registered Retirement Savings Plan (RRSP) as well as a Tax-Free Savings Account. Like an RRSP, contributions are tax-deductible, and like a TFSA, growth earned on the contributions is tax-free.

“If you’re in that position (where) you’re looking to buy a house, 100 per cent of people should be looking at the First-Home Savings Account for that,” Whiteland said. “It’s their Ferrari of registered products because it’s a lot of horsepower under the hood there.”

While the deadline to open and contribute to FHSA has already passed for this year, the more than 300,000 Canadians who opened an account as of December will need to make note of their accounts on this year’s taxes.

Contribution limit changes for 2024

Several savings and retirement accounts have upped the maximum contributions, according to Whiteland.

“All those numbers sort of increase with inflation,” she said.

The TFSA contribution limit is up $7,000 this year. On top of the new maximum for the TFSA, the Canada Pension Plan (CPP) hiked its limit to $3,754.45 and the Employment Insurance contribution is maxed out at $1,002.45.

“People might see (with) some of their first paycheques, they’re paying a little bit more into those programs,” Whiteland said. “The CPP increase is part of CPP enhancements, so there’s a little bit more with that program.”

When it comes to the TFSA, Christianson recommends creating an account if you have money in savings that you’re not using.

“If there’s no particular purpose for that money, or even if you’re planning on using it in a year, the TFSA is a great place to put it, to move that investment, because the investment income has been sheltered from tax and you never pay any tax when you take the money out,” he said in a phone interview.

When it comes to the RRSP, the contribution limit is $30,780 or 18 per cent of your income, whichever is lower. The deadline this year for contributions was Feb. 29.

Ben Cousins is a freelance journalist based in Toronto. Follow him on Twitter @cousins_ben.

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