Time is Running Out for First-Time Home Buyers to Save in 2024

Owning a home, once almost considered a right of Canadian citizenship, has become a more distant dream for millions. The high cost of housing, coupled with a desperate shortage of supply, has turned the notion of home ownership into a near impossibility for many Canadians and those who have arrived in our country more recently.  The Tax-Free First Home Savings Account (FHSA) can help but it’s important to open an account before December 31, 2024 to create and preserve the contribution room.

This tax season will be remembered as a challenging one for most tax accountants and financial advisors who work with Canadians who have long tried to protect their savings and their heirs from financial ruin in retirement.  There are two reasons: CRA’s new filing requirements for bare trusts and the significant cost factors retirees now face due to inflation, taxes and professional fees to keep it all straight.  That makes it a great time for a bootcamp.

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March 28 marks the last day CEBA loan recipients who have submitted a refinancing loan application on or before January 18, 2024 can qualify for up to $20,000 of loan forgiveness.  The outstanding principal of the CEBA loan must be repaid on or before March 28, 2024.  Otherwise, unpaid loans remaining become non-amortizing term loans with full repayment due December 31, 2026.  But there is still at least one bright spot for those loan holders, but it comes with tax complexity.

RRSP and RRIF are retirement savings plans where investments grow on a tax-deferred basis.  When proceeds are taken from these accounts, the full amount withdrawn is reported on the RRSP/RRIF holder’s tax return as income. Can charitable giving reduce the tax sting?  Is that a smart strategy given the detailed tax rules that can leave a tax gap? Can planning now help keep assets invested as markets show signs of recovery?  Yes, but you need to do a little extra tax legwork.

Everyone is likely to have some out-of-pocket medical expenses during the year but many people don’t know that they can claim them.  Common examples are batteries for hearing aids, certain travel costs incurred to seek medical attention not available in your community or contact lenses for example. But there’s also a long list of expenses that can’t be claimed.  Can you name any of them?  The CRA offers a great list:

Only three weeks before the April 2, 2024 Trust Return filing deadline, the CRA released updated guidance indicated that gross negligence penalties will not apply for 2023 in most cases if taxpayers fail to file on time, except in the “most egregorious cases”. It’s good news that the government has decided to ease the penalty provisions for people who don’t file by April 2 as they try to decipher these new rules. When does a bare trust exist, and when do the rules apply? Here are some examples, based on a question submitted by one of our KBR readers and students, Connie Zhu.