December 31, 2023 is fast approaching… see below for a list of tax planning considerations. Please contact us for further details or to discuss whether these may apply to your tax situation.
SOME 2023 YEAR-END TAX PLANNING TIPS INCLUDE:
Certain expenditures made by individuals by December 31, 2023 will be eligible for 2023 tax deductions or credits, including digital news subscriptions, moving expenses, labour mobility tax credit expenditures, multigenerational home renovation expenditures (NEW), child care expenses, charitable donations, political contributions, registered journalism organization contributions, medical expenses, alimony, eligible employment expenses, union, professional or like dues, carrying charges and interest expense. Ensure you keep all receipts that may relate to these expenses.
A senior whose 2023 net income exceeds $86,912 will lose all, or part, of their old age security pension. Senior citizens will also begin to lose their age credit if their net income exceeds $42,335. Consider limiting income over these amounts, if possible. Another option would be to defer receiving old age security receipts (for up to 60 months) if it would otherwise be eroded due to high-income levels.
Consider restructuring your investment portfolio to convert non-deductible interest into deductible interest. It may also be possible to convert personal interest expense, such as interest on a house mortgage or personal vehicle, into deductible interest.
You have until Thursday, February 29, 2024, to make tax-deductible registered retirement savings plan (RRSP) contributions for the 2023 year. Consider having the higher income earning individual contribute to their spouse’s RRSP via a “spousal RRSP” for greater tax savings.
NEW! As of April 2023, individuals can contribute to the new tax-free first home savings account (FHSA). Eligible contributions are deductible, and withdrawals to purchase a first home are not taxable. Up to $8,000 can be contributed annually, to a maximum lifetime limit of $40,000. Contributions must be made in 2023 to be deducted against 2023 income.
NEW! The 2023 Fall Economic Statement proposed to deny income tax deductions for expenses, including interest expenses, incurred to earn short-term rental income when that income is earned in provinces and municipalities that have prohibited short-term rentals and when short-term rental operators are not compliant with the applicable provincial or municipal licensing, permitting or registration requirements, effective for expenses incurred January 1, 2024 and onwards. While this does not affect 2023 filings, it may impact the financial considerations surrounding these assets in 2024.
Malhi Accounting Professional Corporation proudly provides tax and accounting services to businesses and individuals across Canada. Whether you require assistance with an audit or guidance in preparing for the tax season, Malhi Accounting offers reliable and transparent assistance every step of the way. A sincere desire to set clients up for success paired with over a decade of experience ensures progressive and reliable consulting services for individuals and businesses alike. To access the advice only a Chartered Professional Accountant can provide, contact Malhi Accounting today at firstname.lastname@example.org or +1-416-407-5436, or visit malhiaccounting.com/contact
The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents.