2023 personal income tax updates

Another tax year brings another list of changes to CRA and provincial tax rules. This article walks you through the changes for 2023.

• Federal changes for 2023
• Provincial changes for 2023
• Residency type for EFILE purposes changes
• Frequently asked questions

Federal changes for 2023

Canada Dental Care Program

• New fields are added to the T4 and T4A slips.
  • T4 Box 45 – Employer-offered dental benefits
  • T4A Box 015 – Payer-offered dental benefits
• The new box was created to verify insurance status for 2023 and subsequent tax years.
• There is no impact to calculations on the return due to this box.

The following are options for the new boxes:

• 1 - No dental insurance or coverage of any kind
• 2 - Payee
• 3 - Payee, spouse and dependents
• 4 - Payee and their spouse
• 5 - Payee and their dependents

Lifted EFILE restrictions

Non-Canadian mailing address

Starting in 2021, EFILE service began accepting T1 returns with non-Canadian mailing addresses. A question was added to Info to indicate if the return was for a Canadian resident, factual resident, or non-resident for tax purposes. For tax year 2023,  more EFILE restrictions are being lifted and this mailing address-specific indicator is no longer needed.

Starting with tax year 2023, the CRA will be lifting additional EFILE restrictions to allow the following types of T1 returns to be accepted electronically:

• Non-residents filing under Section 116 of the Income Tax Act
• Deemed residents filing under Section 250 of the Income Tax Act
• With some CRA limitations, emigrants
• Taxpayers with a SIN starting with 0 are now eligible to use EFILE.

See the Residency type for EFILE purposes section in this article for more information.

Lifted EFILE restrictions exceptions

• Discounting is not allowed for emigrant, S.116 (non-resident) or S.250 (deemed resident) returns.
• Pre-bankruptcy returns not accepted for EFILE for immigrant, emigrant, S.116 (non-resident) or S.250 (deemed resident).
• Deemed residents and emigrants reporting self-employment income on Form T2203 (multiple jurisdictions) remain exclusions for EFILE.

Name input changes

• The CRA has a number of taxpayers (newcomers/first-time filers) who have identified themselves to Service Canada with only one name. As a result, for 2023 and subsequent tax years in order to allow such taxpayers to file their return electronically, only last name (family name/surname) remains mandatory. first name (given name) is now optional.
• New for EFILE, only for first time filers - middle name will be transmitted with the return, if applicable.

RC71 e-signature for CRA

• On June 22, 2023, Bill C-47 received Royal Assent. As a result, the CRA will begin accepting electronic signatures on form RC71.
• For discounted returns, user must answer the discounter question on Info or on RC71.
• If answered yes, you must fill both date and time on RC71.
• Date and time of e-signature will be transmitted with the return to CRA.

Repayments of federal COVID-19 benefits

• For federal COVID-19 benefits received in a prior year, if a repayment is made after December 31, 2022, a deduction can no longer be split between the tax return for the year in which the benefits were received and the tax return for the year in which the benefit was repaid. The deduction must be claimed, at line 23200, on the return for the tax year in which the repayment was made.
• T4A box 201 no longer splits out federal and provincial repayments.
• Form T1B and T1 line 23210 are both removed.

Climate Action Incentive (CAIP)

• Two new boxes have been introduced on page 2 of the T1 return for residents of New Brunswick in order to capture information regarding whether a taxpayer resided outside of a Census Metropolitan Area with respect to both tax year 2022 (retroactively) and tax year 2023
• T1 returns for Alberta, Manitoba, Ontario, Saskatchewan, Nova Scotia, Newfoundland, and New Brunswick now refer to Statistics Canada (2016) for CMAs, not (2021).  Some have changed since last year.

Residency information for British Columbia

For 2023 and subsequent taxation years, the residency questions for the Tsawwassen First Nation, previously added for tax year 2022, have been deleted from page 2 of the T1 Income Tax and Benefit Return for residents of British Columbia.

Residential property flipping

• For 2023 and subsequent tax years, the 2022 Federal Budget introduced a new deeming rule to ensure that profits from the disposition of residential real estate (including a rental property) that was owned for less than 365 days are taxed as business income, unless the disposition was in relation to one or more applicable life events listed at new field 17906 of the Schedule 3.
• New question added to Info form to direct users to Schedule 3 if applicable.

Property flipping - S3 and T2125

• If S3 17905 = Yes and no life events apply, report the transaction on Form T2125.
• T2125 will show additional question based on S3 and a loss.
• If transaction is a net loss, the return must be paper filed.

First Home Savings Account (FHSA)

• New slip: T4FHSA
• New schedule: S15
• New T1 lines: 12905 and 12906 (FHSA income), 20805 (FHSA deduction)
• If an FHSA was opened in 2023 (regardless of contributions), box 68930 must be ticked on S15 (for 2023 only, the box will be ticked automatically if a T4FHSA slip is entered on the return)

Multigenerational home renovation tax credit

• New schedule: S12 (multi-copy, 1 per qualifying renovation)
• New T1 line: 45355 (refundable credit)
• Not to be confused with the previous version of federal S12, Home Accessibility Expenses, which still exists on OtherCredits (Line 31285) and has similar eligibility requirements with the provincial S12s (New Brunswick, British Columbia)
• The new S12 is specific to creating a secondary unit for a qualifying individual, claimed by an eligible individual, and expenses cannot be reused for other credits (unlike existing accessibility credits).
• It is recommended you review the CRA's examples here.
• Each copy of S12 contains an eligibility checklist based on the Income Tax Act definitions and section Step 1, where an eligible individual enters their own expenses (no sharing on coupled returns)
• The first copy of S12 contains 2 pages of definitions, and section Step 2, where the total qualifying expenditures are summed for the credit.

Advanced Canada Workers Benefit (ACWB)

• New Step 4 on Schedule 6 for reporting ACWB from RC210 slips.
• RC210 ACWB payments now divided into basic (box 10) and disability supplement (box 11).
• If married or common-law, only the person claiming the basic CWB should report the amount from box 10 of all RC210 received on their S6 Step 4.
• Schedule 2 (if uncoupled) has two new lines added for spouse ACWB info.
• One additional question will appear on S6 Step 4 if neither is claiming CWB.
• T1 line 41500 (ACWB) is now limited to CWB claimed for the year - there will no longer be ACWB repayment occurring through filing a T1 return.

T1170 - ecologically sensitive land

• 2 new lines are added to the form T1170 to allow donors to track solely gifts of ecologically sensitive land (previously included on the same lines as bonds and debentures on T1170 and S3).
• You can now select new transaction type 4b on S3Details.
• Any gains will now be added to Real estate, depreciable property, and other properties on S3.

T2043 - Farmers tax credit provinces

• 4 additional designated provinces are now eligible: Nova Scotia, Prince Edward Island, Newfoundland, and New Brunswick.
• New lines have been added on T2043/T2043Supp, T5013 box 237, T2042, T1163-T1273, and T1EFILE to accommodate the total of 8 provinces.

T2039

• Form T2039 is removed for Air Quality Improvement tax credit.
• Credit can still be claimed on T5013 box 238, then on T1 line 47557.

T777S

• Form T777S (and T2200S) has been removed.
• Temporary flat-rate method for COVID-19 home office expenses is eliminated.  
• To claim workspace-in-the-home expenses, taxpayers must use Form T777.

Provincial changes for 2023

British Columbia

T1356- British columbia clean building tax credit

• New form T1356 introduced, and a new section on BC479 for it.
• Form T1356 is multi copy form - used for each qualifying retrofit.
• If the expenses are for a partnership, parts 3 and 4 of Form T1356 need to be completed. In other cases, parts 1 and 2 of Form T1356 should be filled out.
• If the partnership provided has an allocated credit amount, do not use T1356, instead enter it directly on BC479.

Renters Tax Credit

• New section on BC479 (similar to MB479)
• This is a refundable tax credit
• Minimum total of 6 months with rent paid
• The tax credit amount is $400 if the adjusted family net income is less than $60,000. Reduced if less than $80,000. And no credit is available if the adjusted family net income exceeds $80,000. 
• For couples, either spouse can decide who will claim the credit on their return.

Northwest Territories

AgriStability and AgriInvest

• Farmers in Northwest Territories can now participate in the AgriStability AgriInvest Program using the Harmonized Guide and related forms (T1273).
• Form codes have been updated for 2023.

Ontario

• Staycation tax credit on ON479 and ONCredits has been removed.
• Jobs training tax credit on ON479 has been removed.
• Schedule ON(S12) seniors’ home safety tax credit has been removed.

Québec

See our TP1 updates page here.

Saskatchewan

• Schedule SK(S12) Home renovation expenses has been removed.

T1279 for Saskatchewan Mineral Exploration Tax Credit

• Lines have just been moved from Form SK428 (and SK428MJ).
• Credit is essentially the same as before, but claim is limited to Saskatchewan tax (very similar to T1231 for British Columbia and T1241 for Manitoba).

Yukon

Mining business rebate

• Schedule YT(S14) is updated and redesigned with a new rebate for mining businesses, in addition to the existing business carbon price rebate.

Residency type for EFILE purposes

The residency type field on Info that was previously used for non-Canadian mailing addresses has been converted and expanded to capture residency information for all T1 returns.

• There are 7 possible residency types.
• Canadian resident is selected by default.
• Non-Canadian mailing address will prompt user to review residency type.
• An entry date or departure date will automatically change the residency type to immigrant or emigrant.

Residency type 1 (Canadian resident)

• No change to the existing process. The CRA will accept and process the return.

Residency type 2 (Factual resident)

• The taxpayer must indicate their residency status on line 17700 of Schedule D (T1248).
• Schedule D options will appear on the Info form when Residency type 2 is selected.
• Only residency status 5, factual resident of Canada, is accepted for EFILE.

Residency type 3 (Non-resident or Deemed resident)

See also, Residency type 6 and 7.

• You must indicate the taxpayer's residency status on line 17700 of the non-resident or deemed resident T1 return (5013-R).
• Note: there is no residency type option that fits for non-residents of Canada that need to use a provincial or territorial tax package. Situation is not currently EFILE eligible.
• Non-resident or deemed resident T1 return options are reproduced on Info form when residency type 3 is selected (similar to line 17700 on Schedule D for factual resident, but options are different).

Residency status for Type 3 (non-resident)

• For a non-resident of Canada, you should select residency status option 1 or 2.
  • Non-resident of Canada (1) or Deemed non-resident of Canada (2)
• You then need to select the type of non-resident return.
• Only Section 116 returns can EFILE. Any other option must paper file.

Residency status for Type 3 (Deemed Resident 183 days or more, others)

• A deemed resident of Canada should select residency status option 3 or 4.
  • Deemed resident (183 days or more) (3) or Deemed resident (other reasons) (4)
• If residency status 3 is selected (stayed in Canada 183 days or more), the situation is ineligible for EFILE and the return must be paper filed.
• If residency status 4 is selected (deemed resident for other reasons), taxpayer needs to indicate if they are a deemed resident of Quebec reporting income from a T4 in Quebec.
  • If yes, they must indicate if they are filing a Quebec Remission Order. This return would then be ineligible for EFILE and must be paper filed.
  • Otherwise, the return can be EFILED as a deemed resident under section 250 of the Income Tax Act..

Residency type 4 (Immigrant)

• No change to the existing process. The CRA will accept and process the return.

Residency type 5 (Emigrant)

• Taxpayer must indicate if they are attempting to submit T1243, T1244 and/or T1161.
• If yes, a paper return must be filed. Not currently valid for EFILE.
• If no, CRA will accept the return based on a valid emigration date.

Residency type 6 (Deemed resident reporting only business income with a permanent establishment in Canada)

• Subtype of Residency type 3. Not currently accepted for EFILE.

Residency type 7 (Deemed resident reporting income from a business with a permanent establishment outside Canada and/or rental income from a property located outside Canada)

• Subtype of Residency type 3. Not currently accepted for EFILE.

Frequently asked questions

Why is a ProFile form displaying a "DRAFT" watermark?

You may may encounter forms that are in “DRAFT” mode and displaying a watermark. The watermark means that the form has not yet been approved by the CRA for the upcoming tax year, and cannot be filed, via paper or electronically.

Why haven't all forms been approved yet?

Tax software providers receive staged CRA approvals throughout the year for the various T1 module forms.

For example, multijurisdictional forms typically come out of draft in later tax year releases, where other forms typically come out of draft earlier in tax year releases.

How will I know when forms have been approved?

Intuit includes any approved forms in a software release as soon as possible following CRA approval. The What’s New notes for each release details a list of any CRA-approved forms included.

We recommend selecting Check for Updates… under the Online dropdown menu regularly throughout the tax season to ensure that you are using the latest ProFile version.