Registered Retirement Savings Plan (RRSP):
RRSP contribution can save a substantial amount of taxes in the current year when you are in higher tax bracket and will become taxable when you may not be in the higher tax bracket after retirement. The current year RRSP deduction limit is calculated as the lesser of 18% of your previous year’s earned income to a maximum limit for the given year. RRSP contribution limit for 2023 is $30,780. If you did not fully use RRSP deduction limit in the previous year, CRA carries forward the limit to the next year. Please note that the Canada Revenue Agency (CRA) charges a tax of 1% per month on excess contributions to RRSPs.
Principal Residence Exemption (PRE):
The PRE allows homeowners did not have to report any sale of a Principal Residence until 2015 but effective 2016 a sale of Principal Residence must be reported on your personal tax return in order to claim the PRE benefits. If the disposition of a principal residence is not reported you may be able to amend your return at a later time to report the disposition, however, a late filing penalty may apply, calculated at the lesser of $100 for each month the reporting is late and $8,000. Moreover, from 2016, the One Plus year rule in claiming the PRE is no longer available to non-residents who purchase Canadian homes. Earlier, these individuals were allowed to claim the PRE for one year that they owned a Canadian personal residence.
Home Accessibility Tax Credit (HATC):
Individuals sixty five years of age or older or individuals who are eligible to claim the disability tax credit can claim a federal non-refundable tax credit on eligible home renovations which enhances the safety and accessibility of their home. A maximum of $20,000 per year can be claimed which can result in a maximum tax credit of $3000.
Tax Credits to be phased out:
Ontario Staycation credit has been discontinued.
Children Fitness and Arts Credits: The Federal Government has reduced the Children Fitness Credit and Children Arts Credit by half in 2016. Earlier the Canadian Residents were able to claim a maximum of $1,000 and $500 respectively for these expenses and could save a maximum federal tax of $225 per child. In 2016 the maximum limit for these amounts will be $500 for fitness expenses and $250 for arts expenses per child, resulting in a maximum tax savings of $113. The credits will not be available in 2017.
The Education and Textbooks Tax Credit :
The Education and Textbooks Tax Credit allowed all post-secondary students to claim $465 federal tax credit for every month of full-time study and $140 for each month of part-time study. From 2017 onwards, this credit has been eliminated, however, actual tuition fees will still be eligible for a credit. The Ontario Tuition and Education tax credit is expected to be eliminated for periods of study occurring after September, 2017 in order to support the proposed changes of the new Ontario Student Grant program
Educator School Supply Tax Credit (ESS) :
Educator School Supply Tax Credit (ESS) allows teachers and ECEs who purchase supplies for use in the classroom will be eligible for a refundable tax credit on up to $1,000 of purchases.
New Top Tax Rate :
New Top Tax Rate-For 2016 a new top marginal Income tax brackets Federal rate has been introduced.
- 15% tax up to $53,358
- 21% from $53,358 to $106,716
- 26% from $106,717 to $165,429
- 29% from $165,430 to $235,674
- 33% for incomes more than $235,675
Tax Free Savings Account (TFSA) :
Tax Free Savings Account (TFSA) A TFSA is a registered savings account that allows individuals to earn investment income tax-free. Contributions to the account are not deductible for tax purposes and withdrawals of contributions and earnings from the account are also not taxable. The TFSA contribution limit for 2023 is $6500 and for 2024 is $7000.
First Time Home Savings Account (FHSA) :
First Time Home Savings Account(FHSA) introduced in 2023 allows you to contribute up to $8000 a year to a maximum of $40000 which can be withdrawn when you purchase your first time home. Unlike RRSP HBP, the eligible withdrawal is not taxable when you withdraw to the first time home purchaser.
Important Dates for 2025:
Feb 28, 2025 – Filing deadline for T4 returns
March 3, 2025 – Last day to contribute to RRSP for the 2024 tax year (Note: Feb 29, 2025 is a Saturday)
March 31, 2025 – Filing deadline for HST returns (corporations with annual filing)
March 31, 2025 – Filing deadline for Trusts with a calendar year-end
April 15, 2025 – Filing deadline for U.S. personal income tax returns
April 30, 2025 – Filing deadline for Canadian personal income tax returns (except self-employed individuals)
June 15, 2025 – Personal tax installments due
June 16, 2025 – Filing deadline for self-employed Canadian personal tax returns
(June 15 is a Sunday, so the deadline moves to June 16)
June 16, 2025 – Filing deadline for personal HST returns if filed annually
June 30, 2025 – Filing deadline for corporation tax returns (with Dec 31, 2024 year-end)
Sept 15, 2025 – Personal tax installments due
Dec 15, 2025 – Personal tax installments due
Dec 31, 2025 – RRSP contribution deadline for individuals turning 71 in 2025
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