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For many of us, it seems like yesterday that we just filed our 2019 tax returns due to the extended filing and tax payment deadline last year. Although, we do not know if CRA will extend the 2020 tax return filing deadline, we are prepared for a back to normal filing deadline of April 30th.
There are no earth-shattering changes in the rules for your 2020 personal tax filings. But here are some of the highlighted changes that may affect some of us:
Home Office expenses
As many Canadians worked from home for most or part of 2020 due to COVID-19, CRA has relented to allow that some home office expenses can be claimed against employment income. Please see our previous blog for details of this deduction. In addition, CRA has an online CRA Home Workspace Calculator, you can use this calculator to determine the amount that you can claim in your 2020 and 2021 tax returns.
Home Buyers’ Plan (HBP)
This program was set up in 1992 to assist first time home buyers to withdraw/borrow from their Registered Retirement Savings Plan (RRSP) on a tax-free basis to buy their first home. Any withdrawal amount must be repaid to their RRSP within 15 years.
As of March 19, 2019, the withdrawal limit was increased from $25,000 to $35,000. Normally, the home to be purchased under the HPP cannot be the home that you and your spouse or common-law partner owned in the previous four-year period. One exception to this rule is in the event of a relationship breakdown, this four-year limit will be waived for both ex-partners if they have been living apart for a minimum 90 days. This new rule came into effect in 2020.
Digital news subscription tax credits (2020 to 2024)
This is a new credit for 2020 to support journalism and to encourage digital news subscriptions. Online subscription costs incurred up to $500 for digital news fees paid to Qualified Canadian Journalism Organization (QCJO) can be claimed as a non-refundable tax credit. QCJO must be primarily engaged in the production of original news content with a focus on matters of general interest and reports of current events. Currently, there is only one QCJO approved on CRA website. Check back frequently to see if your digital subscription is on the list.
Other Tax changes announced but not yet implemented:
- Child Care Expenses – In normal circumstances, parents can only claim child care expenses they incurred to allow the parents to earn employment or self-employed business income. Employment Insurance (EI) benefits is not considered eligible earned income, against which child care expenses can be claimed. However, as a temporary tax relief measure due to COVID-19, Finance proposed allowing parents to claim child care expenses while receiving EI benefits for years 2020 and 2021. For additional information, see Child care expense and EI for 2020 and 2021 on CRA website.
- Additional Benefits for Seniors – Back in September 2019, Liberals made two promises for senior if they were re-elected:
- increase Old Age Security (OAS) by 10% for seniors older than 75 with earnings less than $77,580, resulting in additional $729 annually starting July 2020.
- increase in CPP survivor’s benefits by 25% for survivors 65 and older, resulting in additional benefits up to $2,080 annually.
Although these benefits have not been implemented, the government is committed to these promises as addressed in the September 23, 2020 Throne Speech. Keep your eyes out for future developments.
If you have any questions, we are here to assist. We are ready for a smoothed personal tax season!