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Koroll & Company Blog

Federal Budget Highlights: Personal Tax Changes

[fa icon="calendar"] Oct 6, 2022 2:00:00 PM / by Koroll & Company

TAx Changes

The Federal Budget was released earlier this year. While no changes were made to tax rates, there were several introductions and increases to credits and deductions, with a focus on residential property, that may have an impact on your end-of-year taxes.

 

In this blog, we take a look at some of the key changes and proposals from the Federal Budget:

Tax Free First Home Savings Account 

The budget proposes a new Tax Free First Home Savings Account. This account is targeted at prospective first-time home buyers. It will let home buyers save up to $40,000 in a tax-free savings account. Like an RRSP, the contributions would be tax deductible. So long as withdrawals are used to buy your first home, the account will also act as a TFSA (tax-free savings account). That is to say, the withdrawals, including investment income, would be non-taxable.

First-Time Home Buyers Tax Credit 

The 2022 budget is proposing an increase in the credit amount for the first-time home buyers tax credit. Currently, taxpayers can claim $5,000. The increase would increase the amount to $10,000 for a maximum credit of $1,500. 

Home Accessibility Tax Credit 

The budget is also proposing an increase to the qualifying expense limit for the home accessibility tax credit. The amount would be increased from $10,000 to $20,000 and would allow for a tax credit on eligible accessibility renovations or alterations of up to $3,000.

Multigenerational Home Renovation Tax Credit 

For multigenerational families living under one roof, taxpayers can receive a credit for up to $7,500 for building a secondary unit for a senior or an adult with disabilities. 

Residential property flipping 

The budget proposes a new rule for residential property flipping. Profits made on the sale of a residential property that was held for less than a year would be fully taxable as business income. There will be some exceptions to this rule, such as selling a house that was held for less than 12 months because of:

  • Death 
  • Disability 
  • Birth of a child 
  • A new job 
  • Separation 

Draft legislation is supposed to be released before finalizing the rules. 

Labour mobility deduction 

The budget is also proposing an annual tax deduction of up to $4,000 for tradespeople. This deduction will cover eligible travel and temporary relocation expenses for eligible apprentices and tradespeople. 

Medical expense credit 

The government is planning to extend the eligibility of the medical expense credit for surrogacy and other expenses. It will now include medical expenses related to surrogate sperm, ovary or embryo donors. It will also extend to medical expenses related to surrogate mothers, including in vitro fertilization. 

In addition, some fertility clinics and donor bank fees will also be covered. 

Minimum tax 

The government will be examining a new minimum tax regime for high-income earners in Canada. Details are to be released in the fall 2022 economic and fiscal update.  

For information on these proposed changes and how they may affect you, contact us today


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The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.



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