Tax season is upon us! As you may or may not know, tax updates and changes occur every year. It is our job as professionals to stay up to date with these changes. However, we feel it is important to share with you a few new changes for the 2021 tax year.
Climate Action Incentive
The federal government has released a legislation that changes how Climate Action Incentive payments are delivered. For 2021 and subsequent years, the amount will no longer be claimed annually as a refundable tax credit on your personal income tax return. Instead, individuals will be receiving quarterly payments through the benefit system.
It is important to file your tax return to receive these quarterly payments for April 2022 to March 2023. On your return, it is required to indicate whether you live outside a census metropolitan area and qualify for the 10% rural supplement.
These payments are expected to begin July 2022, with back pay covering both April and July 2022.
Repaying COVID-19 Support Payments
Perhaps you have received COVID-19 benefits and either did not qualify or opted to repay the benefits. If payment is submitted before January 1, 2023, you can choose to deduct the amount on your tax return for the year you received the benefit or the year you repaid it. It is also possible to split the deduction between the two years if the total deduction is not more than the total repayment.
If you have made repayments in 2021, these will be reported on your 2021 T4A slip from the federal government. Any repayments made on or after January 1, 2023 are required to be deducted in the year of repayment.
Employer Provided Benefits and Allowances
In 2020, relief was provided on employment benefits due to the ever-increasing amounts of individuals working from home due to COVID-19. These benefits have been extended until December 31, 2022 with some additional updates as follows:
- The maximum reimbursement per employee for home office equipment is $500 (limit applies to entire period March 15, 2020 to December 31, 2021). Anything over the $500 limit within the period will be included in income in 2021.
- Accountable allowances are eligible for the equipment reimbursement rule. This is where the employee must produce receipts to account for the expense and return any unspent amounts.
- In regards to employer-provided parking costs, CRA has specified that this relief applies “when a regular place of employment is closed due to COVID-19, including situations where employees have been sent home by the employer or have been given the option to work from home on a full-time basis due to the pandemic, employer-provided parking at the regular place of work will not be considered a taxable benefit.
Now you are up to date with some of the changes for the 2021 tax year. Should you have questions or require more information, please contact our office at your convenience.