Tax Changes 2021

Tax Changes 2021

Amounts received related to COVID-19

If you received federal, provincial, or territorial government COVID-19 benefit payments, such as the Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), or Canada Recovery Caregiving Benefit (CRCB), you will receive a T4A slip with instructions on how to report these amounts on your return.

If you are self-employed and received federal, provincial, or territorial government COVID-19 assistance for your business, such as the Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS), Canada Recovery Hiring Program (CRHP) or Fish Harvester Benefit and Grant Program (FHBGP), you have to include these amounts in your business income or reduce your expenses by the amounts you received. If you received a government loan, the loan is not taxable but you have to include in your business income any portion of the loan that is forgivable.

If you received the CRB, you may have to repay all or part of the amount received if your net income after certain adjustments is more than $38,000. The repayment is calculated using the chart for line 23500 of the Federal Worksheet.

If your income was tax exempt

If your CRB, CRCB, or CRSB income is eligible for tax exemption under section 87 of the Indian Act, complete Form T90, Income Exempt from Tax under the Indian Act, and file your 2021 Income Tax and Benefit Return or simplified return to claim the tax withheld on your CRB, CRCB, and CRSB payments. For more information, click here

Federal COVID-19 benefits repayment

If you repaid federal COVID-19 benefits (CERB, CRB, CRCB, CRSB or CESB) in 2021 that you received in 2020, the amount repaid will be reported in box 201 of your T4A slip, or on your T4E slip along with other employment insurance (EI) amounts repaid. You can choose to claim a deduction on your return for the repayment in the year that the benefit was received or in the year that the benefit was repaid. You may also choose to split the deduction between these two returns as long as the total deduction is not more than the amount repaid. For more information, see line 23210 on page 21 or go to canada.ca/repay-covid-benefits.

Canada workers benefit

The Canada workers benefit (CWB) rates and income thresholds have changed for 2021. A new “secondary earner exemption” has also been introduced.

Zero-emission vehicles

The definition of zero-emission vehicle has changed for vehicles acquired after March 1, 2020. A vehicle may still qualify as a zero-emission vehicle if the vehicle was subject to a prior capital cost allowance (CCA) or terminal loss claim provided that the vehicle was not acquired by the taxpayer on a tax-deferred "rollover" basis or previously owned or acquired by the taxpayer or a non-arm's length person or partnership.

Disability tax credit

The rules relating to the mental functions necessary for everyday life, life-sustaining therapy, and the calculation of therapy time would change.

Northern resident deductions

The deduction for travel benefits would change and be expanded to be available to eligible northern residents who take a trip even if their employer does not provide travel benefits for personal travel.

Postdoctoral fellowship income

Beginning in 2021, postdoctoral fellowship income would be included as earned income for registered retirement savings plan (RRSP) purposes. This change would provide postdoctoral fellows with additional RRSP contribution room in order to make deductible RRSP, pooled registered pension plan (PRPP), or specified pension plan (SPP) contributions. This measure would apply retroactively to 2011. If you reported postdoctoral fellowship income in a tax year after 2010 and before 2021, you could send an adjustment request to the CRA to have your RRSP contribution room adjusted.

Prince Edward Island

The dividend tax credit rate for non-eligible dividends has changed.

A new non-refundable children’s wellness tax credit has been introduced for all families with children under the age of 18 for eligible activities related to their children’s well-being.

You can claim up to $500 per child for fees paid in 2021 relating to the cost registration or membership for your (or your spouse’s or common law partner’s) child in a prescribed program of artistic, cultural, recreational, or developmental activity or a physical activity. The child must have been under 18 years of age at the start of the year during which fees were paid for an eligible activity related to the child well-being.

Ontario

Senior’s Safety Tax Credit

A refundable Ontario seniors’ home safety tax credit has been introduced for seniors and individuals who share a home with a senior relative. Complete Schedule ON(S12), Ontario Seniors’ Home Safety Tax Credit, to claim this credit. This is a temporary credit for 2021 only. You may be eligible for this credit if, at the end of 2021, all of the following conditions apply:

You were a resident of Ontario on December 31, 2021

You were 65 years of age or older or living with or expecting to live with a family member who is a senior

You or someone on your behalf, paid eligible expenses in 2021 for improvements to your principal residence or the land on which your principal residence is situated

Eligible expenses are expenditures for improvements to the principal residence or to the land on which the principal residence is situated that:

allow a senior to gain access to the home or the land or to be more mobile or functional within the home or on the land

reduce the risk of harm to a senior within the home or on the land or in gaining access to the home or the land

would normally be done by or for a person who has an impairment to allow him or her to be mobile or functional within the home or on the land

The improvements must also be of an enduring nature and be integral to the home or land, or must be a modular or removable version of an item of a type that can otherwise be installed as enduring and integral to the home or land.

You can claim the lesser of $10,000 and the amount of eligible expenses that you, or someone on your behalf, paid related to your principal residence. If you occupied more than one principal residence at different times in 2021, eligible expenses you paid for one or more of those residences would qualify for the credit, but those expenses may not exceed $10,000.

Job Training Tax Credit

A refundable Ontario jobs training tax credit has been introduced for eligible individuals. This is a temporary credit for 2021 only. You may be able to claim this tax credit if all of the following conditions apply:

You were a resident of Ontario on December 31, 2021

You have a Canada Training Credit Limit for 2021 greater than zero

You have entered an amount on line 32000 on your federal Schedule 11 Eligible expenses are amounts entered on line 32000 of your federal Schedule 11

Manitoba

Teaching expense tax credit

You can claim up to $1,000 as an eligible supplies expense if both of the following conditions are met:

you received income from a source in Manitoba in 2021

you were an eligible educator Eligible educator You are considered an eligible educator if you were employed in Manitoba at any time during the 2021 tax year and both of the following conditions are met

you were a teacher at an elementary or secondary school, or an early childhood educator at a regulated child care facility

you held a teaching certificate, license, permit or diploma, or a certificate or diploma in early childhood education, which was valid and recognized in the province or territory in which you were employed

Eligible supplies expense

An eligible supplies expense is an amount that you paid in 2021 for teaching supplies that meet all of the following conditions:

you bought the teaching supplies for teaching or facilitating students’ learning

the teaching supplies were directly consumed or used in an elementary or secondary school or in a regulated child care facility in performing your employment

you were not entitled to a reimbursement, allowance, or any other form of assistance for the expense (unless the amount is included in the calculation of your income of any tax year and is not deductible in the calculation of your taxable income)

the eligible teaching supplies expense was not deducted from any person’s income for any year or included in calculating a deduction from any person’s tax payable for any year

Teaching supplies are consumable supplies and prescribed durable goods. Prescribed durable goods include:

books, games, and puzzles

containers (such as plastic boxes or banker boxes)

educational support software

Saskatchewan

Home Renovation Tax Credit

The Saskatchewan Home Renovation Tax Credit (HRTC) allows homeowners to claim a non-refundable tax credit on qualifying home renovation expenses. The total eligible expenses incurred between October 1, 2020 and December 31, 2021, must be in excess of $1,000 (base amount), but not more than $12,000 can be claimed on your 2021 tax return (maximum claim of $11,000 for 2021.

Claiming home renovation tax credit

The claim for eligible expenses is family-based. Eligible family members include you and your spouse or common law partner and your or your spouse’s or common-law partner’s children who are under 18 years of age at the end of year for which the credit is claimed. The claim can be split among eligible family members, but the total amount claimed cannot exceed the maximum allowable.

Eligible Expenses

Eligible expenses include the cost of labor and professional services, building materials, fixtures, equipment rentals, and permits. The costs of routine repairs and maintenance normally performed on an annual or more frequent basic are not eligible.

Examples of eligible expenses generally, in addition to projects you do yourself, work performed by electricians, plumbers, carpenters, architects, etc. in respect of an eligible expense qualifies for the HRTC.

The following items are examples of eligible expenses:

Renovating a kitchen, bathroom or basement

New carpet or hardwood floors

Building an addition, garage, deck, garden/storage shed, fence

Re-shingling a roof

A new furnace, woodstove, boiler, fireplace, water softener or water heater

A new driveway or resurfacing a driveway

Painting of interior or exterior of a house

Window coverings directly attached to the window frame and whose removal would alter the nature of the dwelling

Laying new sod

Swimming Pools (Permanent - in ground and above ground)

Fixtures – lights, fans, etc

Associated costs such as permits, professional services, equipment rentals & incidental expenses

Window coverings, such as blinds, shutters and shades, that are directly attached to the window frame and whose removal would alter the nature of the dwelling are generally considered to be fixtures (i.e., have become part of the home) and therefore would qualify for the HRTC

Note : If an eligible expense qualifies for medical expense amounts, you can claim both the medical expenses and the HRTC for that expenditure

The following items are examples of ineligible expenses:

Furniture, appliances, and hot tubs

Audio and visual electronics

Purchasing of tools

Cleaning carpets

House cleaning

Maintenance contracts (e.g. furnace cleaning, snow removal, lawn care, and pool cleaning)

Financing costs

Supporting documents

Eligible expenses must be supported by acceptable documentation, such as agreements, invoices, and receipts, and must clearly identify the type and quantity of goods purchased or services provided.

Active Families Benefit

Saskatchewan’s budget for 2021 announced the restarting of the Active Families Benefit (AFB) for families with children enrolled in sport, recreation and cultural activities. Families can claim this refundable tax credit for 2021 and subsequent tax years.

Eligibility

An eligible individual who is a resident in Saskatchewan on the last day of the taxation year can claim this refundable tax credit up to a maximum of $150 per eligible child who is 18 years of age or less for the costs of participation in an eligible activity. If an eligible child is eligible for the disability tax credit, an additional $50 can be claimed.

Eligible activity

In order for an activity to be eligible for the Active Families Benefit, it must take place within a program that:

Is offered by a service provider located in Saskatchewan

Involves instruction and supervision by the service provider

Provides proper supervision of children

Is suitable for children

Requires children to actively participate

Requires registration with the service provider and the payment of a registration fee or membership fee in order for a child to participate

Complies with all relevant requirements and standards imposed by statute or by any other law

For more information please click here.