The past year has been one unlike any other. The government of Canada has introduced certain new tax measures and modified some existing guidelines for this tax year.
In this article, we’ll review some of the federal and provincial changes which might affect your tax situation. This update includes:
- T4A and T4E slips will include your Canada Emergency Response Benefit (CERB) payments
- The Canada Revenue Agency (CRA) began sending T4A slips for COVID-19 emergency benefits
- New eligibility for claiming childcare expenses and the disability supports deduction
- Tax-free Savings Account (TFSA) contributions for 2021
- Canada Pension Plan (CPP) / Quebec Pension Plan (QPP) contributions for 2021
- The Ontario Small Business Support Grant
- The Manitoba Bridge Grant
- Tax relief if you worked from home due to COVID 19
If you applied for the CERB through the CRA, you’ll receive a T4A slip with the amount of CERB you received in box 197. If you received your CERB payments from Service Canada, this amount will be included with your regular Employment Insurance (EI) benefits in box 14 on your T4E slip instead. Québec residents will still find this amount in box O of their RL-1 slip. Visit our blog for information about how COVID-19 benefits (like CERB) might affect your taxes this year.
The CRA began sending T4A slips for COVID-19 emergency benefits in February, including the following federal relief measures:
- Canada Emergency Response Benefit (CERB)
- Canada Emergency Student Benefit (CESB)
- Canada Recovery Benefit (CRB)
- Canada Recovery Sickness Benefit (CRSB)
- Canada Recovery Caregiving Benefit (CRCB)
Slips will be delivered on an ongoing basis until March 10, 2021. Service Canada began sending T4E slips for CERB in February 2021.
If you received Employment Insurance (EI) or COVID-19 emergency benefits (including CERB), you might be able to claim your childcare expenses and/or the disability supports deduction, even if you weren’t working or going to school. Both types of benefits will be considered “earned income,” increasing the amount you can claim for your expenses and/or deductions on your return. These changes only apply to 2020 and 2021 returns.
The annual TFSA dollar contribution limit is still $6,000 CAD (this is the same limit as 2020). This means you’ll have to pay penalties if you add more than $6,000 CAD to your TFSA in 2021.
If your earnings are between $3,500 CAD and $61,600 CAD in 2021, the percentage of your income you’ll need to contribute to the CPP has increased from 5.25 per cent to 5.45 per cent. For contributions to the QPP, the rate has increased from 5.7 per cent to 5.9 per cent.
Applications for the Ontario Small Business Support Grant opened on January 1, 2021.
Small businesses who needed to close or significantly restrict their services because of the province-wide shutdown that began on December 26, 2020 can apply for up to $20,000 CAD to help cover lost revenue.
To be eligible, a small business must:
- Have fewer than 100 employees; and
- Have experienced a revenue decline of at least 20% when comparing April 2020 to April 2019 (new businesses that were established after April 2019 can select a different time frame).
Essential businesses and businesses that were already closed prior to October 10, 2020 can’t apply for this grant. You can apply for the Ontario Small Business Support Grant online.
On January 8, 2021, the provincial government started sending second payments of the Manitoba Bridge Grant to the same businesses who applied for the first period between November 16 to December 31, 2020. This is a flat-rate payment of $5,000 CAD, although home-based businesses might receive less than that.
No action was needed to receive the second payment. You’ll get an email confirming when it was deposited in your bank account.
If you didn’t receive your second payment of the grant by January 15, 2021, you should contact the Manitoba Bridge Grant administration office. You can find their contact information, along with your Application Confirmation number, on the email you received at the time of your 2020 payment.
Many Canadians needed to work from home due to COVID-19, some for the first time. Whether you worked from your home office or your kitchen table, two new methods have been introduced to make it easier for you to claim your employment expenses this year: the temporary flat rate method and the detailed method.
You’ll choose one of these methods to calculate your work-related expenses on a new form, the T777S: Statement of Employment Expenses for Working at Home Due to COVID-19.
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