As we exit the 2020 tax year, it’s never too early to start looking ahead to the benefits and credits that might be applicable or advantageous to you in 2021.
One of the conversations we frequently had with our clients in the early months of 2020 was whether we anticipated the government extending the personal tax filing deadline. We knew it might be a last-minute decision and were prepared either way. However, our advice has always been to provide us with the opportunity to file your taxes by the standard deadline. The reason for this is so that you won’t miss out on the many benefits and credits that the government offers by filing your taxes by the regular deadline (April 30th in most cases).
When the federal government presented the Budget in early 2021, increases in taxes was something that was notably absent. Instead, we saw several measures introduced to alleviate some of the financial strain put on Canadians due to the pandemic. Throughout this pandemic, more than ever, families with young children have been greatly impacted by the challenges and unpredictability that COVID-19 has placed on them. We heard in May that the government was introducing the Canada Child Benefit Young Child Supplement (CCBYCS) for those that already qualify for the Canada Child Benefit (CCB). In 2021, families that are entitled to receive the CCB and have a net income of $120,000 or less, will receive an additional $300 for each child under the age of six.
If you are a senior in Ontario that will be 65 by the end of 2021, you may be eligible for the new Seniors’ Home Safety Tax Credit. This credit is intended to help seniors in Ontario make renovations that improve the safety, accessibility and functionality of their home, such as installing grab bars, wheelchair ramps, stair lifts or elevators that will allow them to stay in their home longer. This refundable tax credit is worth 25% of up to $10,000 in eligible expenses for a senior’s principal residence in Ontario, up to a maximum credit of $2,500. Another change for Canadian seniors relates to Old Age Security. Seniors who will be 75 or older as of June 2022 will receive a one-time $500 payment this August.
The federal Budget also announced it is expanding the criteria for eligibility to the Disability Tax Credit, making it easier for Canadians to qualify. Student loan interest forgiveness has also been extended until the end of March 2023, and the annual minimum income threshold for repayment assistance has been increased from $25,000 to $40,000.
There are still several COVID-19 related benefits available to Canadian taxpayers. If you own a business with a payroll account, you may be eligible to receive benefits under the Canada Emergency Wage Subsidy (CEWS) program. If your business rents space and meets the revenue decline threshold, you may be eligible to receive benefits under the Canada Emergency Rent Subsidy (CERS) program. While both of these programs are being phased out by September 2021, the new Canada Recovery Hiring Program (CRHP) has been introduced to November 2021 and is intended to provide subsidies to businesses that hire/rehire employees.
It is also important to note that if you are required to repay a COVID-19 related benefit that you received, you can now claim the deduction for the year of the receipt rather than the year of repayment. It remains to be seen if the government will allow for similar tax deductions related to working from home in 2021 due to COVID-19 – stayed tuned.
Please visit Canada Revenue Agency for more information or contact your Welch LLP representative if you have questions.
613-236-9191 ext. 104