Tax Tips & Changes For The 2023 Tax Year

For 2023: you are no longer able to claim the up to $500 flat rate method for working from home due to Covid. If you are working from home your employer may be able fill out a T2200 enabling you to you to claim certain employment expenses such as a portion of your rent, utilities, and internet fees. The expenses would be calculated on form (T777) and reported under Other Employment Expenses (line 22900).


First Home Savings Account (FHSA). Starting April 1/2023 taxpayers are able to save up to 8k per year to a maximum of 40k toward the purchase of a first home. This calculation can be found on Schedule 15. The deductions are tax deductible but not taxable when withdrawn to purchase a house. Existing RRSPs can be directly transferred to a FHSA if the taxpayer doesn’t have the cash to make a new investment. The FHSA can be used in conjunction with the HBP. Please note HBP withdrawals are taxable unless repaid over a 15-year period.


The Multigenerational Home Reno Tax Credit (MHRTC). New for 2023 is a new refundable tax credit of up to $50,000 in reno expenses that would save the taxpayer $7,500. The renovations have to be related to making another unit or living quarters for a family member (e.g. parents) within your home. This calculation can be found on Schedule 12.


Children’s Sports and Arts Tax Credit: continuing from last year NS taxpayers are able to claim up to $500 for sports or arts amounts on the provincial portion of their tax return. The refundable tax credit would save taxpayers approximately $45.


Canada training credit (CTC) (line 45350 of the return). If you meet certain conditions, you will be able to claim a Canada Training Credit, a new refundable tax credit that is available for 2020 and later tax years. The CTC is entered on the S11 and the NS(S11) and reduces your tuition tax credit. Please note tuition is a non-refundable tax credit, unlike the new CTC.


Digital news subscription expenses (line 31350 of the return). For the 2020 to 2024 tax years, you may be able to claim a non-refundable tax credit for expenses you paid in the year for a digital news subscription with a qualified Canadian journalism organization (e.g. an online newspaper subscription). This tax credit is up to $500 and would save the taxpayer $75.


Covid-19 benefits repayment. If you repaid Covid benefits in 2023 you would generally claim the deduction under Other Deductions (line 23200).


Canadian Carbon Rebate (CCR) replaces the Climate Action Incentive Payments and continues this year. The quarterly payments are approximately $500 annually and help offset the added costs of the provinces who implemented the carbon tax. Nova Scotia being one of them.


For low income taxpayers Canada Workers Benefit (CWB) has been enhanced. Now single taxpayers can make up to 35k before this refundable benefit is eliminated. The maximum has been increased to $1,518 for single persons. Also, this benefit can be paid in advance via the Advanced Canada Workers Benefit (ACWB). This calculation can be found on Schedule 6.


Starting in 2019 and continuing in 2023 the government has increased CPP contributions. The goal of this is to have CPP replace up to 1/3 of your average work earnings. Under the old rules CPP was aiming to replace only 1/4 of your average work earnings. These enhanced contributions are able to be deducted on your tax return.


The amount of money first time home buyers can take out of their RRSP through the home buyer’s plan (HBP) has been increased from 25k to 35k for withdrawals made after March 19, 2019. The home buyer’s plan is a very popular way to save for a house purchase.


Medical Expenses: On a yearly basis CRA expands the list of what you can claim as medical expenses for yourself and your family. The list has been expanded to include cannabis purchased for medical purposes and even costs associated with service animals such as guide dogs. Taxpayers are encouraged to periodically check the CRA website for What are the most common medical expenses you can claim - list. As always medical receipts should be combined and put on the lower income spouse’s return in order to maximize returns.


Donations and Gifts: As always donations can be carried forward for up to 5 years and would normally be combined for spouses in order to maximize total returns as it is a 2-step calculation.

The first $200 of donations saves you approximately $50. Anything over $200 will save the taxpayer approximately half of the amount. For example, a $500 donation would save a taxpayer $50 (200 x about 25%) and another $150 (300 x about 50%) for a total tax saving of around $200! Donations to your favourite animal charity, church or medical foundation are a very good way to help both the community and save on income taxes.


For the last several years the Nova Scotia basic personal amount was increased from $8,481 to $11,481 for individuals with a taxable income of $25,000 or less. The $3,000 increase begins to decrease with taxable income above $25,000 and is eliminated for incomes of $75,000 and above. The age, spousal, and eligible dependant amounts have also been increased.


Pensioners should be sure to look at splitting their pension income with their spouse by completing a T1032. This has been one of the biggest tax savings changes made in decades! For Nova Scotians aged 65 and over be sure to be aware of the up to a $1,000 reduction in provincial tax if they can get their income to $23,999.99 or less.


RRSPs: The deadline for purchasing RRSPs is Feb 29, 2024 if you would like to deduct them on your 2023 income tax return. RRSPs are both a great retirement vehicle and a good way to save for a down payment for a house. Each taxpayer can withdraw up to $35,000 out of their RRSPs (HBP) tax free to purchase a house and then pay it back over the next 15 years. RRSPs can also be used to finance (up to $20,000) going back to university through the Lifelong Learning Plan (LLP).


First-Time Home Buyers should be sure to claim the $10,000 non-refundable tax credit and save $1500 on their taxes. This applies to houses, mobile homes and condos.


Tuition, Education and Textbook Amounts: Beginning in 2017 and continuing in 2023 students can only claim their tuition federally as the claim for education and textbooks has been eliminated federally. However, provincially in NS students can still claim both the tuition and education amounts for both full-time and part-time months. Be sure to check the provincial rules if you’re not filing a NS return as each province has different procedures. For example, Ontario does not allow tuition, or the education amounts to be claimed provincially.


Students should always report their tuition on a S11 and NS(S11) and can still transfer up to $5,000 to a spouse, parent or grandparent. Even if a parent is claiming all of the tuition for themselves it should still be reported on these forms. Students should also be sure to claim any interest paid on student loans.


Sale of Principle Residence: Beginning in 2016 and continuing for 2023 taxpayers must report the sale of their personal residence on a Schedule 3 (S3). Failure to do so could result in taxpayers losing their personal residence designation and the resulting tax-free exemption of the capital gain.




Child Care Expenses: Maximum Child Care Expenses are $8,000 for children under 7 years of age and $5,000 for children aged 7 to 16.


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Other Changes:

- The Basic Personal Amount has been increased to $15,000 (as long as your income is less than $165,430).

- The Age Amount for taxpayers 65 years of age and older has been increased to $8,396 with the income threshold above which the amount is reduced increasing to $42,335 at a rate of 15%.

- The Disability amount has been increased to $9,428 and now the form T2201 can be filled out by a nurse practitioner in addition to doctors.

- The EI claw-back threshold has been increased to apply to incomes over $76,875.

- OAS has been increased to $8,354.52 and the OAS claw-back threshold has been increased to apply to incomes over $86,912.

- The maximum Refundable Medical Expense Supplement has been increased to $1,399 and is eligible to taxpayers who have relatively high medical expenses in relation to their income. Please note that medical expenses for couples would normally be claimed by the lower income spouse in order to maximize total returns.

- The CWB (Canada Workers Benefit) has been increased to up to $1,518 for single taxpayers and $2,616 for couples. This is a refundable benefit aimed at lower income individuals and families.