2021 Tax Filing Season News

Personal Returns

Canada Revenue continues to review personal tax returns, usually after the original filing has been assessed. A review is not an audit; however, you must submit documentation to support deductions claimed. The most commonly reviewed categories include childcare, medical expenses, donations, and foreign taxes paid.

REMINDER: If you have foreign assets with a cost basis of $100,000 or more, it is important to file Form 1135 by your filing deadline (April 30th or June 15th). CRA levies a late filing penalty of $25/day, to a maximum of $2500. Form 1135 is filed separately from an individual tax return.

Looking ahead? CRA has published a list of tax changes that took effect on January 1, 2020.

Issues related to COVID-19

NOTE that tax filing deadlines have gone back to the usual dates (the COVID-19 extensions are not in effect for filing 2020 tax returns).

If you have received ANY COVID-19 government benefits (such as income under CERB or loans under CEBA) it is important to let us know, as many of these are taxable amounts.  You may receive tax slips (T4A and/or T4E) for some amounts, but you may not receive a slip.  If you received a loan under COVID-19 programs, the forgivable part of the loan is taxable as income in the year you received it.  Please complete the section on page 4 of the tax package.

Eligibility for some COVID-19 benefits depended on having a certain level of income in the period before the application.  If you applied for benefits having calculated your eligibility, you must let us know so that we can complete the tax return with this in mind.  (As an example, we may not claim all of your expenses in order to align with your calculations).

Tax Changes

Home office expenses – If you worked from home in 2020 due to COVID-19, you may be able to claim certain employment expenses.  Please provide details on page 8 of the individual tax package.

Digital News Subscription expense credit  –  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.  Please submit your receipt with your tax information.

Canada training credit – If you meet certain conditions, you will be able to claim a Canada Training Credit, a new refundable tax credit that is available for 2020 and later tax years.  The maximum amount you can claim is listed on your 2019 Notice of Assessment, and the amount can be used to offset fees at eligible institutions.  Note that this deduction does reduce the amount you can claim as a tuition credit.  Make sure to submit your tuition receipt with your tax documents.

Home Buyers’ Plan – If you are not considered a first-time home buyer for the purposes of the HBP (withdrawal of RRSP funds to use for first-time home purchase), and you experience a breakdown in your marriage or common-law partnership, you may be able to participate in the HBP under certain conditions. For more information, see CRA’s website.

REMINDER: If you have sold (or changed the use of) your principal residence in 2019 make sure to let us know as it has to be reported on the tax return.  There are penalties for late-reporting so make sure to file your tax return on time in this situation.  Please complete the section on page 6 of the tax package.

REMINDER: If you have foreign assets with a cost basis of $100,000 or more, it is important to notify our office so that we can file Form T1135 by your filing deadline (April 30th or June 15th).  CRA levies a late filing penalty of $25/day, to a maximum of $2500.  Form T1135 is a separate form that can be electronically filed with your tax return.  Please complete the section on page 5 of the tax package.

REMINDER: If you have withdrawn funds from your TFSA this does not affect your tax return.  You do get the contribution room back, but only in the following year, so be careful not to over-contribute.

REMINDER: Watch out for scams!  Be cautious replying to phone calls or emails that appear to be from the CRA.  If you have any doubt, do not give out any personal information and check with our office.

Corporate Returns

Corporate Link:
https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account/business-account-expanded.html

US Returns

IRS link:
https://www.irs.gov/newsroom/get-ready-for-taxes-whats-new-and-what-to-consider-when-filing-in-2021