How are bonuses taxed in Canada? + MORE Jan 16th

These days, a lot of life’s big milestones—such as buying a home and starting a family—feel unaffordable for many Canadians. Inflation and other economic factors have made everyday purchases like groceries and cell phone plans feel like luxuries, and rising interest rates are making it more expensive to borrow money for credit, loans and mortgages.

Jordan Heath-Rawlings shares your frustration. In November 2023, he launched In This Economy?!, a podcast that helps Canadians tackle financial challenges. Described as “Your guide to understanding an unpredictable economy,” the show explores topics such as inflation, employment, debt, home ownership and repaying CERB.

Heath-Rawlings, who lives in Toronto, is a long-time Canadian journalist—he was a newspaper reporter, a founding editor of Sportsnet, and director of special projects at Rogers Media, among other roles. In 2018, he started Frequency Podcast Network, along with Canada’s first daily news podcast, The Big Story, which he still hosts (he also oversees 30-plus other shows)…

If you’re fortunate enough to get a bonus from your employer this year, or if you’ve recently earned a pay bump, how should you spend it? 

Maybe that money is already spoken for. Many Canadians are struggling financially right now, so a bonus or salary increase might simply help cover the rising cost of living or create a bit of breathing room in your budget. But if you’re keeping up with monthly obligations like rent, mortgage payments, household bills and loans, you may have some flexibility in how you allocate those bonus bucks—including saving towards your financial goals.

“Year-end bonuses are very exciting and tempting,” says Reni Odetoyinbo, a financial influencer in Toronto who shares money tips on her site, Reni, The Resource. “I like to look at all my goals for the year and see if anything needs topping up to decide how I spend the bonus.” (Read her Q&A with MoneySense.)

Are work bonuses taxed?

Before you start divvying up your dollars: Know that bonuses are taxed like your other wages, so you may not receive as much as you think…

Ask MoneySense
Could you please confirm if I can apply a loss on the sale of investment securities in 2023 to a capital gain on the sale of an investment property in 2022, and claim a refund of part of the capital gains tax paid in 2022?

—Ramesh

Capital loss carry back: How it works

When you file your tax return, you have to consolidate all of your capital gains and capital losses for the year from different investments. This may lead to a net capital gain or a net capital loss for the year. When the result is a net loss, you have options.

It sounds like you are aware that you can carry back capital losses, Ramesh. If you have a net capital loss on your 2023 tax return, you can carry it back up to three years. So, you can ask the Canada Revenue Agency (CRA) to apply that loss to capital gains you had in 2022, 2021 or 2020.

When should you carry back a capital loss?

You can apply some or all of the loss to one or more of those years. If you had capital gains in more than one of the past three years, there are three primary considerations…

If you have a mortgage on your home or have been trying to break into the housing market, you’ve probably watched interest rates go up, up, up over the past two years. Both fixed and variable mortgage rates have been higher than any other time in recent memory, leading many new home buyers and existing mortgage holders to choose fixed rates to avoid further increases. These rate hikes have also wreaked havoc for many home owners who locked into variable rate mortgages before rates started climbing, causing their monthly payments to skyrocket. 

It’s been a tough time for home owners (and first-time home buyers), but the Bank of Canada (BoC) has held interest rates steady since July 2023, and the latest economic data is leading experts to suggest that interest rate cuts may be on the horizon. So, what can Canadians expect from interest rates in the months and years ahead, and what does that mean for fixed mortgage rates and variable mortgage rates? We spoke to an economist and a mortgage broker to get a better sense of what’s ahead, and whether a fixed or variable rate is your best option in 2024…

As the country re-opens after COVID-related restrictions, Canadians are faced with a worrying financial picture. Many have moved, others are looking to travel, and the cost of living is ballooning with unusual rates of inflation. Meanwhile, the Bank of Canada (BoC) rate hikes designed to curb these forces are adding pressure to those with variable-rate loans and mortgages. Unsurprisingly, many Canadians are using their credit cards to charge their expenses.

How much debt does the average Canadian carry? 

The average credit card balance for Canadians in the third quarter of 2023 was $4,265, according to TransUnion. Credit card debt is growing for Canadians too. That is number up from the second quarter ($4,185) and $3,909 in the first quarter the same year. And it’s almost double the average Canadian credit card debt from the third quarter of 2022 ($2,447). (If you get a work bonus, find out if you should use it to pay off credit card debt or put it toward something else.)

From another report, Canadian consumer debt has risen to $2…