C. Lough-Li Professional Corporation provides personal tax preparation services in Calgary.
Our firm focuses on staying current on the income tax changes and legislation in order to minimize your income taxes and comply with the constant changes within the income tax regulations and legislation.
We attempt to offer a very thorough and personalized service in preparing your personal income tax returns. Our process is based on supplying you with updates in the income tax rules on a yearly basis so we can capture these changes on your personal tax return. We follow up with an initial interview for your first year of filing and on a continual basis when your personal tax situation is changing. These changes occur often with the constant changes in a person’s life, whether it is brought about by a marriage, divorce, having a child, a disability or a death and many other scenarios. Regardless we can deal with all of your income tax requirements to comply and minimize your tax liability. After the preparation of your returns we follow-up with a final interview to review these returns and answer any questions you may have. You don’t leave our office without knowing why you owe money to the government or why your refund is the amount it is.
We pride ourselves in our personal income tax process.
Contact our personal tax accountants to know more about personal income tax services provided by us.
WHAT’S NEW IN PREPARING YOUR 2022 PERSONAL INCOME TAX RETURN
The Home Office deduction is still in effect for your 2022 tax Return:
Employee home office deduction Calculation method
In the December 14, 2021 federal Economic and Fiscal Update (economic statement), the government announced that the optional simplified method of calculating an employee’s home office deduction, introduced in 2020, will be extended for 2021 and 2022. This method is available to employees who were required to work from home due to the COVID-19 pandemic and are not claiming any other employment-related expenses (such as the use of a car, or paying for a substitute or supplies, etc.).
The deduction is calculated as a flat rate of $2 per day worked at home. The maximum deduction under the simplified method is $500 for the 2022 tax year. Employees who claim other employment-related expenses may continue to use the detailed method to calculate their home office expense deduction.
Amounts received related to COVID-19:
If you received benefits for the 2022 tax year relating to COVID-19 programs you will receive in the mail a T4A as the benefits will be included in income on your tax return. These benefits would include the following programs: Canada Recovery Benefit, Canada Recovery Caregiving Benefit, Canada Recovery Sickness Benefit or Canada Worker Lockdown Benefit.
COVID-19 Benefits subject to Exemption:
In certain cases there were benefits from the Canada Recovery Benefit, Canada Recovery Caregiving Benefit, Canada Recovery Sickness Benefit or the Canada Worker Lockdown Benefit that were eligible for exemption under Section 87 of the Indian Act. In these case a Form T90 – Income Exempt from Tax under the Indian Act must be filed with your return.
COVID-19 Benefit Repayment in a prior year:
There is an option by filling out Form T1B to deduct repayments relating to COVID-19 Benefits in a prior year. If you repaid your Benefits in 2022, you have the option to deduct these in 2020, 2021, or split between 2022 and the year that the benefit was received. By Filing the Form T1B the Government will automatically reassess your tax returns and no amendment will be required.
Air Quality Improvement Tax Credit:
A new 25% refundable tax credit for small businesses that improves ventilation or air quality at your place of business. The conditions to qualify are as follows:
- They incurred expenses for air quality improvements in qualifying locations between September 1, 2021 and December 31, 2022.
- Eligible expenses are limited to $10,000 per location, and $50,000 across all locations for affiliated businesses.
- The credit is available to unincorporated sole proprietors and Canadian-controlled private corporations with taxable capital of less than $15 million employed in Canada in the preceding year.
- Partners who meet these same requirements can also claim the tax credit for their share of a partnership’s eligible expenses.
Also there is a refundable tax credit for farmers in provinces without federally-approved carbon pricing systems. This credit will return the federal fuel charge proceeds directly to farmers based on their eligible farming expenses. To be eligible for the credit, farms must incur farming expenses of at least $25,000.
Critical Mineral Exploration Tax Credit:
The Critical Mineral Exploration Tax Credit is a 30% investment tax credit for the exploration of specified minerals. The only expenses eligible are those that were renounced under eligible flow-through share agreements entered into after April 7, 2022 and before April 1, 2027.
Disability Tax Credit:
After the 2021 tax year, an individual diagnosed with type 1 diabetes is deemed to have met the two times and 14 hours per week requirements for life-sustaining therapy.
First-time Hone Buyer’s Tax Credit:
Homes purchased after December 31, 2021 are entitled to a first-time home buyer’s tax credit of $10,000. These are for qualifying homes that are purchased.
Home accessibility Tax Credit:
This credit allows the qualifying Individual to gain access to or to be mobile or functional within the eligible dwelling or reduce the risk of harm to the qualifying Individual within the eligible dwelling or in gaining access to the dwelling.
The annual expense limit of the home accessibility tax credit has increased to $20,000. The Home Accessibility Tax Credit, which is a non-refundable tax credit, was introduced in the Federal 2015 Budget. The credit is for qualifying expenses incurred in 2016 or later, for work performed or goods acquired in respect of a qualifying renovation of an eligible dwelling of a qualifying individual (eligible for the disability tax credit or 65 years or older at the end of the year).. The HATC can be claimed by a qualifying individual or an eligible individual making a claim for a qualifying individual.
Labour Mobility Deduction for Tradespeople:
Eligible individuals can deduct up to $4,000 per year for temporary relocation expenses. This credit is available for eligible tradespeople and apprentices working in the construction industry.
Medical Expense Tax Credit:
The Medical expense tax credit has included in the 2022 tax year amounts paid to fertility clinics and donor banks in Canada to obtain donor sperm or ova to enable the conception of a child by the individual, the individual’s spouse or common-law partner or a surrogate mother on behalf of the individual.
Canada Training Credit (CTC) (Still in effect for the 2022 tax year)
The CTC is a refundable tax credit introduced in 2020. If you are between 26 and 65 years old, you will accumulate $250 towards their Canada Training Credit Limit (CTCL) account in 2020 if both of the following apply to you:
- You had at least $10,000 of “working income” in 2019.
- Your total 2019 net income was less than or equal to $147,667 (the level at which the 29% tax bracket started that year).
Working income generally includes employment and self-employment income, research grants, scholarships, bursaries, prizes, and maternity and parental EI benefits.
Who qualifies, and how to calculate your CTC balance
If you meet both the minimum working income limit and the maximum total income limit in subsequent years, the CTCL account will continue to accumulate over time to a maximum of $5,000; both limits will be indexed to inflation.
You can claim up to 50% of the costs of taking a course or enrolling in a training program against the balance in your account in the year you paid the tuition. The remaining 50% of the program costs may be eligible for the tuition tax credit, as the CTC uses the same eligibility criteria as are used for the tuition tax credit. You would see the balance in your CTC account for 2020 on your notice of assessment for 2019. Any unused CTCL will expire when you turn 65.
For example, Sohil was a 28-year-old Canadian resident in 2020. From 2019 to 2023, he met both the minimum working income limit and the maximum net income limit, so the balance in his notional CTCL account as reported on his 2023 notice of assessment was $1,250 (five years x $250 per year). In 2024, he enrols in a continuing education program at a local community college to upgrade his skills. The tuition he pays for the program is $2,000.
On his 2024 tax return, Sohil can claim a refundable CTC of $1,000 (50% of the $2,000 tuition), and he can claim a non-refundable tuition tax credit of 15% on the remaining $1,000 of tuition fees not eligible for the CTC. Sohil’s CTCL for 2025, assuming he meets both the working income and net income criteria for 2024, would be $500 ($1,250 opening balance – $1,000 CTC claimed in 2025 + $250 added based on his income in 2024).
Capital Cost Allowance for Zero-Emission Vehicles
There are two CCA classes for zero-emission vehicles acquired after March 18, 2019, which become available for use before 2028. (Class 54 and 55)
Lifetime Capital Gains Exemption
- The lifetime capital gains exemption has increased based on the indexation to inflation to $913,630 in 2022. Qualified farm or fishing property continues to be eligible for a maximum total limit of $1,000,000 for 2022.
Tax-Free Savings Account
- For 2022, the tax-free savings account will have a proposed annual contribution limit of $6,000 subject to inflation for subsequent years. The maximum amount from 2009 – 2021 that an individual can contribute to a Tax Free Savings Account is $81,500. Contribution room is accumulated for only those years in which the individual was at least age 18.
Non-eligible and Eligible dividend rates
In 2022, non-eligible dividends had the gross-up factor of 15% and the dividend tax credit adjustment is 9/13 for an effective dividend tax credit rate of 10.38% of the grossed up dividend. In 2022 the eligible dividends had a gross up factor of 38% and the dividend tax credit adjustment is 6/11 for an effective dividend tax credit rate of 20.73%.
Registered Retirement Savings Plan
- Your maximum RRSP limits for 2022 are $29,210.
There have been no changes in the overall federal marginal tax rates; however, the thresholds for taxable income have been changed as indicated in the comparison table below.
|2022 Taxable Income||Federal||Alberta||2022 Taxable Income|
|On the first $50,197||15.0%||10%||On the first $134,238|
|$50,197 up to 100,392||20.5%||12%||134,238 up to 161,086|
|$100,392 up to 155,625||26.0%||13%||161,086 up to 214,781|
|$155,625 up to 221,708||29.0%||14%||214,781 up to 322,171|
|Over $221,708||33.0%||15%||Over $322,171|
Other changes for 2022:
Employment Insurance and Canada Pension Plan
Employment Insurance premiums are $1,002.45 with the employer’s portion being $1,403.43. The maximum insurable earnings have increased from $56,300 in 2021 to $61,500.
The maximum pensionable earnings for the Canada Pension Plan have increased from $61,600 in 2021 to $66,600; the employee and employer contribution rates have also increased from 5.45% to 5.95% in 2022.
The contribution limit for Tax Free Savings Accounts remains unchanged at $6,000 for 2021.
Changes in 2023:
Residential Property flips:
Proposed in the 2022 budget, Residential properties (including rental properties) which are disposed of in 2023 and have been owned for less than 12 months will be deemed to be business income and taxed at full rates.
Home Renovation Tax Credit
Effective for 2023 there is available a $50,000 non-refundable tax credit for qualifying renovations which is a renovation that creates a secondary dwelling unit to enable an eligible person (senior or person with a disability) to live with a qualifying relation.
Underused Housing Tax Credit
Effective January 1, 2022 there is a federal tax applied to a vacant or underused housing in Canada targeting Canadian and foreign property owners.
The underused housing tax is an annual 1% tax on the ownership of vacant or underused housing in Canada. The tax usually applies to non-resident, non-Canadian owners, and in some circumstances it also applies to Canadian owners.
If you are an owner of residential property including rental properties, please ensure you consult our firm to ensure whether you are exempted or affected by the underused Housing Tax Credit. There are specific rules that exempt you as an individual or a corporation or other mode of ownership, which means that you are not required to file the Underused Housing Tax Return and Election Form (UHT-2900 E), and therefore do not have a liability to pay tax. There are additional rules that classify you as an “affected owner”, which mean that you will have to file the tax return, but may not have a liability to pay tax.
Find out more about personal income tax services in Calgary by scheduling an appointment with our personal tax accountants or calling our office at (403) 209-3275.
C. Lough-Li Professional Corporation - accounting firm in Calgary provides: Accounting And Assurance Services | Audit Services | Income Tax Services | | Corporate and Business Income Tax Services | Estate Planning and Succession Planning | Not-For-Profit and Charity Income Tax Services | Bookkeeping Service | |
Our personal tax accountants at C. Lough-Li Professional Corporation service the entire Calgary and surrounding areas.