Helpful tax tips for 2020

What a year it has been! As always it is time you start collecting all your 2020 personal income tax (T1) information to complete your 2020 tax return.

We have collected a variety of different tax tips to guide you in preparing your personal income tax information for submission to us to maximize your benefit or keep your taxes as low as possible. Our checklist is also very helpful.

Our T1 checklist and appendix can be downloaded from here:

Naturally if you have any questions about these tips, please let us know.

Tax Filing and Payment Deadlines
The deadline for filing the 2020 personal income tax return is April 30th, 2021 and the liability due April 30th, 2021 as always. For sole proprietorships, the tax filing deadline is June 15, 2021. However any tax liability must still be paid by April 30th if an amount is outstanding.

Tax slips, receipts and other information
Please gather all tax slips, medical receipts, and stock transactions. Unfortunately, the CRA will impose penalties for any items that are missed. Some T-slips (like T3) do not come out until late March or early April so please do not forget these items.

For medical receipts or prescriptions, or investment transactions, we require a summarized total. Even though it is best if you submit the actual receipts, we still need one totaled amount. If you require assistance tabulating them, we are happy to assist. There will be additional charges for tabulating totals.

Sending documents to us amid COVID-19
We support anybody who wishes to send documents electronically to support social distancing. When sending in documents to us, please send us originals, photocopies, faxes or computer scans.

While we understand sending pictures of documents from your camera phone is convenient. Unfortunately, the quality of the image often makes the text very hard to read. If you must send it this way, please ensure that the image is as clear and readable as possible. Alternatively, there are a variety of free phone apps that make scanning documents much easier.

Work from home office expense deductions
This year, the CRA has provided a ‘temporary flat rate’ methodology for a home expense deduction amid COVID-19. This new method allows each employee to claim $2 for each day they worked from home. The maximum that can be claimed is 200 days to a maximum of a $400 deduction. This does not require detailed documentation of expenses or breakdowns of your home office space allocations.

It’s recommended that you utilize the temporary flat rate method as this generally produces the same amount of deduction with much less work.

If you choose to use the detailed method, please complete Appendix C of our checklist.

COVID Supports and tax reporting
The Canadian government launched a number of different support programs for individuals, not limited to but including the:

  1. Canada Emergency Response Benefit (CERB)
  2. Canada Response Benefit (CRB)
  3. Canada Recovery Sickness Benefit (CRSB)
  4. Canada Emergency Student Benefit (CESB)
  5. Canada Recovery Caregiving Benefit (CRCB)

Please note that all these and other assorted benefits will lead to a T4A that should be received by mid March. These have to be reported as part of your income because they are taxable.

If you applied for any of these benefits and received T4A for them, please include them in your package.

CRA installment notices
For those of you who paid income tax instalments for the prior taxation year, it is important you provide the information to us. When it is accurately recorded, we can get a clearer picture of your exact tax liability. CRA usually mails the instalment notice to you during the month of February.

Notices of assessment from prior year
Please provide to us last year’s notice of assessment and/or re-assessment. The notice of assessment contains vital information and possibly adjustments that we need to know and record in our system. The CRA no longer sends notice of assessments to us directly. We can only get it from you if you provide it to us unless we have online access to your CRA account.

Principal residence sales or changes in use
If you have sold your principal residence, it must be reported on your tax return. Even though there are no tax implications on the sale of a principal residence, the CRA wants to know about it.

In addition, the CRA has also recently changed the rules surrounding changes in a principal residence. If you have changed a principal residence into a rental property or vice versa, the CRA also requires that these be reported in the year that it changed.

Income from Foreign Sources and Foreign Property Reporting
Canadian residents are obligated to report income from all sources, both inside and outside Canada. Form T1135 needs to be filed if you own foreign property including investments and bank accounts managed by financial institutions. Reporting of foreign property is not taxable, but the T1135 must be filed to the CRA when the total cost exceeds $100,000 at any time during the year.

If you have any questions or concerns, please do not hesitate to contact us.

The blogs posted on our website provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.

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