Tax Tips & Pits: What’s new for ‘22? – Rossland News

Tax Tips & Pits: What’s new for ‘22? – Rossland News

Start with perhaps the best “what’s new” … the $1,000 Staycation Credit … but only available in Ontario.

On to serious info.

Reminder April 30 falls on a Sunday this year so the tax filing and payment deadline is Monday, May 1, 2023.

There’s recently been lots in the news about support for first time home buyers, in particular the newly introduced First Home Savings Account (FHSA) that comes into effect in 2023.

The basic tax benefits are summed up like this.

The FHSA is like an RRSP in terms of the contributions being tax deductible, and the FHSA is like a TFSA in terms of the withdrawal not being taxable income as long as it is used to purchase a home, or transferred to another registered account.

Many more details to come in 2023.

In the meantime, there is other news for the first time home buyer that is really not new, just better.

The First Time Home Buyers Tax Credit that has been around for a number of years, has been doubled from $5,000 to $10,000. It’s simply claimed during tax return preparation.

To qualify, a person can’t have owned a home within the four years prior to the year the home was purchased, and this includes a spouse or common-law partner.

And just to be nice, this doubling of the credit is applicable to homes purchased from January 1, 2022, onward.

Sticking with real estate, the recently announced “anti-house flipping” rule does not apply for 2022 tax prep.

The new rule denies the capital gains exemption if a house is bought and sold within 365 days, with some defined exceptions to the rule.

From real estate to renovations.

The “home accessibility renovation” expense limit has been increased from $10,000 to $20,000, to support people to remain living at home.

To be eligible you must qualify for the Disability Tax Credit, or be 65 years of age.

Recently announced but not applicable for 2022 tax prep, the new “multi-generational home renovation credit” is a refundable tax credit of 15 per cent of expenses to a maximum of $50,000.

This is designed to transition a family member into a home owned by another family member.

Reminder, this is for the 2023 tax year.

On the medical front, the government has expanded the list of allowable expenses to include fertility clinic and donor bank services provided to an individual and also for a surrogate mother.

In addition, some costs incurred for a surrogate or donor are considered eligible expenses.

Also with medical, the government has now deemed type 1 diabetes as an acceptable diagnosis to grant a Disability Tax Credit, conditional on the person requiring a specific weekly regimen of medical life sustaining therapy.

New for the construction industry, the government has introduced the Labour Mobility Deduction for tradespeople and apprentices working in the industry who have to live away from home on a temporary basis.

The maximum claim is $4,000 for relocation expenses and must be supported by paid receipts and reported on Schedule T777.

Remaining with the work theme, continuing from the COVID days of 2020, again for 2022 the government is offering a business use of home expense claim for those employees who worked from home who would not normally have worked from home.

For those people preferring simplicity, the COVID $2/day “flat rate” method still applies, to a maximum of $500.

To claim more than $500, the COVID “simplified” method must be used, and it’s really not that simple.

Speaking of COVID, for those who were required and did repay COVID benefits they had received, if the repayment was made in 2022, the government is allowing the repayment to be reported as a deduction for 2022, or it can be reported for either 2021 or 2020 to reduce income in those years.

It does not have to be claimed as a deduction in the year the COVID benefit had been received.

Form T1B has been created to simplify this retroactive tax reporting if claimed for 2021 or 2020.

Finally, the CND-USA 2022 annualized exchange rate is 1.3013.

The annualized rate is used when related multiple conversions spread throughout the year are necessary.

However, in the case of one-off transactions, the exchange rate for that particular month, or even day, should be used.

This is the protocol for converting all foreign currency to Canadian funds.

Check CRA or the Bank of Canada for rates.

Ron Clarke, owner of JBS Business Services in Trail, provides accounting and tax services.

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