Prescribed interest rates for first half of 2023
March 31, 2023
The Canada Revenue Agency has announced the interest rates which will apply to amounts owed to and by the Agency for the first half of 2023, as well as the rates that will apply for the purpose of calculating employee and shareholder taxable benefits.
Debit rate Credit rate Shareholder Benefits
January 1 – March 31 8% 4%/6% 4%
April 1 – June 30 9% 5%/7% 5%
Additional details of interest rates charged and paid by the Canada Revenue Agency can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/prescribed-interest-rates.html.
CRA resumes debt collection activities
March 31, 2023
Where the Canada Revenue Agency (CRA) owes an amount to the taxpayer (such as a tax refund), the Agency has the right to deduct from that amount any debts owed by the taxpayer to the federal government (including debts related to pandemic benefits). Taking such offsetting deductions was in previous years part of the Agency’s debt collection processes.
In 2020 the CRA suspended that particular debt collection practice, in recognition of the difficult financial circumstances faced by many taxpayers during the pandemic. In a recent Tax Tip, however, the Agency confirmed that where a taxpayer owes money to the federal government, his or her tax refund for the 2022 tax year (as well as most other amounts owed to the taxpayer by the Agency) may be reduced by the amount of such debts.
Details of the CRA’s debt collection policies, including some limited exceptions, are outlined in the Tax Tip, which is available on the CRA website at https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2023/cra-would-like-remind-you-it-has-resumed-debt-recovery-activities.html.
Federal Budget 2023
March 29, 2023
More information can be found on Government of Canada web site Budget 2023 — A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future
Deduction for Tradespeople’s Tool Expenses
Budget 2023 proposes to double the maximum employment deduction for tradespeople’s and apprentice mechanics’ tools from $500 to $1,000, effective for 2023 and subsequent taxation years.
Registered Education Savings Plans
Budget 2023 proposes to increase limits on certain RESP withdrawals from $5,000 to $8,000 for full-time students, and from $2,500 to $4,000 for part-time students. Budget 2023 also proposes to allow divorced or separated parents to open a joint RESP for their children. These changes would come into force on March 28, 2023.
Registered Disability Savings Plans
Budget 2023 proposes to extend the qualifying family member measure (which allows a family member to open an RDSP for an adult relative) by three years, to December 31, 2026. Siblings will also be qualified family members, as of Royal Assent.
Strengthening the Intergenerational Business Transfer Framework
Budget 2023 proposes to amend the rules introduced by Bill C-208 to ensure that they apply only where a genuine intergenerational business transfer takes place. To provide flexibility, it is proposed that taxpayers who wish to undertake a genuine intergenerational share transfer may choose to rely on one of two transfer options:
- an immediate intergenerational business transfer (three-year test) based on arm’s length sale terms; or
- a gradual intergenerational business transfer (five-to-ten-year test) based on traditional estate freeze characteristics (an estate freeze typically involves a parent crystalizing the value of their economic interest in a corporation to allow future growth to accrue to their children while the parent’s fixed economic interest is then gradually diminished by the corporation repurchasing the parent’s interest).
Budget 2023 also proposes to provide a ten-year capital gains reserve for genuine intergenerational share transfers that satisfy the above proposed conditions.
These measures would apply to transactions that occur on or after January 1, 2024.
General Anti-Avoidance Rule (“GAAR”)
Budget 2023 proposes to amend the GAAR by:
- introducing a preamble;
- changing the avoidance transaction standard;
- introducing an economic substance rule;
- introducing a penalty; and
- extending the reassessment period in certain circumstances.
Alcohol Excise Duty
Budget 2023 proposes to temporarily cap the inflation adjustment for excise duties on beer, spirits, and wine at two per cent, for one year only, as of April 1, 2023. The excise duty rates on all alcoholic beverage products as of April 1, 2023, are presented in the table below.
Proposed Alcohol Excise Duty Rates as of April 1, 2023
Rates 2022-23 Rates 2023-24 (no cap) Rates 2023-24 (2% adjust)
Spirits $13.042 $13.864 $13.303
Wine $0.688 $0.731 $0.702
Beer $34.820 $37.014 $35.516
Inflation rate for February 2023 at 5.2%
March 25, 2023
The most recent release of Statistics Canada’s Consumer Price Index puts the overall rate of inflation for the month of February 2023 at 5.2%, as compared to the 5.9% rate recorded for January. Both rates are as measured on a year-over-year basis.
The impact on consumers of price increases in essential goods was mixed. The price of gasoline declined by 4.7%, the first such yearly decline recorded since January of 2021. However, the cost of food purchased from stores rose 10.6% in February (as measured on a year-over-year basis) which, as noted by StatsCan, marked the seventh consecutive month of double-digit increases in food prices.
Details of the inflation picture for the month, by index component and by province, can be found in the March release of the Consumer Price Index, which is available on the StatsCan website at https://www150.statcan.gc.ca/n1/daily-quotidien/230321/dq230321a-eng.htm?HPA=1&indid=3665-1&indgeo=0.
Quebec Budget 2022-2023
March 22, 2022
More information can be found on Revenu Quebec web site Budget 2022-2023, Ministère des Finances – Page d’accueil (gouv.qc.ca)
Investment income
March 19, 2023
Interest income and foreign dividends from securities is fully taxable, capital gains get preferential tax treatment and is 50% taxable, and Canadian dividends also get preferential tax treatment and get a dividend tax credit. The actual tax rate on investment income is based on your tax bracket.
More information can be found on CRA web site Investment income – Canada.ca
More information can be found on Revenu Quebec web site Line 130 – Interest and other investment income | Revenu Québec (revenuquebec.ca)
April 1 launch of Tax-Free First Home Savings Account program
March 17, 2023
As part of the 2022 Federal Budget, the federal government introduced the Tax-Free First Home Savings Account (FHSA). The FHSA allows eligible taxpayers to contribute $8,000 per year (to a lifetime maximum of $40,000), and to deduct contributions made from income. Where accumulated contributions are withdrawn and used to purchase a home, no tax is payable on the withdrawal.
Deductions for contributions to an FHSA can be made starting with the 2023 tax year, and it will be possible to set up such plans with a Canadian financial institution as of April 1, 2023. The most recent information posted on the new FHSA can be found on the Finance Canada website at https://www.canada.ca/en/department-finance/news/2022/08/design-of-the-tax-free-first-home-savings-account.html.
Date announced for 2023-24 Federal Budget
March 17, 2023
The Minister of Finance has announced that the 2023-24 Federal Budget will be brought down on Tuesday March 28, 2023, at around 4 p.m. EST. The media release providing the budget date can be found on the Finance Canada website at Government of Canada to release Budget on March 28, 2023 – Canada.ca.
Once the budget measures are announced, the budget papers will be made available on the same website at Federal Budget – Canada.ca.
Seniors Tax Benefits
March 17, 2023
Quebec Residents
- What tax credits are there for people 60 or over, 65 or over or 70 or over? There are a number of tax benefits based on your age at the end of the year. For example:
- Once you turn 60, you can claim the tax credit for career extension if you earned eligible work income.Once you turn 65, you may be eligible for:
- the age amountthe deduction for retirement income transferred to a spousethe grant for seniors to offset a municipal tax increase
- the tax credit for home-support services for seniorsthe independent living tax credit for seniorsthe senior assistance tax creditthe tax credit for seniors’ activities (the registration fees must have been paid before December 31, 2022)
- Once you turn 60, you can claim the tax credit for career extension if you earned eligible work income.Once you turn 65, you may be eligible for:
- https://justepourtous.revenuquebec.ca/en/profiles/seniors/
- https://www.revenuquebec.ca/en/citizens/your-situation/seniors/
Canada
- Canada Pension Plan Monthly, taxable benefit that replaces part of your income when you retire.
- Guaranteed Income Supplement Monthly payment available to low-income Old Age Security pensioners.
- Old Age Security Monthly payment you can get if you are 65 and older.
Underused Housing Tax
March 10, 2023
The Underused Housing Tax is an annual 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022. The tax usually applies to non-resident, non-Canadian owners. In some situations, however, it also applies to Canadian owners.
Underused Housing Tax – Canada.ca
REPORTING GST AND QST
March 8, 2023
GST/HST-QST RETURN:FPZ-500-V
If you are a registrant, you must file a GST and a QST return for each reporting period, even if you are not entitled to a refund or have no amount payable.
Because the GST and QST are both administered by Revenu Québec, you can use a combined GST/HST-QST return.
https://www.revenuquebec.ca/en/businesses/consumption-taxes/gsthst-and-qst/reporting-gst-and-qst/
The banks also provide a Tax Payment and Filing Service, available through Internet banking, lets you pay and file federal and provincial business taxes online
CRA announces meal and vehicle expense amounts claimable for 2022
March 3, 2023
Taxpayers are entitled to make a claim on their annual return for costs incurred in certain circumstances for meal costs and vehicle expenses. Such costs may, for instance, be claimable by individuals who moved during the year, or who had to travel in order to obtain medical care.
There are two methods by which eligible meal and vehicle expense claims may be calculated – the simplified (or flat-rate) method, and the detailed method, which uses actual costs incurred.
Under either method, the amounts which may be claimed are subject to specific limits, which in some cases vary by province. The amounts which may be claimed on the income tax return for 2022 were recently posted on the Canada Revenue Agency website, and can be found at Meal and vehicle rates used to calculate travel expenses for 2022 – Canada.ca.
About Expert Fiscaliste Tax Preparation
Maximize your tax refund this year with Expert Fiscaliste tax services for your T1 and TP-1 2022 Income Tax Returns, call or text us at 514-954-9031 or send us a email will@expert-fiscaliste.ca or visit our web site. In addition, we offer an important advantage with CRA and Revénu Quebec being your Authorized Representative for all taxation years. We also provide a secure portal to securely share documents, data and reports. Contact us now at 514-954-9031, we are accepting new 2022 clients for a limited time.
