Canadian personal tax checklist: You can still save on your 2022 taxes
As we begin a new year and approach the annual tax filing deadline for 2022, it may seem that tax-saving strategies are limited. However, there are some actions you can still take to maximise tax savings for the 2022 tax year and be prepared when final tax payments are due.
Below are some strategies to help you manage your tax costs that are still available. Keep in mind that while not all of these strategies may apply to your particular situation, a trusted BDO advisor can assist you with your tax planning needs.
Understand the home office expense deduction for 2022
If you worked from home during the last two years due to COVID-19, you may have taken advantage of the new temporary flat-rate method for claiming a home office expense deduction when you filed your 2021 or 2020 tax return. This method allowed a deduction of up to CAD 500 in home office expenses (CAD 400 in 2020), provided that you worked from home for at least four consecutive weeks in the year due to the pandemic, without the need to track detailed expenses or the requirement for a signed Form T2200 or T2200S from your employer. For 2022, the eligibility requirements and maximum deduction amount remain the same.
As with previous years, if you are self-employed, you have much more flexibility and can generally deduct reasonable expenses incurred to earn business income.
Contribute to your RRSP
To be deductible for 2022, your registered retirement savings plan (RRSP) contribution must be made on or before March 1, 2023. If you want to know how much you can contribute for 2022, check your RRSP contribution limit on your 2021 notice of assessment, online using the CRA's My Account service, or the MyCRA mobile app.
Your contribution limit for 2022 is 18% of your 2021 earned income (up to a maximum of CAD 29,210) minus your 2021 pension adjustment, if any, plus any RRSP room carried forward from prior years.
Make your required Home Buyers’ Plan repayment
If you participated in the Home Buyers' Plan (HBP) prior to 2021, you may have a repayment due in the 2022 taxation year. Generally, you have up to 15 years to repay the HBP loan from your RRSP. The CRA issues an annual HBP statement of your account, and your required repayment amount will be shown on that statement. Your 2022 minimum repayment amount will be shown on the statement, which would have been received with your 2021 notice of assessment.
If the minimum repayment isn't made, you will be required to include the shortfall from the minimum payment in your income. To ensure the minimum annual HBP repayment isn't included in your taxable income for 2022, the required amount must be repaid to your RRSP on or before March 1, 2023.
A repayment is made by making a regular contribution to your RRSP. Repayments to your HBP don't affect your RRSP deduction limit. This means that you can still contribute to your RRSP and designate that amount as a repayment under the HBP, even if your RRSP deduction limit is zero.
It's not too late to save on your 2022 taxes
Tax planning shouldn't be something that happens only when you file your tax return. By investing some time to review your personal tax situation during the year, you may find some easy ways to save on your annual personal tax bill.
Contact your BDO advisor to see which tax-savings strategies work best for you.
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