It’s tax time and usually at this time, everyone has questions on how best they can maximize their tax refunds or minimize their tax liabilities. Before we get to the tax credits and benefits available to Canadians for 2021, we want to remind everyone that the deadline for most Canadians to file their 2021 income tax and benefit returns is April 30, 2022 but you have until May 2 this year as April 30 falls on a Saturday. If you or your spouse or common-law partner had self-employment income in 2021, you have until June 15, 2022 to file your return(s). In either case, any taxes owing must be paid on or before April 30, 2022.
With a second year under the effects of the pandemic, there are several changes that may have an impact on your situation, including new credits and deductions that you may be eligible for. We have summarized the most important changes for you below.
Home-office expenses
If you worked from home in 2021 due to COVID-19, you may be eligible to claim a deduction of up to $500 using the flat rate method, provided you worked more than 50% of the time from home for a period of at least four consecutive weeks due to Covid-19. If you have been keeping track of your expenses, you may be able to claim your actual expenses using the detailed method.
Climate action incentive payment
Prior to 2021, this was a refundable tax credit received on your tax return. Now, eligible residents of Alberta, Saskatchewan, Manitoba and Ontario will automatically receive the payments four times a year starting in July 2022, provided you file the tax return and qualify for the payments. The July payment will include a retroactive amount for April 2022, and future payments will be made on the 15th of April, July, October and January.
Digital news subscription tax credit
If you paid for a digital newspaper app or website, you may be able to claim the digital news subscription tax credit which is worth 15 per cent on qualifying expenses up to $500 for amounts you paid in 2021. The amounts must have been paid to a qualified Canadian journalism organization for a digital news subscription with content that is primarily written news. A list of qualifying digital news subscription can be found online.
COVID-19 benefits
If you received COVID-19 benefits from the CRA in 2021, such as the Canada Recovery Benefit (CRB), Canada Sickness Recovery Benefit (CSRB) or Canada Recovery Caregiving Benefit (CRCB) you should receive a T4A slip from the government in February.
In certain situations, you may end up owing additional tax on the COVID-19 benefits that were received as taxes withheld on the benefits may not have been enough. In addition, some benefits may need to be repaid if your net income is above a certain threshold. For example, if you received the CRB and your net income after certain adjustments is more than $38,000, then you may have to repay all or part of the benefits you received in 2021.
Change to OAS Benefits
The OAS is designed to provide retirees with a source of income to support their retirement. Beginning in July 2022, OAS benefits will be enhanced by 10% for seniors age 75 or older.
Eligible Educator School Supply Tax Credit
This tax credit was expanded to allow teachers to claim a 25% refundable tax credit for purchases up to $1,000 on eligible teaching supplies bought in 2021. The government also expanded the list of eligible teaching supplies to include electronic devices, such as calculators, digital timers and tools for remote learning.
Rates and Limits
To keep up with inflation and maintain the buying power of Canadians, several tax rates and limits have been changed in 2021.
Changes to other tax credits you need to know
Below are some of the Federal and provincial (Ontario) changes to other tax credits for the 2021 tax year.
| Federal | Ontario |
|---|---|
| Disability Tax Credit: The eligibility requirements for this non-refundable credit have expanded to include an updated list of mental functions necessary for everyday life and to therapy that is eligible for the credit. | The Seniors’ Home Safety Tax Credit: This new credit supports seniors or a taxpayer who lives with a senior family member, in making their homes safer and more accessible, with a credit of 25% up to a max $10,000 in eligible expenses |
| Northern Residents Deduction: For the 2021 tax year, the travel component of the Northern Residents Deduction has been made available to residents with no employer benefits, making it more accessible and giving more freedom to travelers. | Childcare Access and Relief from Expenses (CARE) Tax Credit: For 2021 only, the Ontario tax credit for access to daycare is increased by 20%. |
| Canada Workers Benefit: The Canada Workers Benefit has been updated with increased amounts and will now be available to more individuals to increase accessibility. For those with an eligible spouse, the secondary earner exemption was introduced for this tax year. | Temporary Ontario Jobs Training Tax Credit: This new credit allows individuals to claim 50% of eligible expenses for 2021 to a max credit of $2,000 |
| RRSP Limit Calculation: Postdoctoral Fellowship income will now be considered earned income for RRSP accounts, and this year taxpayers are allowed to retroactively apply the measure for years 2011 to 2020. |
Tax laws and rules are highly complex and continuously changing, so let us take the stress out of your tax filing this year. We will ensure that we maximize your refund or minimize your tax liability through utilization of all applicable tax credits and deductions. If you require further information about any of the above credits or you would like to know whether you meet the eligibility criteria, please contact us.
If you want to learn more about other tax and accounting topics, explore the rest of our blog!
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting/tax professionals. NBG Chartered Professional Accountant Professional Corporation will not be held liable for any problems that arise from the usage of the information provided on this page.
