2024 Personal Tax Season

The 2024 personal tax season is here, and it's time to start getting your tax documents ready for your accountant. To help guide you through the process, we have linked some checklists and worksheets to aid in gathering the information necessary to prepare your personal tax returns, these can be found here. These checklists, available in both Excel and PDF formats, are designed to ensure you’re paying the least amount of taxes possible. We recommend reviewing them thoroughly to make sure you're not overlooking any deductions or claims on your return.

Please make sure you have all relevant tax slips or documents for your situation before sending them to your accountant. If, after submitting your personal tax information, you receive any additional documents (such as a T3, T5, etc.), be sure to send them in as soon as possible so they can be included in your tax return. If your return has already been filed and you receive new documents, please forward them right away so your accountant can prepare and file a T1 adjustment. Keep in mind, the CRA may impose penalties and interest if any necessary documents are missing.

What's New for 2024: Important Tax Changes You Need to Know

1. On January 31, 2025, the Government of Canada announced a change in the effective date for the capital gains inclusion rate increase from June 25, 2024 to January 1, 2026. This means that the inclusion rate for capital gains in the 2024 calendar year still remains at 50%.

2. The lifetime capital gains exemption limit for the sale of shares of qualified small business corporation shares or qualified farm or fishing property has increased to $1.25 million effective June 24, 2024.

3. As of January 1, 2024, taxpayers are no longer able to deduct expenses related to non-compliant short-term rentals (i.e. a short-term rental in a province or municipality that either does not permit operating the short-term rental at that location OR requires registration, permit or licence and the short-term rental does not comply with the requirements). This change applies to all expenses, including interest expenses.

4. There were new reporting requirements placed on digital platform operators (AirBnB, Uber, Amazon, Ebay, etc....) for the 2024 tax year. If you sell goods or provide services on these platforms, they are required to report your activity to the CRA. If you are providing these goods and services through a corporation, then the income and expenses will be taxed on your corporate return. If you are providing these goods and services in your personal name, then the income and expenses will be taxed on your personal tax return.

5. There was change to the alternative minimum tax (AMT) for 2024 and later years. These changes include an increase to the minimum tax rate and basic exemption threshold. Typically this tax comes into play if you have a significant capital gain and are claiming certain losses and deductions - the most common example being the sale of the qualified small business corporation shares.

6. Home Buyer's Plan (HBP) withdrawal limit has increased from $35,000 to $60,000 for withdrawals made after April 16, 2024. Plus there is an extra 3 year delay for when the repayment period is to start  - this applies to withdrawals made up to December 31, 2025.

7. A reminder from last year - any gain from the sale or right to a housing unit that is owned or held for less than 365 days will be taxed as business income and not a capital gain. That is 100% of the gain is taxable as business income (not 50% with capital gains). Plus you may be subject to CPP as this income will be treated as sole proprietorship income.

8. Medical expenses can take time to sort through, and organizing them upfront will save both you and your accountant time, which can ultimately lower your costs. To make this process easier, try to categorize your expenses by family member if possible. Remember, you can claim medical expenses for any 12-month period ending in 2024 (for example, from January 2023 to January 2024) if the total expenses in that period are higher. Just be sure the receipts fall within the correct 12-month period and are eligible medical expenses. Most people choose to claim these on a calendar year, but organizing early will make the process smoother and more cost-effective for you.

9. If you have donation receipts, take a moment to summarize them for the year. Make sure each receipt includes the charity number (ending in RR0001), the charity's name, your name (or your spouse’s), and the date or year of the donation. You can claim donations up to five years back, so if you come across a receipt from 2020 that you haven’t claimed yet, you can still include it on your 2024 tax return. Organizing these now will save your accountant time and ensure you get the full benefit of your charitable contributions.

10. For a list of other changes, please go here

Disclaimer: Please consult with your accountant or tax advisor to ensure that you are taking full advantage of these updates and complying with the latest tax regulations.

Credits and thank you to Perm Persaud for this information.

Perm Persaud

Ark Accounting & Tax Professional Corporation

202-230 East Avenue

Kitchener ON N2H 1Z4

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