To paraphrase Mark Twain: there are only two certainties in life, and one of them is taxes.
The tax season is upon us and there are a number of 2020 income tax changes that both you and your employees should be aware of. For a comprehensive list of 2020 income tax changes, visit the Canada Revenue Agency (CRA) website.
Tax season can be stressful and confusing—at best of times. With many people having received some form of government support throughCOVID-19 emergency benefits, your employees might be looking at owing money rather than receiving a return.
That’s why it’s so important to file early and know which 2020 income tax changes apply to you so you can add them to your return.
Increased processing times
The CRA has indicated that everyone should plan for increased processing times, in part due to a security breach where hundreds of thousands of myCRA accounts for individuals were locked in order to protect users.
Advise your employees to file their tax returns as soon as they are able to in order to avoid any late penalties. April 30 is the last day to file. Processing time is generally two weeks, but you can also check processing times on the CRA website.
Work from home credit
On your 2020 tax return, you can claim expenses associated with remote work under “Other employment expenses” on Line 22900. This includes things like office supplies and WiFi costs.
The CRA writes that “If you are eligible, you can claim $2 for each day that you worked at home during the four-week period plus any other days you worked at home in 2020 due to COVID-19, up to a maximum of $400”. Eligibility is determined by the following:
- Working more than 50% of the time at home for a period of at least four-weeks consecutively due to COVID-19
- You had expenses that were directly related to your work
Changes to the Home Buyers’ Plan
The Home Buyers’ Plan (HBP) allows first time home buyers to withdraw from their Registered Retirement Savings Plans (RRSPs) by up to $35,000 to use as a down payment on a first home. The amount must be repaid within 15 years.
Previously, the HBP was only available to those who were buying a home for the first time. However, this year the CRA notes that if you experienced “a breakdown in your marriage or common-law partnership, you may be able to participate in the HBP under certain conditions”.
This was put into place to help individuals who have already separated or are in the process of separating from their partner to maintain homeownership. For more information on the Home Buyers’ Plan, visit the CRA HBP webpage.
Digital news subscriptions
According to the CRA: “For the 2020 to 2024 tax years, you may be able to claim a non-refundable tax credit for expenses you paid in the year for a digital news subscription with a qualified Canadian journalism organization”.
This credit is a part of a program to help support Canadian journalism. For those individuals that subscribe to Canadian news sources online that are eligible for the tax credit, they can receive up to $500 back. For more information, visit the Government of Canada webpage on the digital news subscription tax credit.
During this past year, many Canadians received a COVID-19 relief benefit such as the Canadian Emergency Response Benefit (CERB). Those emergency benefits may be taxable. If so, you would have received a slip in the mail, or it is available online at My Account for Individuals.
This means that, depending on overall income for 2020, you may owe money in taxes, which is why it’s so important to include in your return all of the different tax reductions you are eligible to claim.
If you’re unsure about which 2020 income tax changes apply to you, we advise you to consult with a tax professional. You can also use a service such as TurboTax or WealthSimple that will help you complete your tax return yourself.