Significant changes due to the COVID-19 pandemic, and numerous tax issues to be aware of this year
2020 was an extraordinary year like no other. Many individuals received support in a variety of forms from various levels of government. Others may have changed how they carried on their employment duties or business operations, including working from home or using their vehicle for employment or business reasons. We have outlined the key issues in the checklist below. Please let us know if you have received other support or incurred other costs related to your income earning activities due to the COVID-19 pandemic.
A. Information – All Clients Must Provide Additional
All income, support and benefits received under COVID-19 relief programs. Official tax slips may have been issued for some, but not all. For support where no slip is available, details surrounding the amount and types of payment is required. Some of these benefits are taxable while others are not. Please provide details on all Federal, provincial/territorial, and other support received.
Key COVID-19 related Federal personal support programs:
|Canada Emergency Response Benefit (CERB)||Yes|
|Employment Insurance (EI) program||Yes|
|Canada Recovery Benefit (CRB)||Yes|
|Canada Recovery Sickness Benefit (CRSB)||Yes|
|Canada Recovery Caregiving Benefit (CRCB)||Yes|
|Canada Emergency Student Benefit (CESB)||Yes|
|One-time payment – disability support||No|
|One-time payment – GST/HST credit||No|
|One-time payment – Canada child benefit||No|
|One-time payment – OAS/GIS||No|
Key COVID-19 related Federal government support for business, rental or other income:
|Canada Emergency Wage Subsidy (CEWS)||Yes|
|Canada Emergency Rent Subsidy (CERS)||Yes|
|Canada Emergency Business Account (CEBA)||Yes|
The forgivable portion of the interest-free loan under the CEBA is taxable. Please provide the details. As no slips are provided specific to these programs, please provide the amounts received and the period to which they relate.
All information slips, such as: T3, T4, T4A, T4A(OAS), T4A(P), T4E, T4PS, T4RIF, T4RSP, T5, T10, T2200, T2202, T101, T1163, T1164, TL11A, B, C and D, T5003, T5007, T5008, T5013, T5018 (Subcontractors), and corresponding provincial slips.
Details of income for which no T-slips have been received, such as:
- other employment income (including any severance or termination pay, retiring allowance, tips or gratuities received, details on stock option plans and Election Form T1212),
- business, professional, partnership, and rental income (including all amounts received from the sharing economy, such as AirBnB, VRBO, Uber, etc),
- alimony, separation allowances, child maintenance (including divorce/separation agreement),
- pensions (certain pension income may be split between spouses),
- interest income earned but not yet received (such as amounts from Canada Savings Bonds, Deferred Annuities, Term Deposits, Treasury Bills, Mutual Funds, Strip Bonds, Compound Interest Bonds),
- scholarships, fellowships, and bursaries, and
- any other income received (e.g. director fees, executor fees, etc).
- capital gains/losses realized (this may be obtained, in some circumstances, from your investment advisor)
- real estate, or oil and gas investments – including financial statements,
- bitcoin or other cryptocurrency transactions, and
- any other investments.
- business, professional, investment and rental expenses (including capital purchases, such as vehicles, and equipment, including the invoice or bill of sale),
- employment related expenses – provide Form T2200 – Declaration of Conditions of Employment, signed by employer, as well as the invoices and receipts for required employment expenses. See item 5 for details on work space in home.
Due to the COVID-19 pandemic, many employees were required to work from home during a portion of 2020. In some cases, a deduction against employment income may be available. For work space in home expenses to be deductible, the employee must have a T2200 form from their employer which certifies that the employee was required to incur expenses in the course of their employment. In addition, one of the following has to be met:
- The home was where the employee mainly (more than 50% of the time) did their work; or
- The employee used the space exclusively to earn employment income, and used it on a regular and ongoing basis for meeting clients, customers or other people in the course of performing employment duties.
If either of the above tests are met, even for a portion of the year, a reasonable claim can be made. To make a claim, please provide a signed and completed T2200 from your employer; details on the portion of your home that was used as a work space (e.g. approx. square footage of work space versus other space); period of time that you worked from home and met one of the above test; expenses incurred that related to the work space; and whether any of the expenses were reimbursed. Also, include details on any allowances or rent payments received from the employer.
As an alternative, the government has announced that CRA will allow employees working from home in 2020 due to COVID-19 with modest expenses to claim up to $400, based on the amount of time working from home, without the need to track detailed expenses. They will generally not request that people provide a signed form from their employers.
- moving expenses (please advise us if you have, or may have, immigrated or emigrated to/from Canada),
- child care expenses (if the services are provided by an individual, their SIN should be on the receipt),
- alimony, separation allowances, child maintenance (including divorce/separation agreement),
- adoption related expenses,
- interest paid on qualifying student loans,
- professional and union dues,
- medical expenses for you, your spouse and any dependent persons,
- charitable donations (including those to registered journalism organizations) and political contributions,
- clergy residence deduction information (including Form T1223),
- tuition fees for both full-time and part-time courses for you or a dependant – including mandatory ancillary fees, and Forms T2202, TL11A, B, C and D where applicable,
- disability supports expenses (speech, sight, hearing, learning aids for impaired individuals and attendant care expenses),
- mining tax credit expenses,
- Registered Retirement Savings Plan and any other pension plan contributions and withdrawals (including withdrawals and repayments for the Home Buyers Plan and Lifelong Learning Plan),
- film and video production expenditures eligible for a tax credit,
- tools acquired by tradespersons and eligible apprentice mechanics,
- scientific research and experimental development expenses,
- Home Accessibility Tax Credit – Certain expenditures (up to $10,000) may be eligible for a tax credit if made in relation to a renovation or alteration of your home to enhance mobility or reduce the risk of harm for an individual who is either, eligible for the Disability Tax Credit, or 65 years of age or older at December 31, 2020. Examples of eligible expenditures include amounts relating to wheelchair ramps, walk-in bathtubs, wheel-in showers and grab bars,
- Eligible Educator School Supply Tax Credit – If you are a teacher or early childhood educator, please provide receipts (up to $1,000) for eligible school supplies purchased in the year. An eligible supply expense is an amount paid in the year for supplies used or consumed in the school or regulated child care facility in the performance of your employment. Supplies include consumable goods such as construction paper, flashcards, items for science experiments, art supplies, and stationary items, and durable goods limited to games, puzzles, books, containers and educational support software. Please also provide a certification from your employer attesting to the eligible supplies expense,
- NEW – Canada Training Credit (CTC) – A refundable tax credit may be available to reimburse up to half of eligible tuition and fees associated with work-related training for individuals aged 25 to 64 years old at the end of the year. Please provide details on tuition and other fees related to training. Amounts refunded through the CTC will not also be eligible for the tuition tax credit. The maximum credit available in 2020 is $250, based on $500 of eligible expenses. To get the credit this year, you had to meet a number of conditions in the 2019 year, such as filing a tax return, being resident in Canada throughout the year, being 25 to 64 years at the end of year, having at least $10,000 from maternity/paternity benefits or working income, and having net income that does not exceed $147,667. And,
- NEW – Digital News Subscription Tax Credit – A non-refundable tax credit based on up to $500 of amounts paid for a qualifying digital news subscription (primarily engaged in the production of original written news content) will qualify for this credit.
Details on the disposition of your principal residence or other real property. Please provide: proceeds of disposition, a description of the property, and the year the property was acquired. If disposing of other real property, please provide the cost of the property in addition to the requirements listed above. This is required even if there is no gain on the disposition of the property.
In addition, please indicate if you have a change-in-use of your property. This could include, for example, converting some or all of your principal residence into an income earning property, such as a rental suite. It could also include converting a property used for short-term rentals, such as AirBnB or VRBO, to long-term rentals.
- Name, address, date of birth, social insurance number (SIN), and province of residence on December 31, 2020, if changed in the current year.
- Personal status – single, married, common-law, separated, divorced, or widowed. If there has been a status change in the year, please provide the date of the change.
- List of dependants/children including their income, birth date, and SIN.
- Details regarding residence in a prescribed area which qualifies for the Northern Residents Deduction.
- Details on 2020 income tax instalments, or payments of tax.
- 2019 Notice of Assessment/Reassessment and any other correspondence from CRA (including correspondence received after the filing of this personal tax return).
- If we are not preparing your spouse or common-law partner’s personal tax return, please provide their return for review and tax planning.
- Details of foreign property owned at any time in 2020 including cash, stocks, digital currency (such as Bitcoin), trusts, partnerships, real estate, tangible and intangible property, contingent interests, convertible property, etc. Required details include: description of the property, related country, maximum cost in the year, cost at year-end, income, and capital gain/loss for each particular property. For property held in an account with a Canadian securities dealer or Canadian trust company, please provide the country for each investment, fair market value of the investments at each month-end, income or loss on the property, and gain/loss on disposition of the property.
- Details of income from, or distributions to, foreign entities such as foreign affiliates and trusts.
- Copy of any foreign tax returns filed and any associated tax assessments.
Internet Business Activities – If you have business, professional, farming, or fishing income, please indicate whether you have Internet business activities. According to CRA, Internet business activities include any activity where you earn income from your webpages, websites, or Apps. Information only webpages and websites like directories or ads will not generally trigger this information requirement.
If you have Internet business activities, please provide:
- The number and address of webpages or websites that your business generates income from. If you have more than 5, provide the 5 that generate the most income.
- The percentage of income generated from the Internet (if you do not know the exact percentage, provide an estimate).
B. Questions to Answer
1. Did you receive interest, dividends, or benefits from a business in which a relative is a key party (in terms of ownership or involvement)?
2. Are you a U.S. citizen, Green Card Holder, or were you, or your parents born in the United States? You may have U.S. filing obligations.
3. Are you an aboriginal person? Special tax rules may apply.
4. Are you or any of your dependants disabled? If so, provide Form T2201, Disability Tax Credit Certificate. The transfer rules allow claims for certain dependent relatives. In addition, are you, or would you like to provide support to a disabled person? Tax planning opportunities may be available, such as the establishment of a Registered Disability Savings Plan. Persons with disabilities may also receive tax relief for the cost of disability supports (e.g. sign language services, talking textbooks, etc.) incurred for the purpose of employment or education. If you or your dependents are disabled but do not have a T2201 Form, please provide details so we can explore whether you are eligible for special credits or benefits.
5. Are you the caregiver for any infirm family members? Did you provide in-home care for an infirm dependent relative?
6. If you have children up to the age of 17, have you received the Canada Child Benefit (CCB)?
7. Have there been any other significant life events in the past year, such as the death or impairment of a loved one? There can be tax planning opportunities.
8. Did you incur costs to access medical intervention required to conceive a child which was not previously allowed as a medical expense? Amounts may be claimed in respect of any such expense for the previous 10 years (if amounts were incurred in 2010, a claim must be made by the end of 2020).
9. Did you purchase a new home in 2020? If so, you may be eligible for the new residential property GST/HST rebate. Also, are you a first-time home buyer in 2020? A federal tax credit based on $5,000 (@15% = $750) may be available.
10. Have you spent more than 200 hours acting as a volunteer firefighter or a search and rescue volunteer? You may be eligible for a federal tax credit.
11. Have you made any contributions to a gifting tax shelter?
12. Did you receive any significant prizes or awards from your, or a related person’s place of employment?
13. Did you receive a retroactive lump-sum payment over $3,000 (for example, spousal support)? In certain cases, some tax relief may be available.
14. Do you want your tax refund deposited directly into your account at a financial institution?
15. Do you authorize CRA to give your name, address, date of birth, and citizenship to Elections Canada to update the National Register of Electors?
C. Additional Information – New Clients Must Provide
- All CRA correspondence for the past three years.
- Details of previously claimed capital gain exemptions, business investment losses and cumulative net investment loss accounts.
- A listing or copy of receipts for significant capital assets purchased previously, which are currently held.
- Details of carry-forward amounts from previous years (ex. losses, donations, forward averaging amounts, RRSP).
Instalments required for 2021? A Pre-Authorized Debit Arrangement is an online service-payment option which authorizes CRA to withdraw a pre-determined payment amount directly from a bank account on a specific date to pay taxes. This may help avoid penalties on late and/or missing instalment payments.
MyCRA mobile App – This web App allows you to access and view key portions of your tax information such as your notice of assessment, tax return status, benefit and credit information, and RRSP and TFSA contribution room.
Canada Job Grant – 2/3rds of certain employee training courses may be eligible for this grant. If interested in improving your skills, ask your employer about this opportunity.
CRA Online Services – Account Alerts – Individuals can register with CRA to be notified by email when CRA’s record of an individual’s address has changed, banking information for direct deposit has changed, or if mail sent by CRA was returned.
Additional provincial/territorial credits and programs may be available (such as the Ontario Seniors’ Public Transit Tax Credit).
First-Time Home Buyer Incentive (FTHBI) – Broadly, first-time home buyers and those who have recently experienced a marriage or common-law relationship breakdown may be eligible to obtain 5% or 10% (newly constructed homes only) of the purchase price of a home under a shared-equity mortgage. The borrower(s) must repay the FTHBI (being 5% or 10% of the value of the property at repayment) at the earlier of the sale date or 25 years. Alternatively, the borrower may voluntarily choose to repay the full amount back at an earlier time without a pre-payment penalty. No partial payments are permitted. Access to the program is limited to those borrowers (all who are on title) whose total combined income is not greater than $120,000. The maximum home price depends on several factors, including the total combined income of all borrowers and the deposit on the property, however, in the most extreme cases, must be less than just over $500,000. To determine the maximum home price, based on your specific factors, go to https://www.placetocallhome.ca/fthbi/ eligibility-savings-calculator. The government has also recently announced that the program will be expanded.
Zero-Emission Vehicles – Individuals or businesses can receive a federal incentive of up to $5,000 when they purchase or lease a zero-emission vehicle. A listing of eligible vehicles can be found at https://tc.canada.ca/en/road-transportation/innovative-technologies/zero-emission-vehicles/list-eligible-vehicles-under-izev-program. Alternatively, certain zero-emission vehicles for business use may enjoy a temporary first-year CCA rate of 100%. A business can access only either the purchase incentive or the enhanced CCA in the first year.