This year’s federal budget saw a variety of tax measures affecting individuals, corporations, and charities
Currently, the top federal tax rate of 33 per cent kicks in at income over $221,708 for 2022. While the budget introduced no rate changes, the government expressed concern that “some high-income Canadians still pay relatively little in personal income tax as a share of their income.” For example, 28 per cent of filers with gross income above $400,000 pay an average federal tax rate of 15 per cent or less by using a variety of tax deductions and tax credits.
There’s a lifetime contribution limit of $40,000, and an annual contribution limit of $8,000, beginning in 2023. Unlike RRSP or TFSA contributions, unused annual contribution room cannot not be carried forward, meaning an individual contributing less than $8,000 in a given year would still face an annual limit of $8,000 in subsequent years.
You’ll also be allowed to transfer funds from an RRSP to an FHSA on a tax-free basis, subject to the $40,000 lifetime and $8,000 annual contribution limits. It’s expected that individuals will be able to open an FHSA and start contributing at some point in 2023. The budget, therefore, proposed to introduce a new deeming rule, effective Jan. 1, 2023, to ensure that profits from flipping residential real estate are always subject to full tax. Specifically, profits from the sale of residential real estate, including a rental property, that was owned for less than 12 months would be deemed to be business income.
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