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Tax Changes Canadians Need to Know About for 2022

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Last updated on January 20, 2022 Comments: 43

Taxes. Is there any word that stirs up more dread? They’re complicated, time-consuming, and can cost you a lot of money.

But they can also save you some serious cash if you’re smart about them. Tax credits and benefits are available to Canadians for everything from buying your first home to working from home due to COVID-19.

And with spring’s tax filing deadline looming (April 30, in case you’ve forgotten), it’s a good idea to keep up-to-date with recent tax changes — so you can keep more of your money in your pocket, where it belongs.

Tax Changes for 2022

Rates and Limits

As expected, several tax rates and limits are changing in 2021.

  • Federal and provincial income tax brackets are increasing to keep up with inflation. (Don’t know your tax bracket? Check here.)
  • Employment Insurance (EI) Premiums are staying steady at 1.58% in 2022. However, maximum insurable earnings will increase from $56,300 to $60,300.
  • Maximum pensionable earnings, the amount used by the government to calculate Canada’s Pension Plan contributions for the year, is increasing to $64,900, up from $61,600 in 2021. Similarly, the employee and employer contribution rates for 2022 will be increasing to 5.70%, up from 5.45% in 2021.
  • The Canada Child Benefit will continue to be indexed to inflation. For the 2021-2022 benefit year, the maximum a parent can receive is $6,833 for children under age 6 and $5,765 for children ages 6 to 17.

Our Recommended Tax Software


Tax-Free Savings Account Contribution Limit Increased

Changes are being made to your TFSA in 2020

ImageSource: Shutterstock

In 2022, the annual contribution limit on the Tax-Free Savings Account (TFSA) remains at $6,000, where it’s been since it was upped for the first time in 2019. If you’ve never contributed to the TFSA and you’ve been eligible to contribute since 2009, you now have $81,500 in total contribution room.

As the name implies, your money grows tax-free in the TFSA. What sets it apart from the Registered Retirement Savings Plan (RRSP) is that you don’t have to pay income tax when you cash out your money.

Related: A Guide to the TFSA


COVID-19 Credits & Benefits

While CERB (the Canada Emergency Response Benefit) no longer exists, a few other pandemic-related benefits have been extended.

For the 2021 and 2022 tax years, employees forced to work from home due to COVID-19 can claim a flat rate tax credit of up to $500. You’re eligible for this credit if you’ve worked from home more than 50% of the time for a period of at least four consecutive weeks.

Eligible expenses include utilities, home internet, rent, and maintenance and repair costs. Commission employees can also claim home insurance, property taxes, and the lease of electronics such as cellphone, laptop, tablet, etc.

The Canada Recovery Sickness Benefit provides up to $500 ($450 after taxes) for workers unable to work because they are sick, need to self-isolate or have an underlying health condition that puts them at greater risk.

Similarly, under the Canada Recovery Caregiving Benefit, anyone who is unable to work because they need to care for a child or family member due to COVID-19 can receive $500 ($450 after taxes) per week, for up to 44 weeks

Keep in mind that while both CRSB and CRCB deduct a 10% tax at source (so the amount you’ll receive is $450), you may still need to pay additional tax come income tax time, depending on your situation. Both programs have been extended to May 7, 2022.


Canada Training Credit

The federal government introduced the Canada Training Benefit to help with disruption in the labour force due to changes in technology. This refundable tax credit is designed to lower the barrier to professional development and to provide financial support to help pay for half of the tuition and training fees. As a worker, you’ll be eligible to receive up to $250 annually as a tax credit. This amount goes into a notional account, which the worker can use for eligible purposes.

To be eligible to accumulate $250 in a year, you must meet the following criteria:

  • File a tax return for that year
  • Be at least 26 years old and no older than 65 years old at the end of the year
  • Be a Canadian resident during the year
  • Have a total working income of minimum $10,100 and maximum $150,473 in the year (this includes employment, self-employment, and maternity and parental benefits)

To help make it easier to keep track of your notional account balance, it will be communicated each year on the Notice of Assessment you receive from the Canada Revenue Agency (CRA) after you file your income taxes. In any given year you can claim the lesser of the balance in your notional account and half of eligible tuition and fees paid in the year.


Home Buyers’ Plan

The Home Buyers’ Plan (HBP) assists first-time homebuyers in attaining a down payment sooner. It allows those buying a home for the first time to withdraw money from their RRSP without paying any tax. Any money borrowed under the HBP must be paid back over 15 years, beginning in the second year after your initial withdrawal was made. Only funds that have been in your RRSP for at least 90 days can be withdrawn as part of the HBP.

After being frozen for several years, the federal government increased the withdrawal limit back in 2019. Now, those eligible to participate in the program can withdraw up to $35,000 from their RRSP, up from $25,000 in previous years. This means that a couple buying a home together could withdraw a combined $70,000 from their RRSPs to buy their first property.


Basic Personal Amount

The basic personal amount is a non-refundable tax credit that all taxpayers are eligible to claim. The basic personal amount is the amount you can earn without paying any income tax, currently at $14,398 for 2022.

In 2019, the federal government announced an annual increase of $15,000 to the BPA, until 2023, after which point, it’ll be indexed to inflation.

However, not everyone will be entitled to this tax break. The wealthiest Canadians, those earning more than $155,625 in the second-highest tax bracket, will have the basic personal amount reduced, with those earning more than $221,708 not receiving any tax break at all for the basic personal amount.


Tax Breaks for Seniors

Under Old Age Security, seniors aged 65 and older can receive up to $642.25 per month, depending on how long you’ve lived in Canada. Effective July 2022, seniors aged 75 and over will see an automatic increase of 10% on their OAS pension.

There is also a one-time taxable payment of $500 for seniors who are eligible for OAS as of June 2021 and were born on or before June 30, 1947.

The maximum pensionable earnings for the Canada Pension Plan (CPP) have increased to $64,900 in 2022, from $61,600 in 2021.

In addition, a surviving spouse, over the age of 65 and not otherwise receiving CPP benefits, is able to get 60% of their deceased spouse’s pension. Survivors between 60-64 years of age are eligible for 37.5%.


Tax Breaks for Parents

Being a parent isn’t cheap, and any tax breaks you can get can be a big help.

Any maternity or parental benefits received through EI are tax-exempt at source. This means an extra $1,800 a year for someone who receives EI benefits and earns $45,000 a year.

For the 2021-2022 benefit year beginning July 2021, the maximum annual benefit under the Canada Child Benefit is $6,833 for each child under 6 and $5,765 for children aged 6 to 17.

For parents of disabled children under the age of 18, the Child Disability Benefit has increased to $2,915 for the July 2021 to July 2022 benefit period.


Registered Disability Savings Plan

There is no annual contribution limit for a Registered Disability Savings Plan (RDSP). However, the lifetime limit is $200,000, and contributions are only permitted until the beneficiary turns 59.

Have a Successful Tax Year in 2022

There’s no shame in getting help with your tax return and making sure you’ve covered all your bases. Tax return software has become increasingly popular and choosing the right one could make all the difference. Read our list of the best tax return software to find which program will best suit you.

Companies like H&R Block give you the option to file online for free or to get help from one of their tax experts, so you can discuss all the above changes and see what applies to you.

Understanding your eligibility and documentation needed will help prevent any unpleasant surprises and expedite these tedious processes.

Tax season comes around once a year, so while it may be cumbersome, take the time now and do your research so you can save time later on, and, better yet, enjoy your well-deserved tax refund!

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Author Bio

Sean Cooper
Sean Cooper bought his first house when he was just 27 and paid off his mortgage in only three years. An in-demand personal finance journalist, money coach and speaker, his articles have been featured in publications such as the Toronto Star, Globe and Mail, MoneySense and Tangerine’s Forward Thinking blog. He makes regular appearances on national radio and television shows to discuss personal finance, real estate and mortgages, and is also the bestselling author of the book, Burn Your Mortgage. Follow him on Twitter @BurnYrMortgage and request his services on his website.

Article comments

43 comments
Cindy says:

I own a rental property for some years and in 2019 I moved into one of the apartments. Since then all the tenants have vacated. In 2020 the property was not tenanted. Do I have to pay/claim the capital gain on the property? and when? Thank you

Daniel from GreedyRates says:

Hi Cindy,
Your best bet will be to consult an accountant or contact the CRA’s Individual tax enquiries line at 1-800-959-8281 for a definitive answer. Hope you get the result you’re looking for.

Purdy Killam says:

service canada is pleased to inform you that will be eligible to receive a taxable $ 500 lump sum payment issued to all old age security recipients who will have age 75 as of June 2022

Daniel from GreedyRates says:

Hi Purdy,
Thank you for sharing. For those that are interested some more information, please read the News release from Employment and Social Development Canada.

Rene says:

My Grandson just called in a panic as the deductions on his paycheque went from $350 to $525.00….he will no longer be able to pay his rent with his one paycheque and he is terrified and I repeat terrified he will be homeless or living on only $200 a month for food after paying his bills. What is going with such a increase in deductions.

Daniel from GreedyRates says:

Hi Rene,
Thanks for connecting with us. If your Grandson’s paycheque deductions have increased, it may be worthwhile to first reach out to the employer to determine why the amount has changed. If it’s an individual tax related issue, the Canadian Revenue Agency can be contacted at 1-800-959-8281. Regardless of either, we hope that your Grandson’s situation improves for the best.

martha a. mr rubido says:

Hi, there in error in this article ,seniors did not received any increase as the Federal Gonvernment promised on the campaign and the September 2020 pre budget ,is there any coming up on April 19 2021 budget. thanks.

Ring says:

Hello,
I’m interested to know did the deduction of the Federal and Province tax % increase in 2021 as well?

Aaron Broverman says:

Yes Ring, the government has increased several deductions to adjust for inflation. Here’s some info on that from Motley Fool and the way the deductions off your paycheck have increased for 2021:
“The CPP contribution rate is 5.45%, and the maximum pensionable earnings are $61,600. This means your employer can deduct up to $3,166 per year, or $264 per month.
The EI premium rate for employees is 1.58%, and the maximum insurable earnings are $56,300. This means your employer can deduct up to $889.5 per year, or $74 per month.
The CRA has revised the tax brackets under which the minimum federal tax rate of 15% is applicable on the first $49,020. This grows to 33% for income above $216,511. There are also changes in the provincial tax rate.”

Calgarychadz says:

Hello,
Thanks for the update!
I’m interested in 2021 changes in the capital gains tax and the dividend tax credit. As well, understanding the typical effective date of changes relative to the Federal budget date and effect on the 2021 taxes. If the Fed announce changes in Apr 2021, is it for the beginning of 2021 or budget date or 2022?

Aaron Broverman says:

The changes are in effect for 2021 for the 202o tax year. The Federal government website says the following about Capital Gains changes in 2021. They have increased the Lifetime Capital Gains Exemption Limit (LCGE) “For dispositions in 2020 of qualified small business corporation shares, the lifetime capital gains exemption (LCGE) limit has increased to $883,384.” For more information read this page from Canada.com. I haven’t seen any changes to the federal dividend tax credit. Do you mean provincially in Alberta?
If that’s the case, the rate is reducing by 2.6% to 11.2%.The increase in the tax rate as a result, begins in the 2021 tax year.

Azam Khan says:

Thanks for summarizing the complex changes to the complex tax system

Aaron Broverman says:

No Problem, thanks for being such a gracious reader Azam

Bookkeeping Mangawhai says:

This is such a nice blog on tax changes canadian you need to know. This article makes the work straight and easy for us. It is a wonderful article. It is very useful article and would suggest others too. I am sure many people will come to read this in future.

Aaron Broverman says:

Thanks,
We work hard to deliver the best content we can for our readers. Check back often for more amazingly thorough and original articles from our entire team of personal finance journalists and financial experts.

guy says:

great info. My comment is political… basically, Trudeau is making things more socialist… less incentive to do the right things. in the short run excellent but in the long run… it’ll turn out to be bad. capital will leave Canada. We will also lose doctors

Ingrid Davis says:

Hi there guys, i am uncertain about a things:
I am trying to understand permanent residence and citizenship for non-canadians – basically i want to understand when a person that is a non-citizen (like an Australian or South African or Italian etc…) how they go about buying condo or another home type.
Is it easier to purchase a specific type of place like house/ condo /town house / duplex/ semi ?
When are non-Canadians allowed to purchase, because i have seen people do this before they are given residency so i am trying to understand it all.
Also , besides a down payment of 5% or ? ; what is the tax for non-Canadians – i see for Ontario is is 15%
So to clarify , is this down payment for the bank + a tax percent because u are not from Canada or not a certain attribute status ?
I am hoping what i am asking makes sense more or less , thank you

Aaron Broverman says:

Hi Ingrid,
The best resources for newcomers to Canada looking to buy a home comes from the Canadian Mortgage and Housing Corporation. They have a variety of resources for new immigrants and guides that can walk you through the process. You can get a step-by-step guide: .https:// www. cmhc-schl. gc. ca/ en /Data-and-Research/ Publications-and-Reports/ Homebuying-Step-by-Step-Workbook-and-Checklists You have to be able to establish a credit hoistory in order to be able to apply and get approved for a mortgage as well.

As for taxes and fees you will need money for the downpayment, land transfer tax, property taxes, real estate lawyers fees, real estate agent fees The 15% tax you are talking about only applies to non-residents and only applies to certain provinces in Canada. The 15% is non-resident speculation tax and there’s also a tax if you own a property and are collecting rental income from a property in Canada while living outside Canada which exists in Ontario and B.C. If your downpayment is less than 20%, you will also need mortgage insurance. I would consultant an accountant and a real estate agent just so you have all these fees and taxes sorted out and you know exactly what must be paid. Hope that helps.

Mia says:

I made 6 000$ but my common law partner 80 000$ and we are filing taxes together. For the Canada Workers benefit if I answer to the question: Is (spose name) an eligible spouse? If I answer NO then I get refund 370$ if YES then I am owing. Do I put yes or no please? Would you know please? Kind of confused with this why if the partner is not eligible then I get refund, but if he is eligible I am owing. Thank you!!

Aaron Broverman says:

Hi Mia,
Eligibility for the Canadian workers benefit is listed on the CRA website by googling “Canada Workers Benefit Eligibility.” If your spouse fits that criteria then they are eligible and you should say, “Yes.”It’s never a good idea to lie to the CRA, even for a refund because even if you get your refund. You could trigger an audit and have to pay the tax you would’ve owed for this year anyway at some point down the line. You are owing if you put Yes simply because you aren’t treated as a single individual and your tax bracket goes up because of the tax benefits you can transfer between the two of you.

Maria says:

Hello. Just wondering if disability benefit for kids are still going to double? I have not heard anything from the govt about this …

Aaron Broverman says:

You are right Maria. I see what you are talking about, but only on the liberal platform for the last election. If I had to guess, I’d say the pandemic has thrown campaign promises like these off. I wouldn’t expect a doubling of this benefit until the 2021 tax season at minimum. After all, money was spent on COVID-19 relief and will no doubt continue to be spent to bolster the economy so doubling the disability child benefit may not be the priority.

Damini Parihar says:

This blog is really helpful for me.
It has given me a lot of information about tax and its practicalities.
Eager to know more from you.
Keep posting such helpful content.

Aaron Broverman says:

Thanks Damini, we live to serve.

Eric Gray says:

Good to read your blog, Sean! It was an amazing experience for me. I am happy to read your blog. Keep posting, waiting for more blogs like this.

https://www.stuartsnowaccounting.co.nz/

Amy says:

I thought there was something new to help seniors – take them to appointments etc. but in going through the Income Tax forms I don’t see anything. Did I miss something? I don’t think my parents would qualify as infirm since they are very healthy.

Aaron Broverman says:

Hi Amy,
There’s nothing new for seniors that I can see. They can still claim medical expenses and yes, if you want the Canada Caregiver Credit (replacing the Family Caregiver and Caregiver credit) for them, they would either need to be infirm or they would need to be physically or mentally impaired. For the full list of credits for seniors, google “CRA – Seniors Enjoy Your Golden Years with These Tax Tips”

LeeAnn C says:

My daughter is a single 22 year old living away from home working as a receptionist in Vancouver. Should she apply for the Canadian Workers benefit?

Aaron Broverman says:

Hi Leeann,
If your daughter makes $24,111 or more for her net annual income, applying for the Canadian Workers’ Benefit is not worth it, as she will not receive anything. The benefit is meant for low-income individuals. Her benefit will be gradually reduced if her income falls at more than $12,820. Single individuals only receive $1,355 in benefit, so if that will make a big difference for her and she is eligible, she should go for it.

john says:

when can I file my personal taxes in 2020? I know the deadline is end of april but how soon can I file them?

Aaron Broverman says:

Hi John,
You can file your personal taxes for 2019 as soon as January hits in 2020. However, if you think you will owe taxes and want to build up a cushion for payment or if you are expecting some T4s (these are usually sent out in March) you may want to wait until later, like March or April to file.

Catherine Gallant says:

When would the government announce if they’re going to double the Children’s Disability Benefit?

Aaron Broverman says:

Hi Catherine,
Your guess is as good as ours. Given that Trudeau is leading a minority government, I assume that he won’t be able to pass a lot of his platform the way he intended had he won a majority and right now, the federal liberals obviously have bigger fish to fry with the COVID-19 outbreak and providing an employment insurance cushion for those who are quarantined.

Edmunds, Mellissa says:

As of January 2019 are Spousal support payments Non taxable?

Nate Siegel says:

Hey Mellissa,

Thanks for coming to GreedyRates. We did a little research for you and found what you’re looking for. In 2019 in Canada, spousal support (otherwise known as alimony) is regarded fully taxable as it concerns the former spouse or partner. In your case, the person who’s making the support payments can claim them as a tax deduction on their return, in the amount of whatever support payments were made. Hope that helps you out and saves a bit on the yearly tax bill. Thanks again.

GreedyRates

JP money says:

If you do not have a court order or written agreement, the payments are not subject to the tax rules that apply to support payment. You cannot deduct any of the payments made and do not have to report the payments received on your tax return.

K. Hill says:

We received an email from revenue Canada today _August 15- that beginning September 1, they want us to prepay our 2019 income tax in installments of $1500 because we might owe $3000 on April 30, 2020. If we don’t prepay they will charge us interest. We haven’t heard of this before. As we are on pensions, this is a hardship for us. Apparently this is something new. Is Canada so hard up for money that they have to gauge seniors again?

The GreedyRates Team says:

Hey K,

Thanks for the comment. We’re unsure exactly what occurred, but it seems like an individual matter. You should give the CRA a ring to inquire further. Good luck!

GreedyRates

Michael says:

Instalment payments are not new. If a taxpayer outside of Quebec owes the CRA more than $3,500 in the last 2 of 3 years, the CRA sends out instalment reminders. (As Quebec does its own tax returns along with the Federal T1, the amount owing the CRA is slightly lower in Quebec.)Instalments are quarterly payments of anticipated tax owing. Just as when we work, we have tax deducted at source every payday, instalments are similar withholdings but done quarterly.
Very often taxpayers with significant rental income, investment income or possibly foreign pensions can find themselves in this situation, as no Canadian tax is being withheld at source. If your tax situation changes and your income will decrease significantly for 2019 from previous years, you could avoid making the suggested payments; however, if you miscalculate and your income remains similar then you will face interest charges (currently 6% annually compounded daily) on the missed payments.

Bob G says:

Definitely not a new situation. My income varies every year and rather than make the quarterly installments that they recommend, I calculate my own based on my quarterly revenue X 20%. This usually gets me in close to the right number at year end. Use a % that is close to the total % of tax you have paid in previous years and adjust it up or down if you think it is going to be higher or lower.

Nate Siegel says:

Hi Bob,

Interesting tactic! Thanks for sharing, and we agree that while CRA instalment payments shouldn’t be ignored, it’s also smart to get ahead of what you owe and then create a plan to stay there. If quarterly revenue * 20% gets you where you need to be then more power to you! An instalment reminder, after all, is just a way to determine if you need to make the proper calculations for an income tax in instalment, and to suggest an amount. If it hurts your lifestyle or won’t be enough, you can adjust as necessary. However, be wary of making a deficient instalment if your income changes drastically, otherwise you might face a penalty. Thanks again for the comment!

GreedyRates

Flora says:

How much is the low income threshold for Albertans this year.

The GreedyRates Team says:

Hey Flora!

Good question. If you’re a resident of Alberta, then the benefit rates you’ll get as an AISH, Income Support, or Seniors Benefit recipient have been boosted as of January 1, 2019. Benefit rates for these Canadians have increased across the board, as has the amount of income a recipient can earn while still receiving benefits. Child allowance benefits (for the first and subsequent children) have also increased.

For example, if you’re a single person receiving AISH then your rate has increased from $1,588 in 2018 to $1,685 in 2019. If you’ve got two kids, then your old rate is $1,788 and your new one is $1,985 including $200 for your first child and $100 for each other child. There are also some new eligibility changes and income exemptions to be aware of, but we won’t cover them here. If you need further information just head on over to the official Alberta page about these social benefits increases. Best of luck!

GreedyRates