What are the changes for 2022 tax return- Explained by Tax Accountant Toronto
Any one-time provincial payments to help you through COVID-19 will not be taxable, and you don’t need to report them as income on your 2022 tax return.
You can claim up to $500 for work-from-home expenses
You can once again claim the work-from-home tax credit. If you’ve been keeping track of your expenses, you can go ahead and claim your calculated total. Otherwise, you can use the flat rate method of $2 for each day worked from home during the pandemic to a maximum of $500.
Basic Personal Amount (BPA) has been increased
The government increased the Basic Personal Amount for the 2022 tax year to $14,398. This means that every Canadian will get a slight boost to their return this year, and it’s likely you can expect another increase next year as well.
Repaying COVID-19 benefits- Tax Accountant Toronto
If you received COVID-19 benefits from the CRA in 2022, such as the Canada Recovery Benefit (CRB), Canada Sickness Recovery Benefit (CSRB) or Canada Recovery Caregiving Benefit (CRCB) you will receive a T4A slip with the relevant information you need for your tax return.
If you received the CRB and your net income after certain adjustments is more than $38,000, then you may have to repay all or part of the benefits you received in 2022.
If in 2022 you have already repaid all or part of COVID-19 benefits received, you can choose which year to claim the tax deduction for the repayment on, either the year you received the benefit, or the year you repaid it.
Tax brackets have shifted to account for inflation- Tax Accountant Toronto
Inflation has increased significantly in 2022. The government has adjusted tax brackets for 2022 to maintain buying power for Canadians as prices of goods continue increase.
The new federal tax brackets for 2022 are as follows:
$0 to $50,197 of income (15%) | > $50,197 to $100,392 (20.5%) | > $100,392 to $155,625 (26%) | >$155,625 to $221,708 (29%) | Above $221,708.01 (33%)
This means that Canadians on the edge of a tax bracket might find themselves shifted into a lower bracket this year and pay less taxes because of it.
New OAS limit amounts- Tax Accountant Toronto
The Old Age Security is designed to provide retirees with a source of income to support their retirement. However, if your income is over certain limit amounts, you might find your OAS amount reduced, and even canceled entirely. if your taxable income was over $81,761 in 2022, you would need to repay some of your OAS. Similarly, if your taxable income was over $134,626, you would not have received any OAS payments.
The Canada Pension Plan (CPP) have been increased by 2.7%, the maximum pensionable earnings are $64,900, with a basic exemption of $3,500 for 2022. For CPP, the Employee and employer maximum contribution is $3,039.30.
If you are self-employed, you must account for both the employer and the employee sides of the contribution. For 2022, their maximum contribution amount for the CPP is $6,078.60.
RRSP annual dollar limit for tax year 2022 is $29,210. Remember that your RRSP contribution limit is capped at 18% of your earned income in the previous year. This means the dollar limit is the maximum amount you can contribute regardless of your income.
Some credits have been added, changed, reinstated, or expanded for the 2022 tax year.
Below are some of the Federal changes to tax credits:
Air Quality Improvement Tax Credit: Eligible businesses including sole proprietorships, can claim 25% of their qualifying ventilation upgrades to a maximum of $10,000, creating a $2,500 tax credit.
Automobile income tax deduction limits: The changes include Increase in Capital Cost Allowance (CCA) ceiling limits for zero emission and passenger vehicles, deductible monthly leasing costs increased by $100, and the per kilometer rate paid by employers to employees who use their personal vehicle for work has increased by 2 cents per km from last year.
2022 Tax credits specific to Ontario Residents- Tax Accountant Toronto
The Ontario Staycation Credit: is a one-time tax credit for Ontarians who’ll be able to claim 20% of their stay in an Ontario hotel, cottage or campground, during 2022 up to $1,000 individually or $2,000 as a family.
The Ontario Seniors Care at Home Tax Credit: is a refundable personal income tax credit to help seniors with eligible medical expenses, including expenses that support aging at home. The credit is equal to 25% of your eligible medical expenses up to $6,000, for a maximum credit of $1,500.
The Seniors’ Home Safety Tax Credit: is a new credit that supports seniors in making their homes safer and more accessible, with a credit of 25% up to a maximum of $10,000 in eligible expenses. The maximum credit is equal to $2,500 per year.
