Only one week left to contribute to your RRSP

The countdown to tax season is on. There is only one week left to contribute to your registered retirement savings plan (RRSP), and two months to file your income tax return. A brief summary of tax dates and news to remember this year.

Dates not to forget

The first deadline to consider is February 29. This is the deadline to contribute to your RRSP and thus reduce your taxable income for the year 2023.

“However, we should not wait until the last minute if we want to be sure that the contribution is taken into account in our current declaration,” warns Yannick Lemay, tax specialist at H&R Block.

At issue: processing times for financial institutions. “It can sometimes take two or three days to open an account or add contributions,” he emphasizes. If you do it too late, you run the risk that the tax benefits will be carried over to next year’s declaration.

As for benefiting from a reduction in taxable income thanks to the new tax-free savings account for the purchase of a first property (CELIAPP), it is too late for the year 2023. You had until December 31 to contribute and benefit from it this year. If you did so before this date, the amount set aside will be deducted from your current return. Otherwise, it will be counted next year.

Another date not to be missed: April 30. This is the last day to file your income tax return as well as the last day to pay your balance and avoid paying interest.

First two levels

The tax cut for Quebec taxpayers came into effect in 2023. It is a reduction of one percentage point in the rates of the first two brackets of taxable income.

As a reminder, it is not only low and middle incomes who benefit from the tax cut, but all Quebecers who pay tax, including those who earn more than $100,000 per year – since their first income brackets are also taxed according to the first two levels.

Even though it was announced in the spring of last year, the rate cut “is retroactive to the beginning of January,” recalls Mr. Lemay of H&R Block. “However, the calculations for withholding deductions from payroll were only updated from 1er July. This therefore means that, for the first half of the year, we overpaid tax under the new tax rates,” he adds.

This shortfall “will have an impact on your tax return,” underlines Mr. Lemay. But be careful, this does not necessarily mean that you will receive an amount of money.

“If someone is in the situation where they have an amount of tax to pay, the economy will reduce or cancel their balance, but they will not receive money as such. While, yes, some whose balance to pay is zero will receive money,” explains the expert.

Tax credit for teleworking

Another important change this year: the popular fixed rate method for calculating the tax credit for teleworking is no longer available starting this year. This is the “simplified” method, introduced in 2020 during the pandemic, which allowed you to claim $2 for each day of working from home, up to $500.

From now on, if you are still teleworking, you will have to use the detailed and more tedious method – which is still available – to benefit from the related tax deduction.

Quick resale of a property

Furthermore, changes to the tax on the rapid resale of residential real estate were introduced in 2023. If you have resold a property that you have owned for less than 365 consecutive days, this is considered a “rushed resale” or a “precipitous resale”. flip real estate”, unless there is a reason that justifies it — such as death, separation or the birth of a child.

Now, profits made from a quick resale of property are considered fully taxable business income. It is no longer possible to benefit from the 50% capital gains tax, nor from the principal residence exemption.

Where to find an accountant?

To watch on video


source site-48