A guide to 2023 tax season in Canada
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Updated: January 31, 2024
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Tax season can be unnerving for even the most organized among us. The best way to ensure the process goes as smoothly as possible is to stay up to date on filing deadlines and be aware of new deductions and other changes.
While many assume that tax season in Canada starts in April, the reality is that you can—and should—start preparing for your income tax return well before spring. This guide is designed to provide you with comprehensive information, ensuring a fast and stress-free tax filing experience. It covers details on the new and updated tax breaks applicable for your 2023 income tax return, along with info about all the associated deadlines. While tax season may never be fun, it doesn’t have to be frustrating.
What’s new for taxes in Canada 2023?
Each year, the federal government adds, removes or changes eligible deductions, credits and benefits that can save you money on your annual tax return. While there are a couple of changes to existing claims, there were no new tax credits introduced this year.
What’s changed for taxes in Canada 2023?
Here is an overview of the major tax changes that may affect how you do your taxes in 2024 for the 2023 tax year.
- Elimination of Short-Term Rental Deductions: The federal government eliminated deductions on short-term rentals in provinces and cities where operating them is banned. This change is to encourage owners to return units to the long-term rental market in an effort to help ease Canada’s housing shortage.
- CPP Pension Enhancement: The Canada Pension Plan (CPP) contributions are set to increase, with a second level of CPP contributions being collected to boost CPP payments to retirees. Both employees and employers will see an increase in contributions.
- Alternative Tax: This minimum tax rate is imposed on high-income earners to prevent them from using deductions to unfairly lower their tax bill beyond a set amount, regardless of the deductions and credits they may be eligible for under the regular tax rules. Presently, the AMT is applied at a 15% rate with a $40,000 exemption. Proposed amendments (the bill to make this change has not yet been officially approved) include an increase in the minimum taxable income exemption to about $173,000, accompanied by a tax rate of 20.5% on income above this threshold.
- Temporary Flat Rate Method For Office Expenses: The temporary flat rate method, introduced in 2020 in response to the COVID-19 pandemic, made it easier for employees to claim home office expenses. However, this method will no longer be available for the 2023 tax year.
BPA and tax brackets
Of course, two things that change every year are the maximum basic personal amount and the tax brackets.
The maximum basic personal amount refers to the highest amount of income that a person can earn in Canada before they are required to pay federal income tax. It’s a non-refundable tax credit that reduces the amount of income on which you have to pay tax. The amount changes every year to keep up with inflation. For 2024 the amount is $15,705 ($14,156 for high income earners with incomes above $173,205).
Tax brackets 2023
How to file taxes in Canada
There are several ways for Canadians to file their taxes:
- File Online: The CRA calls its online filing for individuals NETFILE (as opposed to EFILE, which is the service that tax preparers use). To send in your return via NETFILE, choose a certified desktop, online, or mobile software product, like TurboTax, to prepare your return and follow the prompts to submit it to the CRA. If you use NETFILE and have set up direct deposit, you should receive your refund in about eight days. NETFILE opens on February 19, 2024.
- Mail-in a paper copy: If you filed a paper return last tax season in Canada, the CRA should automatically mail you the 2023 income tax package by the end of February. Otherwise, you can view and download forms from the CRA website.
- File by Phone: Canadians with low or fixed incomes, and those whose tax situation doesn’t change much each year, are invited by letter to use the CRA’s automated phone service, SimpleFile by Phone (formerly called File my Return).
Frequently asked questions
When is tax season in Canada in 2024?+
Tax season in Canada starts early, with forms and publications for the 2023 tax year available to view, download and order from the CRA website as of January 23, 2024. You can prepare your return as soon as you receive all the necessary slips and paperwork—such as T4s, T4As, T5s, T3s and RRSP receipts—from your employers, banks, government agencies, etc. (If you’re missing any slips, check your My Account for electronic copies as of February 2024.) The CRA will begin accepting returns online for the 2023 tax year on Feb. 19, 2024.
What is the deadline for filing taxes in Canada?+
The tax filing deadline for most Canadians is Tuesday April 30, 2024. Those who are self-employed have until June 15, to file their returns (however, because that day falls on a Saturday, they have until June 17) however, the actual tax payment is still due by April 30 or you’ll be subject to interest and possible penalties.
How do I fix a mistake on my tax return?+
If you notice a mistake on a return that you’ve already filed, wait until you receive your Notice of Assessment from CRA and then file an adjustment request online, or by mail using Form T1-ADJ, T1 Adjustment Request For paper adjustments, also include all the necessary supporting documents, including receipts, slips and schedules. Also, consult our article on The Biggest Mistakes Canadians Make on Their Taxes – and How to Fix Them.
How do I pay my taxes in Canada?+
There is certainly no shortage of ways to remit your tax payment to the CRA. You can use your online banking service, pay by credit card, PayPal or e-Transfer, set up a pre-authorized debit, use a third-party service provider, pay in person at bank or post office, or send a cheque by mail. If you pay your taxes by credit card, consider getting one of the best cash back credit cards or one of the best travel rewards credit cards so you can earn back a little something on the spend.
What are the penalties for late tax-filing?+
If you owe money on your taxes and do not file by the deadline, you’ll get dinged financially in two ways. First, you’ll pay a 5% late-filing penalty and an extra 1% for every month after that (up to 12 months). Second, CRA will charge you compound daily interest on your unpaid balance starting the day after your taxes were due. If you file on time but are late with your payment, you’ll pay interest charges but avoid the late-filing penalty.
Is tax filing mandatory?+
Generally, you are required to file a return if you owe income taxes, or if the CRA asks you to file. There are a few other situations in which you’re obligated to file a return (e.g., if you’re repaying amounts you borrowed from your RRSP for the Home Buyers’ Plan or Lifelong Learning Plan. But even if it’s not a must, you should file anyway so you can collect a tax refund, and apply for various benefit programs, such as the GST/HST tax credit and Canada Child Benefit.
How can I avoid making tax mistakes in the first place?+
A simple way to avoid tax mistakes is to use an online tax filing software like TurboTax. Just answer a series of questions accurately, and the system does all the hard work of putting together your return. You can also use the handy TurboTax Live Assist and Review. The virtual service lets you ask questions and get advice about your taxes from a real tax expert — from the comfort of your computer. The software even reviews your return line-by-line to make sure nothing is overlooked.
When does NETFILE open for 2021 income taxes?+
NETFILE opens on Monday, February 19, 2024, for filing personal tax returns for the 2021 tax year. To file online, you must use CRA-certified tax-filing software products that use the NETFILE web service. You can also file previous tax years back to 2016, but returns for tax years earlier than 2015 must be done on paper.
The bottom line
Tax time doesn’t have to be painful. There are plenty of resources online to help you through it as well as reliable online tax filing software to make it easier. Just schedule some time to get it done before the deadline. Late filers risk being hit with penalties. Wouldn’t you rather spend that money on something you want? And if you’re getting a refund, get those funds as soon as possible so you can do what you like with them. In either case, file on time!
Lastly, don’t forget to review our handy guide on How to Get More Money Back from your Tax Return! It could put a little more change in your pocket.
With files from Tamar Satov