The Department of Finance Canada has announced the automobile income tax deduction limits and expense benefits rates for 2021, which will remain largely the same as 2020 with the exception of one change that came into effect on January 1, 2021.
Employees working from home is not a new phenomenon, but with COVID-19, it has become less of a perk and more of a necessity.
In response, the government has introduced a simplified process for claiming home office expenses. But before we get to that, let’s look at the home office deduction that was claimed in past years.
When CERB was first released, the government wanted to get it out as quickly as possible so that Canadians would have the support they needed. But that meant eliminating validation checks to speed up the process.
The problem is validation is a necessary step to ensure nobody took advantage of a program that was meant to support the millions of Canadians who lost their jobs.
Now that we’re in the new year, it’s too late to maximize most of your tax credits and deductions for your 2020 tax return. There is, however, one tool remaining that you can use to minimize your tax owing from 2021 and that’s RRSP (registered retirement savings plan) contributions.
As of July 1, 2021, new rules will be imposed on employee stock options.
Employee stock options are a form of compensation that some companies offer their employees. They give an employee the right to buy a specific number of shares at a pre-set price. But they must be purchased within a specific time frame.
Every year the government announces the new contribution limit for tax-free savings accounts (TFSAs). For 2021 the amount will be $6,000 – the same amount set in both 2019 and 2020. Contribution room is carried forward each year. That means the total contribution of someone who has been eligible since the introductions of TFSAs in 2009 and has never contributed is $75,500.
The provincial government of Ontario has proposed a new refundable tax credit for seniors 65 or older in 2021. It would provide up to $2,500 for eligible home renovations. The intention behind this temporary tax credit is to help seniors stay in their homes longer, especially considering the impact of COVID-19.
The end of 2020 is fast approaching which means it’s time for you to start making year-end tax planning decisions.
To help you on your way, here are some important tax planning considerations for employees.
