If you were affected by the 2020 COVID-19 lockdowns and received the CERB (Canada Emergency Response Benefit) you may have a large tax bill coming your way.
When you receive employment income, taxes are deducted at the source and sent to the government on your behalf. This pay as you go program stops you from owing large amounts come the new year.
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.
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.
As the year comes to a close, it’s time to start making last minute tax planning decisions. This may include deciding whether to make a holiday donation. Depending on your situation it may be the perfect time … or it may be best to wait until the new year.
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