Your 2022 Tax Fact Sheet and Calendar

We are into a new year and with it comes some upward adjustments to tax brackets, credit amounts and benefits. These inflation-based changes apply mostly across the board. The Canada Revenue Agency has indexed these amounts for 2022 at 2.4% over last year’s levels. That rate is based on the average Consumer Price Index during the 12 months ended Sept. 30, 2021, compared to the same period a year earlier.

The year could bring some changes to tax rules, based on last fall’s election promises and the government’s subsequent economic statement. These and general tax-planning tips will be discussed in a separate article in the coming weeks. Meantime, here are some new numbers and key dates to consider for 2022:

Tax Rates

Federal

While the rates of taxation are mostly unchanged, the federal tax-bracket thresholds for taxable income have been increased as follows:

• 15% on the first $50,197 of employment and “other income” (compared with the first $49,020 in 2021)
• 20.5% on $50,197 to $100,392 (versus $49,020 to $98,040)
• 26% on $100,392 to $155,625 ($98,040-$151,978)
• $29.38% on $155,625 to $221,708 (compared with 29.32% on $151,978-$216,511)
• 33% on the amount over $221,708 (versus $216,511)

The minimally higher tax rate applied to the fourth bracket also applies to rates for capital gains and both types of dividend income. The respective rates for capital gains (based on one-half of gains being subject to tax), eligible dividend income (generally applicable to large Canadian corporations’ dividends) and to non-eligible dividends (those paid out by smaller Canadian corporations) in each bracket are as follows: 

Combined Federal/Provincial

Individual provinces also have adjusted their brackets accordingly. Here is an overview of how this affects combined federal/provincial tax rates in the four biggest provinces:

• Ontario’s lowest combined federal/provincial bracket now applies to those with taxable income of $46,226 or less, compared with $45,142 in 2021, and this tranche of income continues to be taxed at 20.05%. The top bracket now applies to those with taxable income in excess of $221,708, versus $220,000 last year, and is taxed at 53.53%. Due to the change in bracket threshold, an individual with taxable income of $100,000 now pays tax at no more than 37.91%, compared with 43.41 % last year.
• In Quebec, the lowest combined federal/provincial bracket is now capped at $46,295 versus $45,105 in 2021 and is taxed at 27.53% (unchanged). The top bracket applies to amounts above $221,708, an increase from $216,511 last year, and taxed at 53.31% (no change). An individual with taxable income of $100,000 now pays tax at no more than 41.12%, compared with 45.71% last year.
• British Columbia’s lowest combined federal/provincial bracket now reaches $43,070, up from $42,184 last year and continues to be taxed at 20.06%. Its top bracket applies to taxable income above $227,091, versus $222,420 in 2021. Someone with $100,000 in income now pays maximum tax of 32.79%, down from 38.29%.
• Alberta now has a bottom combined federal/provincial tax bracket ceiling of $50,197, up from $49,020 last year, and continues to be taxed at 25%. Its top bracket continues to be taxed at 48% and applies to income above $314,928, unchanged from 2022. A $100,000 individual’s top tax rate is now 30.5%, down from 36%.

Tax Credits

Here is a summary of changes to key federal non-refundable tax credits for 2022:

• Basic Personal Amount: $14,398 (up from $13,808). Note that this increase is based on an “enhanced” formula that is designed to bring this amount up to $15,000 in 2023. No tax is payable on taxable income up to this level. (High-income individuals may not benefit from the enhancement due to a complex income-test calculation.)
• Age: $7,898 ($7,713). This credit is available to those age 65 and over and is gradually “clawed back” for those who reported net income in 2021 of approximately $39,000 to $90,000, when the credit is eliminated.
• Disability: $8,870 ($8,662)
• Pension income: $2,000 (unchanged)
• Medical expenses: $2,495 ($2,421) and continues to be capped at 3% of net income

For provincial tax purposes, these credits also have been similarly increased. For example, in Ontario the basic personal amount applicable to provincial tax is now $11,141, up from $10,880 in 2021. In Quebec, the amount is now $16,143, versus $15,728.

Contribution Limits

• RRSP Dollar Limit: The 2022 limit is $29,210, up from $27,830 for 2021. This annual limit cannot exceed 18% of your previous taxation year’s earned income. The actual maximum contribution in any given year is determined by your total contribution room generated by unused contributions over the years.
• TFSA Limit: $6,000 (unchanged). For those who have never contributed to a TFSA, the cumulative limit is now $81,500.
• OAS Clawback Range: Old Age Security income is taxed back for higher income recipients. For 2022, the clawback begins if taxable income is $81,761 and OAS must be completely repaid for those who make $133,141 or more. This compares with the 2021 clawback range of $79,845 to $129,581.
• CPP Contributions: Premiums payable to the Canada Pension Plan (and the Quebec Pension Plan) have increased to 5.7% or an employee’s earnings from 5.45% in 2021. The maximum annual contribution for employees (and their employers) is now $3,499.80, compared with $3,166.45 in 2021. For self-employed individuals, the maximum is $6,999.60, up from $6,332.90. The yearly maximum pensionable earnings is now $64,900, up from $61,600 last year. This is an increase of about 5.4%, the biggest YMPE increase in 20 years, which is due to the effect of the pandemic on the labour market. The increase for 2022 originally had been pegged at 3.4%.
• EI Contributions: The maximum Employment Insurance contribution for an individual has risen to $952.74, up from $889.54 in 2021. The maximum annual insurable earnings is now $60,300, up from $56,300 last year. 

Your 2022 Tax Calendar

Personal Income Tax
-2021 RRSP contribution deadline: March 1 (The 2022 RRSP contribution deadline is March 1, 2023)
-Quarterly installment dates for 2022 income tax (if applicable, i.e., tax not deducted at source): March 15, June 15, Sept. 15, Dec. 15
-Deadline for employers send out T4 employment-income slips: end of February
-Deadline for T5s to be sent out: end of February
-Deadline for T3s to be sent out: end of March
-Income tax return filing deadline for individuals: May 2 (The normal filing deadline of April 30 falls on a Saturday this year.)
-Income tax return filing deadline for self-employed individuals: June 15
-Deadlines for paying taxes owed:

• Individuals – May 2
• Self-employed individuals: May 2

-Deadline to file deceased taxpayer’s return in respect of the year of death:

• If death occurred during 2021 between January and end of October – May 2
• If occurred during November or December 2021- six months following the date of death
• Any outstanding amount of tax for the deceased are due on the above return-filing dates.

-RRIF conversion deadline: Dec. 31 (but realistically speaking this should be arranged earlier in December) 

Sales Taxes

(The following applies to self-employed individual who file H/G/QST return annually.)

-Quarterly installment dates for 2022 H/G/QST remittances: one month after the end of the period
-Deadline to file H/G/QST return: June 15
-Deadline for paying any H/G/QST owing in excess of amounts paid by installment: May 2