2022 has been a challenging year with the highest inflation we have seen since the 80s, we have also seen the highest interest rate increases since 2008. 2023 will bring in some changes to help Canadians save their money and pay less tax.

As 2022 come to a close, there are tax changes coming into effect in 2023 that Canadians need to be aware off.

Tax Changes in Canada for 2023

Here are 10 tax changes that are coming your way in 2023:

1.  Basic Personal Amount (BPA)

2. Federal Tax Bracket Changes

3. Tax-Free First Home Savings Account

4.  Multi-Generation Home Renovation Credit

5. RRSP limit increase

6. TFSA limit increase

7.  CPP Contribution Rate Increases

8.  EI Contribution Limit Increase

9.  Lifetime Capital Gains Exemption Increase

10. Residential Anti-Flipping Rules

1.     Basic Personal Amount

One of the best good news for Canadians, is the increase to the basic personal amount (BPA).

The BPA is a tax credit that can be claimed by all Canadians. It allows taxpayers to earn up to the basic personal amount without having to pay a single cent of federal income tax.

The rate is $14,398 for 2022 and is increasing to$15,000 for 2023, which gives a bit more cushion to you as a taxpayer before you start paying federal income tax.

2.    Federal Tax Bracket Changes

Federal tax brackets are changing in 2023 to account for inflation. The federal tax rates are not changing, but the earnings brackets are increasing, which will mean lower average tax rates.

On the first $53,359 of employment or self-employment income, you will be taxed at only 15.00%

On income between $53,359 and $106,717, you will be taxed at 20.50%

On income between $106,717 and $165,430, you will be taxed at 26.00%

On income between $165,430 and $235,675, you will be taxed at 29.38%

On income $236,675 +, you will be taxed at 33.00%

These brackets are for federal taxes and does not account for provincial tax rates.

3.     Tax-Free First Home Savings Account (FHSA)

The First Home Savings Account coming in March 2023 is designed to help Canadians save up for the purchase of their first home. It isa tax-sheltered account with similarities to the Tax -Free Savings account (TFSA)and Registered Retirement Savings Plan (RRSP).

Like the TFSA, the funds you invest in the TFHSA will grow tax free. In addition to that, the funds you contribute will provide you with a tax deduction on your personal taxes like contributions to RRSP work.

TFHSA will have a lifetime contribution limit of$40,000 and an annual contribution limit of $8,000. If you cannot contributed full amount in any year, the unused limit with carry forward to subsequent year.

4.    Multi-Generation Home Renovation Credit

As many Canadians live in a multi-generational home with grandparents, parents and children living together, the Federal Government will provide support to these families by providing a home renovation tax credit up to $7,500 for renovation that aims to establish a secondary suite for a senior or an adult with a disability.

5.     RRSP Contribution Limit Increase

RRSP or Registered Retirement Savings Plan is as savings plan that is registered with the Canadian government and is designed to help Canadians save up for retirement. It is a tax-deferral program where contributions made to the plan reduces the amount of personal tax payable. Investments held within the RRSP can grow tax free while they remain in the registered account.

The maximum limited is calculated at 18% of earned income, which is not changing, however, the maximum amount which was capped at$29,210 is increasing to $30,780.

6.    TFSA Contribution Limit Increase

TFSA or Tax-Free Savings Account allows you to contribute cash or investments into your TFSA with the investment growing inside the TFSA tax free.

Unlike with RRSP, there is no tax deduction when you contribute to your TFSA, however, funds are not taxed when you withdraw them from your TFSA.

The TFSA annual contribution limit is increasing from$6,000 to $6,500 in 2023. The program has started in 2009, and if you have not contributed before into a TFSA account, your maximum contribution limit will be$88,000.

7.      CPP Contribution Rate Increases

The new CPP Employee and Employer contribution rates for 2023 will increase to 5.95%, up from 5.70% in2022, at the same time the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2023 will be $66,000, up from $64,900 in 2022. The basic exemption amount for 2023 will remain at $3,500.

8.     EI Contribution Limit Increase

The new Employment Insurance (EI) contribution limit for 2023 will increase to $61,500, up from $60,300 in 2022. In 2023, the employee EI premium will be $1.63 per $100 of earned income, this means that insured workers will pay a maximum annual EI premium in 2023 of $1,002.45compares with $952.74 in 2022.


Because of the increase in premium, beginning in 2023,the maximum weekly EI benefit rate will increase from $638 to $650 per week.


9.     Lifetime Capital Gains Exemption Increase

The lifetime capital gains exemption on qualifying capital gains is increasing to $971,190 in 2023, up from $913,630 in 2022,which is an increase of $57,560

10. Residential Anti-Flipping Rules

The 2022 Federal Budget proposed to target individuals who purchase a house (or any type of residential property) and sell it for much more than they purchased it for if the sale occurs within 12 months of the original purchase, and if the sale was not due to a major life event, the sale would be required to be reported as business income with no ability to claim the property as either a capital property or a principle residence.


Please note that the above information is intended as a general source of information and should not be considered as specific source of tax, legal or financial advice. Tax rules and regulations are subject to change at any time, and we at MMS Accounting &Bookkeeping will help you navigate and fully benefit from any tax savings available to you.



contribution room


18% of previous year’s earned income, less any pension adjustment


$5,000 / year, subject to inflation adjustment after 2009 as stated by Revenue Canada

carry forward of unused contribution room


Unused contribution room carried forward until the year the contributor turns 71


Unused contribution room carried forward indefinitely

require earned income to contribute





age qualifications to make contributions


Any age until you reach 71


Must be over 18 and no maximum age

are contributions tax Deductible


Yes – reduces taxable income



tax implications on income growth


Tax deferred (not taxed until withdrawn)


Tax free (never taxed)

tax implications on withdrawals


Withdrawals are added to your taxable income in the year funds are withdrawn


Withdrawals are tax free

can i withdraw savings for any reason


Yes – but depending on kind of investment. Tax will be withheld at time of withdrawal


Yes – but depending on kind of investment. No tax will be withheld at time of withdrawal

am i required to change my plan at a certain age


Yes – RRSP must be converted to RIF or an annuity by end of the year you turn 71 or you can choose to close the plan



are there over-contribution penalty tax?


Yes – excess contributions are subject to a penalty tax of 1% per month. Penalty tax only applies if you exceed the $2,000 lifetime over-contribution amount


Yes – excess contributions are subject to a penalty tax of 1% per month