The 2021 personal income tax filing deadline is May 2,2022, and the filing deadline for self‐employed individuals and their spouses (including HST returns) is June 15th. The late filing of your tax return will result in a CRA penalty of 5% of any balance owing, plus an additional 1% for every month your return is late, up to a total of 12 months. All outstanding income tax and HST payments are due on or before May 2nd.
Here are some things to keep in mind as you gather information for your 2021 income tax return:
Home Office Expense – Temporary COVID‐19 Deduction:
The temporary home office expense deduction options introduced in 2020 have been extended to the 2021 and 2022 taxation years.
If you are ineligible to deduct home office expenses under the traditional method, but worked from home more than 50% of the time for a period of at least four consecutive weeks during 2021 due to the COVID‐19 pandemic, you may be eligible to deduct home office expenses (that have not been reimbursed by your employer) using either of the two temporary methods:
- temporary flat rate method – a $2 deduction for each day worked at home, up to a maximum of $500. (no documentation required)
- temporary detailed method – you can make a deduction based on your actual expenses incurred to work from home if you obtain a completed and signed form T2200S from your employer. (keep your receipts up to 7 years, in case the CRA reviews your claim)
COVID‐19 Related Relief Benefits:
You will receive a T4A slip if you received COVID‐19 benefit payments in the 2021 tax year under the Canada Recovery Benefit (CRB), Canada Recovery Caregiving Benefit (CRCB), Canada Recovery Sickness Benefit (CRSB) or Canada Worker Lockdown Benefit (CWLB). These amounts are required to be included in your taxable income for 2021.
If you received Canada Recovery Benefit (CRB) payments and your net income after adjustments is more than $38,000, you may have to repay all or part of the amount received. Any repayments made during 2021 will be included in box 201 of your T4A slip. You can claim a deduction for these repayments in either the year in which the benefit was originally received, or the year in which the repayment was made. You can also split the deduction between these two years.
If you are self‐employed and received grants and assistance such as the Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS), or Canada Recovery Hiring Program (CRHP), you will need to include these amounts in your business income OR reduce your business expenses by the amount received.
If you received a government loan in 2021, the loan is not taxable but you do need to include the forgivable portion of the loan in your business income in the year received.
Ontario Childcare Access and Relief from Expenses (“CARE”) Tax Credit:
Ontario will provide a top‐up of 20% on the refundable Ontario CARE Tax Credit for the 2021 taxation year. Eligible childcare expenses claimed will have the 20% top‐up applied automatically.
Ontario Jobs Training Tax Credit:
This is a temporary refundable tax credit intended to help workers receive the training necessary for a career change, re‐train for a specific job, or enhance a current skillset. This credit provides up to $2,000 per year in relief for 50% of an individual’s eligible expenses during 2021 or 2022.
Eligible zero‐emission vehicles purchased after March 18, 2019 can now benefit from a 100% CCA write‐off in the year of purchase under the new CCA classes 54 and 55, subject to a cap of $55,000. In 2021, the definition of zero‐emission vehicles was expanded to allow for used vehicles, if purchased in an arm’s length transaction.
Seniors’ Home Safety (“SHS”) Tax Credit
The SHS Tax Credit is a new temporary refundable tax credit that can be claimed for 2021 and 2022. A credit of 25% on up to $10,000 of eligible expenses per year that are paid or become payable during the taxation year can be claimed for improvements and renovations made to a senior’s principal residence in Ontario to facilitate safety and accessibility. The $10,000 maximum eligible expense can be shared by individuals who share a home, including spouses and common‐law partners. Receipts should be retained. These expenses may also be eligible for the Medical Tax Credit and the federal home accessibility expenses tax credit.
Reporting the sale of a principal residence
Since 2016, individuals who sell their principal residence have to complete the “principal residence” section on schedule 3 of their personal tax return, even though the gain is fully exempt by the principal residence exemption (PRE).
Canadian residents who hold specified foreign property with a cost amount over $100,000 in the aggregate at any time during the year continue to be required to file the information return T1135 – Foreign Income Verification form along with their personal income tax return. A list of specified foreign property is available on CRA’s website. Keep in mind, crypto currencies and other digital assets held in exchanges, brokerages, wallets, ledgers, keys or other storage means outside of Canada may also be considered specified foreign property. There are severe penalties for failure to file this information return with the CRA.
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