by Ron Clarke
Any COVID benefits you have received in prior years and had to repay in 2023 can only be reported as a deduction in 2023.
You can’t carry them back to the tax year you received them.
Speaking of COVID, and this is the last it will be mentioned, if you still worked from home in 2023, the flat rate business use of home expense claim is no longer an option for 2023.
To make the claim, you will have to follow the standard criteria for making this claim.
Here are some reminders and updates on tax changes brought into effect in 2022.
On the medical front, as of 2022, allowable expenses include fertility clinic and donor bank services provided to an individual, and for a surrogate mother.
Also, Type 1 diabetes is an approved diagnosis to grant a Disability Tax Credit, conditional on the person requiring a weekly regimen of medical life sustaining therapy.
Also brought into play in 2022, the Labour Mobility Deduction (LMD) for tradespeople and apprentices working for an employer and having a job greater than 150 km away and therefore having to set up life temporarily away from home.
If costs are not reimbursed by the employer, the worker can claim up to $4,000 of expenses, if supported by paid receipts for travel, food, and accommodation.
The “home accessibility renovation” expense limit was increased in 2022 from $10,000 to $20,000 with the credit being 15 per cent of the amount.
The credit is to support people to remain living in their home. To be eligible a person must qualify for the Disability Tax Credit or be at least 65 years of age.
So, what’s new for 2023 tax reporting?
Announced in 2022 and now applicable for 2023, the new “multi-generational home renovation credit” is a refundable tax credit of 15 per cent of up to $50,000 of renovation expenses. This is designed to transition a family member into a home owned by another family member.
Also announced in 2022, The Property Flipping Rule came into effect January of 2023.
Otherwise known as the “365 day rule” or the “anti-house flipping rule.”
This new tax rule denies the capital gains exemption if a house is bought and sold within 365 days. Instead, the full profit from the sale is included as taxable income.
However, there is a list of defined exceptions to the 365 day rule such as change in marital status, employment change, health issues for self or immediate family member, and the list goes on and on.
A very popular 2022 announcement was the First Home Savings Account (FHSA).
It came into effect April of 2023 so if an account was set up and a contribution made prior to Dec. 31, this is the first year a T4FHSA slip will be issued to claim a tax deduction, just like an RRSP contribution.
If funds were withdrawn from an FHSA in 2023, this tax slip is also issued but as long as a home was purchased there is no tax consequence since these investment funds aren’t reported as taxable income if used for that purpose.
New for British Columbians is the BC Renters Tax Credit. It’s a $400 refundable tax credit for a household income under $60,000, reducing down to a zero credit at $80,000.
The renting of a unit in 2023 must include a minimum of 6, one month rental periods.
There is only one $400 claim for spouses whether they live in one rental together or two separate rentals. However, unrelated roommates living in one common rental can each make a $400 claim.
There is a broad definition of rental unit, including long term care facilities and student housing.
Excluded are rentals owned by a family member, free employer provided rentals, rent to own agreements, and rentals in mobile and trailer parks.
Now for some very basic changes for 2023 tax preparation.
For those situations when travel expenses can be claimed, the mileage reimbursement rate for 2023 is down from $0.58/km to $0.565/km, but the flat meal rate remains at $23/meal.
The CND-USA 2023 annualized exchange rate is 1.3497.
The annualized rate is used when related multiple conversions are spread throughout the year. In the case of one-off transactions, the exchange rate for that particular month should be used.
There is a new box on the T4 slip this year due to the enhanced CPP program.
It’s box 16A.
Will you sleep better tonight knowing that box 16A now exists?
Oh, one last thing.
There’s something that never changes … unless it falls on a weekend … the tax filing deadline including the payment of any taxes owing is April 30.
It’s on a Tuesday this year.
Ron Clarke, owner of JBS Business Services in Trail, provides accounting and tax services.