Income tax: Benefits and changes for the 2022 tax year
|Tips & advice
The tax filing period has just begun. Although the years keep ticking by, each one is different! To help you navigate your personal tax situation, we have put together this article on the main changes affecting seniors, including credits you may be eligible for.
What new changes apply to your federal income tax?
With each New Year, we have to start thinking about filing our upcoming tax return. Needless to say, the tax system also include various credits, breaks and deductions. For the 2022 tax year, the following changes may be of interest to you.
- Higher basic personal amount
From 2020 to 2023, the basic personal amount (BPA) gradually increased; in 2023, it will be $15,000. For the 2022 year, this non-refundable credit will be exactly $14,398. This will mean no federal tax payable for individuals whose taxable income is less than the BPA; it also means less tax payable for those whose income is higher than the threshold.
- Tax bracket changes
The rise in prices for goods and services was particularly significant in 2022. To take inflation into account and to protect Canadians’ dwindling purchasing power, the federal government decided to adjust the tax brackets for 2022:
- Income ranging from $0 to $50,197 (15%)
- From $50,197 to $100,392 (20.5%)
- From $100,392 to $155,625 (26%)
- From $155,625 to $221,708 (29%)
- $221,708 and up (33%)
The good news is that if you used to be “just inside” a certain bracket, you might now be in a lower one, which would mean less income tax payable!
- Higher threshold for the Old Age Security (OAS) pension and affordability plan
Please note that the minimum recovery threshold for Old Age Security (OAS) has also been increased. This means that if your 2022 taxable income was less than $81,761 (up from $79,845 in 2021), you won’t face a “clawback” (i.e. you won’t have to pay back a portion of the OAS you received).
Thanks to the CRA Affordability Plan put in place in July 2022, individuals aged 75 or older will automatically receive a 10% increase in their OAS pension. Be sure to find out whether you are eligible for this benefit!
What about provincial income tax?
As regards provincial income tax, the main news has to do with changes to the senior assistance tax credit. If you are at least 70 years of age, have no spouse and your household income does not exceed $24,195, your credit may be as much as $2,000. If you are married but your spouse is not eligible and your household income does not exceed $39,350, you could also qualify for a $2,000 credit. But if both you and your spouse are eligible, your credit could be as much as $4,000!
If you are unfamiliar with the home support tax credit, keep in mind that it also applies if you live in a seniors’ home. If you qualify, you can claim reimbursement for a portion of the services you signed up for under your lease, including laundry, housekeeping, meals and nursing/personal care. If you need help claiming this deduction, please note that Le Groupe Maurice offers a tax credit assistance service (for further information, please contact your rental advisor).
Since everyone’s situation is different, you should find out more about the eligibility conditions for these credits. Please contact your financial advisor or accountant for guidance regarding your personal situation and file your 2022 return with complete peace of mind!