Things that Canadians Need to Know about Tax Changes in 2024

Things that Canadians Need to Know about Tax Changes in 2024

Let’s find out what the biggest tax changes are in Canada for 2024 and how they affect you.
This will be a major update that will affect your finances.

1. Marginal Tax
Canada’s tax system is a progressive model, meaning that as income increases, tax liability also increases. Ontario’s marginal tax rate on individual income is adjusted to reflect inflation, which increases the amount of tax that some individuals must pay has been reduced.

2. Canada Pension Plan
Starting in 2024, high earners in Canada will begin making a second additional CPP contribution (CPP2).
The CPP changes provide up to 50% more CPP benefit income for employees who reach retirement age in about 40 years. The second additional CPP contribution (CPP2) will come into effect from 1 January 2024.

3. Tax Free Saving Account = TFSA
The 2024 contribution limit has been increased to $7,000. Assuming you haven’t contributed since 2009, when the TFSA plan began, and you’ve been eligible to contribute since 2009, your cumulative contribution would be $95,000.
If you’re wondering where to invest, a good first account to invest in to avoid most taxes is a TFSA. If you have already contributed to and withdrawn funds from your TFSA, it is important to check your CRA records before making additional contributions.

4. Canadian Dental Care Plan = CDCP
The Canadian Dental Care Plan is scheduled to be updated in 2024 with coverage for people with a household income of less than $90,000 (if they are not already insured) and those who do not have insurance through their employer, as well as eligible individuals. You will receive a letter from the Canadian government inviting you to apply.

5. First Home Saving Account = FHSA
The government introduced the First Home Savings Account in 2023 as a way to help first-
home buyers save for their own homes. The lifetime contribution limit for eligible Canadians is $40,000 and the annual contribution limit is $8,000. If you qualified for a first home savings account, you could have contributed $8,000 in 2023, which means if you didn’t have the money to contribute in 2023, you can contribute up to $16,000 in 2024.

6. Revised Underused Housing Tax
If you are a real estate investor, the Underused Housing Tax Act, which comes into effect in 2023 and targets foreign investors who have vacant Canadian investment properties, has extended the 2022 filing deadline twice, so the filing deadline has been extended until April
30, 2024. It has been extended until.

7. Trust Reporting Rules
The CRA implemented trust reporting rules starting January 1, 2023, for all trust relationships in existence during the year.
For example, if you were added to your parent’s bank account and the amount exceeded $50,000, you would be required to report. The deadline for submitting reports is March 30, 2024.

8. Short-Term Rental Deductions
From January 1, 2024, if you operate a short-term rental in an area where rentals are prohibited by local governments, such as Toronto and Vancouver, you will not be able to claim a deduction on your income.
This is an important part of the regulations change that takes effect on January 1, 2024.

9. GST/HST on purpose-built residential rebate
If you build a property with four or more units, you can claim a refund of 100% of the GST paid.
These changes are set to significantly reduce costs for builders