Tax season is upon us. And it couldn’t be at a worse time. We’re potentially about to enter a recession, and now there are many Canadians who aren’t looking forward to perhaps paying more out to the government.
However, that’s not necessarily always the case.
About 92% of Canadians are now filing their returns electronically, according to the Canada Revenue Agency (CRA). While this makes things much easier, you might be missing out on some tax credits! So, let me enlighten you, with two new payments that Canadians may miss out on otherwise.
Climate Action Incentive Payment
Now, this payment is only eligible for Canadians living in Alberta, Saskatchewan, Manitoba, and Ontario at the moment. However, you may also be eligible if you live in Newfoundland and Labrador, Nova Scotia, or Prince Edward Island. This credit could expand in the future as well, so definitely read on.
The CAIP is a “tax-free amount paid to help individuals and families offset the cost of federal pollution pricing,” according to the CRA. Before 2021, this was a tax credit that came out during returns. Now, it’s a quarterly benefit paid out starting from July 2022.
All you have to do is file an income and benefit return, and if you have a partner make sure it’s just one of you applying. What’s more, CRA recommends filing electronically by March 10 to make sure you receive the first issuance on April 14 of this year.
How much could you get? It depends on where you live. In Ontario can be as much as $488 for an individual plus $122 for each child. Alberta has the highest at $772 for each individual and $193 for each child! So, make sure to check out the rules and get applying!
Canada Housing Benefit
This year, the CRA also introduced a tax-free $500 one-time payment for lower-income renters. These are for those facing housing affordability challenges. To apply, you would need to claim a family net income for 2021 of $35,000 or less, or $20,000 or less for individuals. Further, this benefit requires that at least 30% of your 2021 income was spent on your principal residence in Canada during 2022.
What’s more, the deadline is March 31, 2023, if you want to obtain the $500 payment. So, make sure you have filed your 2022 return as well as your 2021 return. Again, online tax filing is the quickest way to get this money.
Invest what you can
If you’re struggling, then, of course, you should be creating an emergency fund first and foremost. However, if you’re able to put some money aside for stable investment, there is a way to create more income to help through this difficult year.
I would recommend an exchange-traded fund (ETF) that allows you access to multiple companies, as well as bonds, to create fixed income. It’s managed by financial advisors, so it’s like having a team doing the hard investment work for you.
A great option right now is Vanguard FTSE Global All Cap ex Canada Index ETF (TSX:VXC) for global exposure, besides Canada. This gives you diversified income, with shares on par with where they were a year ago, beating out the TSX today. Plus, you can add on extra passive income at $0.81 per share annually.
Bottom line
Take care of yourself, take care of your family, and take care of your finances. By taking advantage of your tax credits and investing what you can, you’ll be sure to have done that this year and in the years to come.
