It's Your Money  

Income tax during COVID

This year’s tax filings will likely prove move complicated for many due to pandemic-related benefits and work from home adaptations.

Although Canadians were given an extension to file their taxes last year, the deadline to file 2020 income tax returns remains April 30 (June 15 for the self-employed).

So what is different this year?

Reporting taxable COVID benefits

Millions of Canadians received pandemic related benefits in 2020 that must be reported on your tax return.

The CERB, CESB, CRB, CRCB and CRSB programs are all considered taxable income and should be reported on Line 13000 (Other income) on tax filings.

T4A and/or T4E slips have been issued by the government for these programs and although they should have all been sent in the mail, you can also view them on your “My Account” on the CRA website.

Understanding what is non-taxable

While the above-mentioned benefits are taxable, some other pandemic related relief is considered tax-free.

The government also delivered a number of other payments to some people including a GST/HST credit, OAS and GIS supplements and payments to people with disabilities which are not taxable and should not be reported on the 2020 return.

Certain provincial benefits such as the BC Recovery Benefit one-time payment are also not taxable.

Some will need to file for their first time

Children as young as 15 were able to apply for the CERB and some of them received as much as $14,000 in benefits, which are taxable. Many students may have also received the taxable CESB benefit as well.

Young people who received a government benefit of any type during 2020 need to confirm if they need to file their own tax return, even if they’ve never done so before.

Claim work from home expenses

The government announced two methods for claiming expenses related to working from home.

First, a flat rate of $2 per day to a maximum of $400 is available to employees who worked more than 50 per cent of the time from home for a period of four consecutive weeks or more.

No employer-signed form or supporting details are required, but the total amount you can claim using this method is quite small.

The second option is to use a more detailed method. Documentation of all eligible expenses is required as well as an employer-signed form T2200S.

Childcare expenses

For the 2020 and 2021 tax years only, the calculation of “earned income” will include both EI and any taxable pandemic benefits.

In addition, childcare expenses can be claimed for a period in which one or both parents are receiving EI or other taxable benefits.

This will inevitably be a challenging tax year for many Canadians to navigate but that does not mean you can put it off any longer. Missing the filing deadline is a bad idea, even if you don’t have the funds on hand to pay any taxes that are owing.

If needed, seek professional help in preparing your tax return, even if only for this year.


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About the Author

Brett, designated as a chartered investment manager and certified financial planner, is the regional director (Okanagan) for IG Wealth Management.

In addition to his “day job," Brett was appointed to the board of directors of FP Canada (formerly FPSC) in 2014, named as the board’s vice-chair in 2017 and took over as board chairman in 2019. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FP Canada board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected]

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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