2020 brought on a lot of new challenges that none of us were prepared for including new changes to the 2020 tax year. There are a few new deductions that you may be eligible for and of course a refresher on what it means if you collected CERB at all in 2020.
Canada Emergency Response Benefit (CERB) and Canada Emergency Student Benefit (CESB).
CERB recipients need to be aware that the CERB is a taxable benefit and is considered ordinary income. In other words, the amount of taxes owed from CERB payments will depend on the recipient’s total income for 2020 and their marginal tax rate for the year Recipients of these benefits will get a T4A slip from CRA.
Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), and Canada Recovery Caregiving Benefit (CRCB)
The government is withholding 10 per cent in taxes at source. In addition, when it comes to the CRB, you may have to pay money back if your additional income for 2020 is more than $38,000. The claw back rate is $0.50 for each dollar of CRB received for net income over this amount.
Basic Personal Amounts (Federal)
The basic personal amount was $12,069 in 2019 and has been increased to $13,229 for 2020; what this means is that a taxpayer can earn up to this amount before paying any federal income tax.
The simplified home office deduction- including those working from home due to the Pandemic
If you’re an employee who’s been toiling at home more than 50 per cent of the time over at least four consecutive weeks in 2020 due to COVID-19, you’ll be able to claim a deduction of $2 for every work-from-home day up to a maximum of $400. This is what the CRA is calling a temporary flat-rate method of calculating the home office deduction. If you’re an employee with significant home office expenses, you can use the current “detailed method” of calculating the home office tax break. If using the simplified method you will not be required to provide a T2200 or the simplified version T2200S nor will you need to keep records of expenses. If choosing to use the detailed method you will have to have this form signed by your employer and keep your supporting documents for the 7 year requirement period. The CRA has launched an online calculator to assist with this.
NEW– Home office expenses can now include your internet expense. It will be claimed under the utilities column on your T777. You cannot include the cost of connection OR the rental portion of a modem or router.
Use of Employers Vehicle and reporting Personal Usage amount
Business lockdowns, reduced business activity, and other changes to our daily and business lives throughout the pandemic, may result in an employee’s business or personal mileage being reduced compared to a normal year. If employees have used the automobile substantially less for business purposes during the pandemic, they may no longer qualify for the reduced standby charge for tax purposes, even though their personal driving use might be similar or less than last year.
To address this, the government proposes to allow employees to use their 2019 automobile usage to determine whether they use the automobile primarily for business purposes in order to access the reduced standby charge in 2020 and 2021. Only employees with an automobile provided by the same employer as in 2019 would be eligible for this option.
Digital News Subscriptions Tax Credit
The maximum credit will be calculated by:
- multiplying the lowest personal income tax rate (15%) by the total of all amounts paid by the individual for qualifying subscription expenses in the year up to $500.
Only the individual(s) who entered into the agreement can claim the credit:
- if more than one individual is entitled to claim the qualifying subscription expense for a year (i.e. spouses, roommates, etc.), the total amount can be split between them provided that the total amount claimed is not more than the maximum amount that would be allowed if only one of them made the claim.
If the qualifying subscription is eligible and provides access to content in non-digital form or content other than content of the QCJO:
- only the cost of a stand-alone digital subscription to the content of the QCJO will be an eligible expense; and
- if there is no stand-alone subscription, the amount is limited to the cost of a comparable stand-alone digital subscription that provides access to content of a QCJO. If there is no comparable digital news subscription then only one half of the amount paid is an eligible expense.
Canada Training Benefit
The federal government introduced the Canada Training Benefit to help with disruption in the labor force due to changes in technology. This refundable tax credit is designed to lower the barrier to professional development and to provide financial support to help pay for half of the tuition and training fees. As a worker, you’ll be eligible to receive up to $250 annually as a tax credit. This amount goes into a notional account, which the worker can use for eligible purposes.
To be eligible to accumulate $250 in a year, you must meet the following criteria:
- File a tax return for that year
- Be at least 26 years old and no older than 65 years old at the end of the year
- Be a Canadian resident during the year
- Have eligible earnings of minimum $10,000 and maximum $150,000 in the year (this includes employment, self-employment, and maternity and parental benefits)
Claiming Cannabis as a Medical Expense
To reflect the fact that cannabis is legal in Canada, the federal government will be amending the ITA. You can claim a medical expense tax deduction for any cannabis products that you buy as a patient after October 16, 2018. If you didn’t claim your medical cannabis on your 2018 or 2019 return, you may submit these now as an adjustment to those particular tax years.