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Year-end Review of Personal Tax Planning for 2023 – Navigating New Tax Credits and Leveraging Established Strategies

As we approach the end of 2023, it’s crucial to stay informed about the essential tax deadlines, planning strategies, and legislative updates that could impact your financial decisions. This year’s overview covers key areas of personal tax planning.

Important Payment Dates

Awareness of payment deadlines is vital to maximize tax deductions or credits. Key dates include:

  • December 15, 2023: Final 2023 tax instalment due.
  • January 30, 2024: Deadline for payment of interest on employer loans and family member loans.
  • February 14, 2024: Reimbursement deadline for personal motor vehicle expenses.
  • February 29, 2024: Repayment deadline for RRSP withdrawals under the Home Buyers’ or Lifelong Learning Plan; also the deadline for RRSP contributions.
  • April 30, 2024: Final personal tax payments for 2023 due.

Timely payments are essential to avoid interest charges, which is also non-tax deductible.

First Home Saving Accounts (FHSAs)

FHSAs are an excellent tool for first-time homebuyers. With a 2023 limit of $8,000, these accounts offer tax-deductible contributions and non-taxable withdrawals for home purchases. Unlike TFSAs, FHSA contribution room does not accumulate, so opening an account early is beneficial.

Multigenerational Home Renovation Tax Credit

Starting in 2023, this refundable tax credit offers up to $7,500 for eligible renovations creating secondary dwelling units for seniors or persons with disabilities.

Charitable Donations

Maximize tax savings through strategic charitable donations. With potential Alternative Minimum Tax Changes in 2024, consider if a 2023 donation could be more beneficial.

In conclusion, effective tax planning requires staying updated on relevant changes and deadlines. Consult with a tax professional to optimize your tax strategy and ensure compliance with the latest regulations.

Self-Employment and Employment Expenses

For self-employed individuals, documenting all expenses is crucial. Employment expenses like union and professional dues should also be tracked if they are not reimbursed by your employer.

Regarding home office expenses, it’s currently unclear if the same rules from the past two years will apply for 2023. Monitoring updates from the CRA is advisable.

RRSPs

Contributing to your RRSP can significantly reduce your taxable income. The 2023 contribution limit is 18% of your 2022 earned income, up to $30,780. Spousal RRSP contributions are also deductible. Ensure contributions are made by February 29, 2024, to count for 2023.

TFSAs

TFSAs are a tax-efficient way to save, with a 2023 limit of $6,500. Income earned in a TFSA is not taxed. Always confirm your contribution room with the CRA and your financial institutions.

RESPs

While RESP contributions don’t affect your 2023 tax liability, they enable future educational savings and access to the Canada Education Savings Grant.

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