Income Tax Changes for 2024 Tax Year

Every year there are changes made to the Canadian tax rules and this is no different for the 2024 tax year. Here are the key changes for the 2024 tax year.

 Basic Personal Amount

The basic personal amount has increased this year.

Per the Financial Post, “[T]he basic personal amount—on which you do not pay federal income tax — ranges from $14,538 to $16,129, depending on your overall income…Those with lower incomes have a higher basic personal tax credit.” 

Income Tax Brackets

Canada Revenue Agency has also revised the tax brackets. Per their website: 

“Federal income tax rates for 2024

15% on the portion of taxable income that is $55,867 or less, plus

20.5% on the portion of taxable income over $55,867 up to $111,733, plus

26% on the portion of taxable income over $111,733 up to $173,205, plus

29% on the portion of taxable income over $173,205 up to $246,752, plus

33% on the portion of taxable income over $246,752” 

Vehicle Use For Business

The amounts you can claim for a vehicle that is used for employment limits have increased this year.

Global News explains, “The limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes in the provinces will increase by two cents to 72 cents per kilometre for the first 5,000 kilometres driven, and to 66 cents for each additional kilometre.” 

Employment Insurance (EI) Contributions

There have been a few adjustments to EI contributions.

Per CBC, “The maximum insurable earnings ceiling for employment insurance rises to $65,700 starting Jan. 1, up from $63,200 in 2024. That means the new maximum annual EI contribution for a worker will increase to $1,077.48, up from $1,049.12 in 2024.” 

Registered Retirement Savings Plan (RRSP) Limits

RRSP contribution limits have increased for the 2024 tax year as well.

Again per the Financial Post, “The threshold for registered retirement savings will go up to $32,490 in the new year, from the previous $31,560, plus any contribution room from the previous years.” 

First Home Savings Account (FHSA)

There is a new tax-free savings plan to help Canadians save to buy their first house – the First Home Savings Account (FHSA).

The Scotiabank website explains, “The First Home Savings Account (FHSA) is a tax-free savings account that allows you to contribute up to $8,000 per year, up to a lifetime limit of $40,000, for your first home.” 

Canada Carbon Rebate For Small Businesses

There is a new carbon rebate for small business corporations in Canada. To find out if you qualify, please see this site.

Capital Gains

There has been an increase in the Lifetime Capital Gains Exemption (LCGE). The CFIB website says, “The $1 million LCGE for sales of small business shares or assets for fishers and farmers will rise to $1.25 million as of June 25, 2024. It will be indexed to inflation starting in 2026.” 

For further detail, this video has a good overall look at the changes for the 2024 income tax year for Canadians.

Income taxes can be complicated; Shaw & Associates would love to take care of all your accounting needs, including your income taxes, personal or business.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.