Tax Changes 2022
The Canada Revenue Agency and the provincial governments in response to the aftermath of the COVID-19 pandemic and the economic ripples resulting from the pandemic and other global events, have introduced several tax credits and benefits for the 2022 tax year with the aim of alleviating some of the pressures experienced by Canadians. For the 2022 tax year, as with any other tax year, there are also several changes to personal limits, entitlement amounts and tax brackets.
COVID-19 Benefits Repayment
If you received COVID-19 benefits but you did not qualify for them, the repayment is inevitable and ignoring the repayment letter will result in further action by the CRA such as interest charges, withholding of refunds and benefits, and in a worst case scenario garnishing of bank accounts. Once you remit the repayment to the government, you will receive a T4A slip from either the CRA or Service Canada for the year the payments were made. CERB repayment amounts are reported in box 201 of the T4A slips. To read more about CERB Repayment, click here
Doubling of GST Credits for Six Months
To alleviate the financial stress on low-income Canadians who are severely affected by inflation and interest rates, the Government of Canada has proposed a plan to increase 2022-2023 Goods and Services Tax (GST) Credit by an additional six months period. The GST credit is indexed to inflation based on Consumer Price Index (CPI) as reported by Statistics Canada.To read more about the Doubling of GST Credits for Six Months, click here
Air Quality Improvement Tax Credit
The Government of Canada has introduced a temporary 25% “Refundable” tax credit” to encourage small businesses to invest in improved and efficient indoor air filtration and ventilation systems. The tax credit rate is 25% applicable to an entity’s qualifying expenditures limited to maximum $10,000 per qualifying location and a maximum of $50,000 across all qualifying locations which incurred between September 1, 2021 and December 31, 2022.To read more about the Air Quality Improvement Tax Credit , click here
Increase in Basic Personal amount
As part of the Government's initiative to increase the Basic Personal Amount (BPA) which is a non-refundable tax credit, to $15,000 by 2023, the BPA for the 2022 tax year has been increased to $14,398 from $13,808 in 2021.To read more about Basic Personal Amount , click here
Old Age Security Pension Recovery Tax
Old Age Security (OAS) pension is a monthly payment by the Government to supplement income for seniors 65 and older. In response to increased inflationary pressures on seniors, the Government permanently increased OAS payments by 10% for seniors 75 years of age and over starting in July 2022. OAS pension is linked to income and as income increases the amount of the pension decreases. OAS income threshold for 2022 tax year has been increased to $81,761 from $79,845 in 2021. At incomes over $134,626 for ages between 65-74, and $137,331 for 75 and older, the pension will have to be paid back in its entirety.To read more about the Old Age Security Pension, click here
Canada & Québec Pension Plan Maximum Contribution Amounts
For 2022, the maximum annual pensionable earnings amounts for Canada Pension Plan (CPP) and Québec Pension Plan (QPP) have increased by 5.35% to $64,900. Basic exemption for both CPP and QPP remains at $3,500. CPP and QPP maximum contributory earnings have increased to $61,400 versus $58,100 in 2021. Employee and employer maximum contributions have also increased to $3,499.80 for CPP and $3,776.10 for QPP. Maximum annual self-employment contribution is set at $6,999.60 for CPP and $7,552.20 for QPP.To read more about CPP click here and for QPP click here
RRSP Contribution Limit Increase
Your RRSP contribution room for any given year is limited to 18% of earned income for the previous tax year as long as it does not exceed the contribution limit for that year. For example if you had earned $50,000 in 2021, your contribution room for 2022 would be $9,000. Any unused RRSP amounts are carried forward. The contribution limit for 2022 has been increased to $29,210 versus $27,830 in 2021.To read more about RRSP, click here
Adjustments to Tax Brackets
In response to inflationary pressures, for the 2022 tax year the Government has adjusted the tax bracket upwards. Canadians who were on the lower limits of a given tax bracket in 2021, will be shifted to a lower tax bracket this year which will result in lower taxes.
Federal tax rate for 2022 are as follows:
Capital Cost Allowance (CCA) for Passenger Vehicles
The following rates and limits have become effective as of January 1, 2022:
The Canada Dental Benefit
The Government of Canada initiative aims to provide dental care benefit for uninsured children under the age of 12 with family annual income of less than $90,000 while a comprehensive long-term dental program is being developed in collaboration with provinces, territories and private enterprise.To read more about the proposed Canada Dental Benefit, click here
One-Time Canada Housing Benefit
The one-time top-up to Canada Housing Benefit in the amount of $500 is intended to lessen the financial burden borne by many low-income Canadians who are experiencing difficulties in paying their rents due to rising inflation and interest rates. The Benefit will be available to renters with adjusted net incomes below $35,000 for families, or $20,000 for individuals based on their 2021 Notice of Assessment. Individuals who have not filed their 2021 income tax returns will not be eligible for this Benefit.To read more about the proposed One-Time Canada Housing Benefit, click here
Provincial Tax Credits
Ontario
1. The Ontario Seniors Care at Home Tax Credit:
The Ontario Seniors Care at Home Tax Credit is a refundable tax credit intended to assist low to moderate income seniors with eligible medical expenses including expenses for caring for seniors at home. The credit allows 25% of eligible medical expenses up to the limit of $6,000 ($1,500). The amount is reduced by 5% of family income over $35,000. At $65,000 of income the credit is fully phased out.To read more about the Ontario Seniors Care at Home Tax Credit , click here
2. The Seniors' Home Safety Tax Credit:
The Seniors' Home Safety Tax Credit is a temporary, refundable tax credit intended to make homes more accessible and safe for seniors. The credit is available for tax years 2021 and 2022. The credit is limited to 25% of expenses up to $10,000 for a seniors principal residence in Ontario.To read more about the Seniors' Home Safety Tax Credit , click here
3. The Ontario Staycation Credit:
Ontario Staycation Tax Credit is a temporary tax credit for 2022 tax year which aims to encourage tourism in Ontario following the devastating blow to the tourism and hospitality sector by the COVID-19 pandemic. Residents of Ontario can claim 20% of their eligible 2022 accommodation expenses up to $1000 for a leisure stay with a duration of less than one month on their income tax and benefit return for the tax year.
Nova Scotia
1. Nova Scotia Children's Sports and Arts Refundable Tax Credit:
The credit which is intended to benefit the child's health and well being will allow parents to offset child's registration and expenses in sports and arts programs. Parents are entitled to claim $500 in enrolment and registration fees effective January 1, 2022.
Posted on 09 Dec 2022