What you need to know to prepare for 2024 tax-filing season

Tax changes in effect for 2024 New federal tax changes went into effect on New Year's Day, meaning many people will see a little less from their pay cheques.

It’s a new year, and along with your list of resolutions, you’ll also need to complete your tax returns.

With the tax deadline getting closer every day, it’s a good idea to start preparing. Early preparation streamlines the process and ensures you can leverage the full spectrum of tax breaks and credits the CRA has to offer.

Below, I’ll go over some of the most significant changes to Canada’s tax code for 2024, so you’ll know what to expect going into this tax season and the new fiscal year.

When is the tax deadline for 2024?

Mark your calendars, as April 30, 2024 is the deadline for filing personal tax returns in Canada. Missing this date could mean facing penalties, which typically start at 5 per cent of your total owed amount, plus an additional 1 per cent of the balance for each full month your return is late, which is capped at 12 months.

The CRA doesn’t allow taxpayers or businesses to file for an extension on their tax returns, so it’s vitally important that you file your returns by the tax day deadline.

Tax deadline for businesses

For business owners, the tax filing deadline varies based on your fiscal year-end, but it's generally six months after the end of the fiscal period. For most businesses, this means six months after December 31st, although some corporations have a different fiscal year-end.

Important changes to personal taxes and contributions in 2024

The CRA has introduced a number of changes to the federal tax code in 2024, which will go into effect this year. Last month, the Canadian Taxpayers Federation released an in-depth report detailing the changes.

Here are some of the most important changes for personal tax filers that you should know about.

Income-based taxes and contributions

This year, taxpayers will see an uptick in income-based taxes and contributions. This is driven primarily by increased payroll payments and reflects the government's efforts to bolster social safety nets in the face of recent economic shifts.

Although this means a slightly higher cut from your paycheque, these funds will contribute to long-term benefits, including enhanced health care and social services.

Canada Pension Plan (CPP)

This year, the CRA will increase the maximum pensionable earnings for the CPP, which directly influences the ceiling of contributions and benefits.

Additionally, the introduction of CPP2 marks a new chapter for incomes over $68,500, extending up to $73,200 in 2024 and $79,400 in 2025. This new tier aims to provide greater retirement security.

Employment Insurance (EI)

Employment Insurance (EI) will also see a notable change this year, with an increase in both the premium rate and the maximum insurable earnings.

This change is in response to the growing demand for EI coverage and may offer better protection for those working in uncertain job markets.

For employees, this means a slight increase in EI deductions from your pay. However, it means you’ll have more support if you face unemployment.

Carbon Tax

As the government remains on its path to net-zero emissions by 2050, Canada's carbon tax will be escalating from $65 to $80 per tonne in 2024.

While it may be good for the environment in the long run, the increased carbon tax likely means higher fuel prices across the board, impacting everything from your daily commute to the cost of goods and services, as transportation costs increase.

Alcohol Taxes

2024 rings in with a noticeable hike in excise taxes on alcoholic beverages, including beer, wine, and spirits. For consumers, this means that your occasional glass of wine or weekend beer may cost a bit more.

This increase is in response to both public health concerns and revenue generation, as excessive alcohol consumption is correlated with long-term health risks, which increase health care costs for the government.

Digital Services Tax (DST)

The new Digital Services Tax (DST) is a significant change in 2024 as it specifically targets large online companies.

With this tax, the government aims to level the playing field between traditional businesses that have more overhead expenses and large digital companies, which often realize higher profits thanks to lower overhead and outsourcing overseas labour.

This tax could potentially cost taxpayers an extra $1.2 billion in 2024, according to the Canadian Taxpayers Federation.

The DST is expected to affect a range of digital services, including streaming, online advertising, and cloud computing. This could mean an increase in the cost of these services for the average consumer.

Provincial tax changes for 2024

In addition to the countrywide changes from the CRA, there are also some province-specific changes to be aware of.

When will these changes go into effect?

Most of these changes won’t directly affect your 2023 tax filing. However, all of these changes are going into effect this year, which means you’ll need to adjust your budget accordingly and keep them in mind when filing next year’s returns.

If you’re looking to save more money on taxes and possibly get a larger refund this tax-filing season, be sure to check out these great tax credits and deductions!