It might not be fun, but it’s time to start thinking about taxes again. In addition to staying on top of changes to your own financial situation, it’s important to become familiar with tax changes that have been introduced by the government this year. Here are some of the new measures that might change how much you owe.

Basic Personal Amount Increase

The basic personal amount—the income you can earn without having to pay federal income tax—is increasing to $15,705 due to inflation. This means that anyone earning below the BPA threshold will not be taxed. However, individuals in higher tax brackets will have their BPA capped at $14,156.

New Alternative Minimum Tax Rate

The alternative minimum tax ensures that higher-income individuals pay a minimum amount of tax even after deductions and exemptions. Previously, the alternative minimum tax has been 15% on income above $40,000. For 2024, the rate will increase to 20.5%.

Adjusted Tax Brackets

Federal tax brackets have also been adjusted for inflation so that you will be paying a lower rate on more of your earnings. The tax brackets for 2023 are as follows:
• 15% for incomes up to $53,359
• 20.5% for incomes between $53,359 and $106,717
• 26% for incomes between $106,717 and $165,430
• 29% for incomes between $165,430 and $235,675
• 33% for incomes more than $235,675.01

Canada Pension Plan Increase

In addition to an increase in regular Canada Pension Plan contributions for everyone, higher earners will now also have a second earnings ceiling.

Up to the first earnings ceiling, the payments work as before, with employees contributing a set portion of their income to CPP (self-employed individuals must pay both the employee and employer portion). This first ceiling is $68,500.

Now there is a second contribution level up to $73,200, and workers in this group must pay an additional 4% of their second-tier earnings. This means that those earning over $73,200 will be contributing an extra $300 in 2024.

Home Office Deduction Calculations

During the COVID-19 pandemic, the Government of Canada introduced a simpler, flat-rate method for calculating home office deductions due to the sudden and massive increase in remote workers. However, the flat rate will no longer apply in 2024, and those who work from home will have to use the more detailed method of calculating their home office deductions.

Short-Term Rental Deductions Elimination

In an effort to encourage property owners to return short-term rental units to the long-term rental market, the government has announced the elimination of some short-term rental deductions. In particular, short-term rental operators will be denied expense deductions if they operate in provinces or municipalities that have banned short-term rentals.

Employment Insurance Premiums

EI premiums are also getting a rate hike from $1.63 per $100 to $1.66 per $100. What this means is that, in 2024, those earning at least $63,500 will pay a maximum annual EI premium of $1,049.12 compared to $1,002.45 in 2023.

The best way to tackle tax season is head-on and informed. By familiarizing yourself with each year’s tax changes, you’ll be less likely to get caught off guard when it comes time to file.