Annual Message from Steve
I generally feel that each tax season has arrived more quickly than the last, but this year it is more than just a feeling considering the filing deadline for last year ended only in September. It is yet to be seen whether there will be further extensions for the 2020 tax filing. For my part, I hope not.
There is really not much to be said about the past year – in varying degrees it has been extremely difficult for everyone. I think it is safe to say this will again be a virtual/digital tax season and that we will not be able to meet face to face for the most part. While we have all to some extent become accustomed to Zoom and other ways of communicating virtually, it is just not the same and we certainly miss the human interaction at this time of year.
On a positive note, there is light at the end of the tunnel in terms of vaccines and declining case numbers and so hopefully life will begin to return to something resembling normal by the summer months. Once again, I would like to express our gratitude for your continued support and trust. In whatever form we are able to communicate, we are here for you.
Canada Emergency Response Benefit (“CERB”) was introduced for individuals facing financial difficulties either due to illness, job loss or inability to work. CERB covered the period of Mar 15, 2020 – Sept 26, 2020, providing eligible applicants $500 per week to a maximum of $14,000. The full amount is taxable and a T4A or T4E tax slip will be issued. The tax implication will be dependant on your tax bracket which is based on total income. Once the CERB program ended, the following programs were introduced from Sept 27, 2020 through to Sept 25, 2021 to continue providing financial support.
Canada Recovery Benefit (“CRB”) is available for Self-employed individuals, business owners, and independent contractors. The benefit is $450 per week less 10% withholding tax.
Employment Insurance (“EI”) Changes – Those not eligible for CRB may qualify for the adjusted EI program. The adjusted program requires only 120 insured hours down from 400 – 700 hours. Qualifying applicants can receive between $500-$573 (less 10% withholding tax) for up to 14 – 45 weeks depending on their situation.
Canada Recovery Sickness Benefit (“CRSB”) is available for individuals who contracted COVID-19, were required to isolate, or missed work due to COVID-19. They are eligible to receive a 1-week payment of $500 ($450 after tax) which can be applied for twice. Those receiving benefits under the other programs or EI during the same period are not eligible.
Canada Recovery Caregiving Benefit (“CRCB”) assists individuals who are unable to work because they are providing care to a child under the age of 12, or a family member that requires supervised care. This is a weekly application in which you can receive $500 ($450 after tax) up to 26 weeks.
For more information for all these programs visit: https://www.canada.ca/en/services/benefits/covid19-emergency-benefits.html
Child Care Expenses
The definition of “earned income” has been amended to include COVID-19 payments received in the year for which a T4A or T4E has been issued. (i.e., CERB payments). This may increase the eligible amount of childcare costs that you can deduct against your 2020 employment income.
Home Office Expenses
If you were required to work from home over 50% of the time due to COVID the CRA has provided an option to use a temporary flat rate method or detail method.
Temporary Flat Rate Method – allows for $2.00 per day for a maximum of 200 days. No receipts or forms necessary. This will reduce net income by $400, the tax implication will depend on or your personal tax rate.
Detail Method – requires a T2200 form signed by your employer and a prorated calculation of the expenses directly related to the home office. Expenses include electricity, heat, water, utilities, internet access fees, maintenance and rent if applicable. Commission employees can also deduct insurance, property taxes, cell phones and equipment. Mortgage interest, home internet connection fees, furniture & capital expenses cannot be claimed.
Office supplies and certain phone expenses can be claimed if required as part of your employment and indicated on the T2200 form.
Refundable Canada Training Credit
A $5,000 lifetime refundable training credit is available on eligible tuition and course fees paid in 2020 and subsequent years. To be eligible, you must be between the ages of 25 – 65, a Canadian resident with employment income (including maternity and parental benefits) between $10,000 and $150,473. The credit limit will accumulate at a rate of $250 per year and unused credits will be carried forward. The credit is the lesser of the accumulated limit and half the eligible tuition or course fees.
If you’re single, divorced, separated, or widowed and support a dependant who lives with you, in a home that you maintain, you may be eligible for a federal tax credit of $13,229 for 2020. The dependant may be your parent, grandparent, a child under the age of 18 including grandchild, or sibling. The credit is not available if you’re required to pay child support (unless it is a netted support payment) or if the dependant’s income is greater than the credit amount. A claim cannot be made by more than one individual on the same dependant therefore it must be coordinated if there is an ex-spouse.
Filing Deadlines – Last year saw extended filing deadlines. No such extension has been implemented at this time, therefore the deadline remains to be April 30th for personal tax filings and June 15th, for self-employed individuals and their partner. Regardless of your filing deadline, tax owing is due by April 30, 2021 otherwise attract 5% interest compounded daily. Late filed returns will attract a 5% penalty on the balance owing plus 1% for each full month the return is outstanding.
Electronic Signatures – CRA continues to accept electronic signatures on the T183 – E-file authorization from for the 2021 tax filing season.
RRSP Contributions – March 1, 2021 is the RRSP contribution deadline which can be used in either 2020 or 2021 tax filings, subject to your RRSP room available. Review your 2019 Notice of Assessment for your available room or check online with CRA “My Account” if registered. An overcontribution above $2,000 will trigger a 1% monthly penalty.
TFSA Contributions –Canadian residents over 18 years of age you can open a tax-free-savings account (TFSA). The annual limit for 2020 and 2021 is $6,000. If you have not previously contributed to a TFSA, your cumulative limit as of January 1, 2021 will be $75,500.
Late Slips – Typically, T3 (trust) and T5013 (partnership) slips are not issued until the end of March and foreign slips can be even later. If you receive a late or amended slip after filing, please notify us as soon as possible to amend your return. The CRA’s matching program will identify any missing slips and impose penalties.
Paying CRA – Three payment options:
- Pre-Authorized Debit (PAD): A one time draw directly from your bank account on a specified withdrawal date. The PAD form must be filed at least 5 days before the withdrawal date therefore must be submitted by April 25th to meet the April 30th deadline.
- Online: Sign-in through your financial institution and add CRA as a payee. Your account number would be your 9-digit SIN.
- Remittance Voucher: We can issue a voucher that you can mail with a cheque or take to your bank for a direct transfer.
My CRA Account for Individuals
My Account is a secure portal that allows you to view your personal income tax and benefit information and manage your tax affairs online. A taxpayer can find their RRSP/TFSA contribution room, download Notices, and confirm any outstanding balances/refunds. To register for your online access, please visit: