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As we flip the calendar to a fresh twelve months, there are a number of tax changes in 2022 that we should be considering, or at least be aware of. Hopefully this will help to expose you to these numbers before tax season rolls around.
Using the percentage change on the CPI, the CRA calculated the inflation rate to be 2.4 per cent. This is important as it affects each of the following areas involving tax changes in 2022.
As we know, there are 5 separate tax brackets in which tax payers are taxed. As previously discusses withe the inflation adjustment, these brackets are one of the changes in 2022 being made. The following are the new tax brackets for the new year:
In addition to these tax change in 2022, each individual province also has changes that you can find depending on what province you reside in.
The BPA will go to $14,398 for the upcoming year. In case you’re unsure what the BPA is, it refers to the basic personal amount, which means the maximum amount that a resident is allowed to make without paying any taxes. This has increased year over year since a plan to have this amount be at $15,000 in 2023.
Considering contribution, these tax changes in 2022 have also increased. The CPP rate is going to be 5.7% for the upcoming year. Maximum contributions will be just under $3,500, $499.80 to be exact. This specific increase is in contribution to a long-term plan aimed at increasing contribution over time.
After 3 years of the TFSA limit sitting steady at $6000, 2022 will be no different. This will remain at $6000 in 2022. After establishing a plan in 2016, the TFSA limit would be rounded to the nearest $500 amount and is relative to inflation. Through an assumption that inflation will be at least 1.5% going into 2023, one of the tax changes in 2022 will result in 2023 seeing a TFSA limit of $6500.
Tax changes in 2022 include an increase the the RRSP limit, resulting in a limit of $29,210, which appears to be up $1,380 from last year. Keep in mind here that the individual limit is still only 18% of one’s total income. So whichever number is lower is your individual limit. This would have to include things like rental income and/or self-employment income generated throughout the year.
For those residents who are currently receiving OAS, if your taxable income is greater than $81,761 in the new year, your OAS will begin to decrease. If your income is in excess of $133,141, you are not eligible to receive OAS anymore.
As introduced in 2020 as a response from the pandemic, those people who were forced to work from home were able to claim $2 for every single day that they performed their work from their own home (up to $400). This is to help cover office-related expenses. As another one of the changes in 2022, this amount will remain at $2 per day, but increase to a maximum of $500 per year.