Spring has sprung in Canada, and it means more daylight and warmer weather, but it also means tax season is here!
We’ve already covered important dates for business owners, but now it is time to focus on personal taxes. For many, doing your personal taxes is simple and easy, but a few things have changed for 2020, including the need to claim COVID-19 benefits.
To help ease the process and help you gather all the information and paperwork you need to proceed, we’ve put together this handy guide!
What’s New For 2020 Taxes?
There have been a few changes to benefits, tax credits, and expenses for individuals and families in 2020.
These include changes to:
- Home Buyers’ Plan: If you are not classified as a first-time home buyer with regards to HBP, and you experience a breakdown of your marriage or common-law partnership, you might be able to participate in HBP under certain conditions. For more details, visit What is the Home Buyers’ Plan (HBP)?
- Other employment expenses: If you worked from home in 2020 because of COVID-19, you might be eligible to claim certain expenses. Check out the information related to Line 22900 for more details.
- Basic Personal Amount: For most taxpayers, this amount has increased. If your net income at line 23600 of your return is $150,473 or less, enter $13,229 on line 30000. If your net income is $214,368 or more, enter $12,298. For more details, see Line 30000.
- Spouse or common-law partner amount: Again, for most taxpayers, this amount has increased. This amount can be claimed if at any point in 2020 you supported your spouse or common-law partner and their net income was less than your Basic Personal Amount. For full details on this claim, see Line 30300.
- Amount for an eligible dependent: This amount has also increased for most taxpayers. You may be eligible to claim this amount if during the year you supported an eligible dependent and met certain conditions and you did not claim an amount for the year on line 30300 of your return. For details, see Line 30400.
- Digital news subscription expenses: 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. For details, see Line 31350.
- Your tuition, education, and textbook amounts: Tuition, education, and textbook amounts can be reported for a tax deduction for the student or their partner. Amounts can carry forward to a later year up to a certain amount. Any amount claimed under the Canada Training Credit reduces the amount that can be used to calculate the tuition tax credit, the amount transferred to another individual, or the amount carried forward for a later year For more, see Line 32300.
- Donations and gifts: The calculations for schedule 9 have been simplified for most, and for 2020 and years after you may be a non-refundable tax credit for donations made to registered journalism organizations. For more, see Line 34900.
- Canada training credit: If you meet certain eligibility requirements, you may be able to claim the Canada Training Credit for 2020 and later tax years. See Line 45350 for more details.
- Canadian journalism labour tax credit (CJLTC): If you are a member of a partnership that is a Qualifying Journalism Organization, you may be eligible for this refundable credit. See Line 47555 for more.
- Mineral exploration tax credit for flow-through share investors: This investment tax credit has been extended to March 31, 2024.
If you received employment income in 2020, you might notice additional boxes on your T4 slip. These boxes (boxes 57, 58, 59, and 60) are for CRA use only and do not require you to take any action.
How COVID-19 Benefits Impact Your Taxes
2020 was a challenging year for many Canadians, and the Federal, Provincial, and Territorial governments stepped in with COVID benefits as a means of support.
If you received benefits like Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB), Canada Recovery Caregiver Benefit (CRCB), or the Canada Recovery Sickness Benefit (CRSB), you should have received a T4A in the mail.
You will get a single T4A that details all of your federal COVID benefit payments. Any provincial or territorial payments will come in a separate T4A. If you received CERB through Service Canada or received Employment Insurance (EI) benefit payments, you may get a T4E. Residents of Quebec will get an RL-1 slip.
Each COVID benefit will have its own box on the T4A slip. If you have received multiple payments or made any repayments, check to see if the amount listed is correct. You can check your amounts in the “COVID-19 Support Payment Application Details” in your MyAccount with the CRA.
If you have not received your T4A or T4E, you can get a copy from your MyAccount.
Should you notice any of the following issues with your T4A, call the CRA immediately at 1-800-959-8281:
- Your T4A slip shows an incorrect amount
- The amounts you repaid before December 31, 2020, are not reflected on your T4A slip
- Your T4A slip shows incorrect personal information such as SIN or address
- You did not apply for COVID-19 benefits but received a T4A slip
Before you call, make sure you have the following information handy:
- Benefit type (CERB, CESB, CRB, CRCB, CRSB)
- Eligibility period you repaid or applied for
- Amount and date of any repayment
If you meet a set of eligibility criteria, you will receive interest relief on any 2020 tax amounts owing.
You will receive interest relief if you meet all of the following:
- Your total 2020 taxable income was $75,000 or less
- You received at least one COVID-19 benefit in 2020 (CERB, CESB, CRB, CRCB, CRSB, EI, provincial or territorial emergency benefits)
- You filed your 2020 income tax and benefit return
If you fit the criteria, interest relief will be automatically applied to your taxes owing. This relief only applies to 2020 and not previous years or previous debts with the CRA.
You will not be required to pay interest on amounts until April 30, 2022.
It is worth noting, however, that late penalties are not included in interest relief. You will incur a late-filing penalty of 5% of your 2020 balance owing plus an additional 1% for each month you file after the due date to a maximum of 12 months.
Personal Tax Filing Deadlines
To avoid penalties, it is necessary to file your taxes early or by the filing deadline.
The filing dates for 2020 are as follows:
- April 30, 2021, for filing personal taxes
- June 15, 2021, for filing personal taxes if you, your spouse, or common-law partner is self-employed
Filing your taxes on or before April 30 will not only help you avoid late penalties but can also ensure that you receive all the benefits to which you are entitled. This includes GST/HST credits, the Canada Child Care Benefit, the Canada Workers Benefit, the Guaranteed Income Supplement, and any provincial or territorial credits. Failure to file by the deadline could delay any COVID-19 related benefits you might wish to receive as well. And, of course, if you file on time there will be fewer potential delays in receiving a refund if you are getting one!
The deadline to pay your 2020 taxes is also April 30, 2021. If you are unable to pay your taxes at this time, the CRA has several payment options that may make things easier for you. You can explore those options here.
File Correctly and On Time
The changes to tax filings, and the COVID benefits you have received, may have left you feeling a little confused. While the process is still largely the same, you want to get the details right to avoid paying more than you need to and to maximize any potential tax savings or returns.
If you would like a hand compiling and filing your taxes, consider reaching out to the chartered professional accountants at WTC. They will assess your unique situation and simplify your personal taxes.
Call WTC today to learn more!