Tax time is here again and there are some changes that could affect your return. Julie Seberras, Senior Manager, Wealth Planning Support, TD Wealth, joins Kim Parlee to discuss this year’s expanded work-from-home deduction, increases to CPP contributions, Old-Age Security payments and more.
Julie, jumping right in. Here's the question. With the 2022 tax filing deadline approaching, are there changes I should be aware of?
- Well, let's start with Canada Pension Plan or Quebec Pension Plan, Kim, also known as CPP or QPP. So this year, we saw the biggest increase in three decades to the year's maximum pensionable earnings, or YMPE. And what this number represents is the earnings ceiling for which you're going to be making CPP or QPP contributions. We also saw an increase to the contribution rate that will be taken off of each paycheck to fund this plan.
So let's put some numbers around this. So for 2022, in all provinces other than Quebec, as they would have a different contribution rate, both employee and employer will each be contributing 5.7% of the employee's gross earnings for earnings between $3,500 and the new YMPE of $64,900. Once you reach earnings of $64,900, your contributions cease for the remainder of the calendar year. So what this means is that you're going to have a little more taken off of each paycheck. And for those who have earnings above the YMPE of $64,900, you're going to see these contributions come off for a little longer.
- Now, I know last year we had some pretty interesting changes, benefits for people who are working from home. Any sense of what we can expect this year?
- So in 2020, CRA introduced that new flat rate method for calculating work at home expenses. And so that will continue this year. So it is a $2 per workday deduction. And in 2020, that limit was $400.
In 2021, for the 2021 filing year, we have seen that threshold increase to $500. And so the eligibility for this is somebody who is working at home at least 50% of the time due to COVID-19 for at least four consecutive weeks. Now, what we know is that that detailed method is still available. However, you do need to obtain either a T2200 or T2200S from your employer in order to use that method. If you are using this simplified flat rate method, you do not need that T2200.
- And one is definitely more work than the other. You got to think about that when you're doing this, as well. OK, what about Old Age Security? Any changes or differences there?
- So under the federal budget in 2021, we saw a one-time payment of $500 to Old Age Security recipients. And that was paid in the summer of 2021. Under that same budget, we also saw an increase for Old Age Security recipients age 75 and above. And this is going to be a permanent 10% increase. Now, we have not seen a permanent increase other than just inflationary increases since 1973. So this one's a big one.
- Anything else in terms of any other adjustments we need to be aware of?
- So the TFSA limit is holding at $6,000 again for 2022. We did get some inflationary increases to both the personal basic amount, as well as the tax brackets. And as always, get organized, get your receipts, and work with the appropriate tax professionals to help you navigate your tax situation.
- Julie, thanks so much. We love being able to ask you the questions. And if you have a question you want to ask Julie or anybody else, send it in to Ask MoneyTalk. The way you do that, send an email to firstname.lastname@example.org with Ask MoneyTalk in the subject line.