Toronto, Ontario, Canada, March 12, 2024 – The year 2024 brings many tax changes and financial adjustments that could significantly impact your finances. These changes are vital factors that could influence your financial planning and tax strategies.
Tax Adjustments You Should Know
Here’s a comprehensive overview of significant tax changes and financial adjustments Canadians should know:
Inflation-adjusted tax brackets
Due to the high inflation experienced in recent years, there has been a considerable adjustment in the tax brackets. For the 2024 tax year, the indexation factor is 4.7 percent. This adjustment results in higher income thresholds for each tax bracket. This means taxpayers will pay less tax on a higher portion of their income​​.
See the federal tax rates and income threshold for this year below:
Changes in CPP and EI contributions
Canadians will notice an increase in Canada Pension Plan (CPP) contributions. The government has introduced a second earnings ceiling. Those earning above $68,500 will enter a second contribution level, peaking at $73,200.
Employment Insurance (EI) contributions also increased, with the maximum insurable earnings ceiling rising to $63,200​​. These changes are relevant for middle-income earners and their employers, who must account for the increased employment taxes for financial planning​.
Home office tax deduction
The flat-rate method for tax deductions introduced due to the COVID-19 pandemic is no longer applicable from 2023. Remote workers must now use a more detailed method and meet certain conditions to claim home office expenses​​​​.
Expansion of trust reporting rules
In 2024, Canadians must disclose beneficial ownership details for trusts, including “bare trusts.” This new requirement aims to enhance transparency and address both legal and potentially illicit uses of trusts​​​​. This change will require individuals involved in trust arrangements to be more vigilant in reporting.
Failing to comply can lead to penalties. Individuals must understand if they are part of such an arrangement and their reporting obligations.
Increase in the basic personal amount (BPA)
The BPA, the amount of income not subject to federal tax, also increased. For 2024, the federal BPA is $15,705, though high-income earners have this amount capped at $14,156​​.
This change can slightly decrease the tax burden for many Canadians. Make sure you understand how it applies to different income levels, mainly if you belong to higher tax brackets​. Note that these BPAs differ by territory or province.
RRSP limit increase and TFSA changes
The Registered Retirement Savings Plan (RRSP) contribution limits increased. For the 2023 tax year, the limit is $30,780. Individual RRSP contributions are limited to 18 percent of your total income​​.
On the other hand, the contribution limit for the Tax-Free Savings Account (TFSA) is $7,000, reflecting its adjustment in line with inflation trends.
Take Charge of Your Taxes This 2024
The tax landscape in Canada for 2024 has significant changes that could have far-reaching implications for your personal and business finances. Staying informed and proactive in understanding these adjustments is more than just a matter of compliance.
Review your financial plans and make sure you’re fully prepared to meet these new requirements. Consult with tax professionals from Faris CPA, who specializes in handling tax concerns for both personal and corporate clients.
Remember, being well-informed is your first line of defense in the ever-evolving world of taxation. Don’t let the complexities of tax changes catch you off guard.
Media Contact:
Name: Sam Faris
Organization: Faris CPA
Email: info@fariscpa.com
Phone: 1 844 340 5771
Website: https://fariscpa.com/
Address: 255 Duncan Mill Road, Suite 604 Toronto, Ontario M3B 3H9
