544 University Park Drive
Regina, SK S4V 2Z3

Phone: 306-757-3261
Fax: 306-347-0823
sandraj@sandrajacksoncga.com

544 University Park Drive, Regina, SK S4V 2Z3
Phone: 306-757-3261 | Fax: 306-347-0823 | sandraj@sandrajacksoncga.com

Our Newsletters

Administrative measures - COVID-19 (April 2020)
Suspension of review, audit and collection activies.
The Canada Revenue Agency regularly carries out review activities in which taxpayers are asked to provide documentation or other information with respect to their entitlement to claimed benefits or credits. The CRA has indicated that taxpayers who have received a letter that includes a date to respond or asks for documents do not need to respond at this time. Verification work is currently on hold and the CRA will re-contact taxpayers at a future date.

The Agency has also announced that it will generally not contact small or medium (SME) businesses to initiate any post assessment GST/HST or income tax audits during the month of April.

Finally, collection activities on new tax debts are suspended until further notice.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

Business measures - COVID-19 (April 2020)

Wage subsidy program for employers
The federal government will be providing eligible employers who have experienced a significant decline in revenues with a wage subsidy. For purposes of the subsidy, eligible employers include individuals, taxable corporations, and partnerships consisting of eligible employers, as well as non‑profit organizations and registered charities.

The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:

75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.
Details of the wage subsidy program, and how it will be administered, are still being developed and the most up-to-date information can be found on the Finance Canada website at: https://www.canada.ca/en/department-finance/news/2020/04/the-canada-emergency-wage-subsidy.html.

Deferral of GST/HST remittance deadlines
Businesses which are required to make GST/HST payments or remittances which become owing on or after March 27, 2020 and before June 2020 can defer payment of those amounts.

The deferral will apply to GST/HST remittances for the February, March and April 2020 reporting periods for monthly filers; the January 1, 2020 through March 31, 2020 reporting period for quarterly filers; and for annual filers, the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.

Where such remittances are made on or before June 30, 2020, no interest or penalties will be imposed by the Canada Revenue Agency, regardless of the original due date.

Deferral of income tax filing and payment due dates for corporations
Corporations which have a tax filing due date after March 18, 2020 and before June 1, 2020 will have until June 1, 2020 to effect that filing.

In addition, where any income tax balance or instalment payment of income tax is payable after March 18 and before September 1, 2020, the deadline for making such payment is now September 1, 2020.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

Individual tax measures - COVID-19 (April 2020)

Changes to filing and payment deadlines for 2019 returns
Individual Canadians are generally required to file their tax returns for the 2019 tax year on or before April 30, 2020. Self-employed Canadians (and their spouses) have until June 15, 2020 to file such returns. All individual Canadians, regardless of their filing deadline, must usually pay all taxes owed for 2019 by April 30, 2020.

However, the filing deadline for individuals who would normally have to file by April 30 has been extended to June 1, 2020. The filing deadline for self-employed individuals and their spouses remains June 15, 2020.

The new payment deadline for all individual income tax owed for the 2019 tax year has been extended and is now September 1, 2020. No interest or penalty will be assessed where payment is made on or before September 1.

While individual taxpayers now have until June 1 to file, those who receive Canada Child Benefit or the Goods and Services Tax/Harmonized Sales Tax credit (or similar credits provided by their province of residence) should consider filing as soon as possible. The benefit year for those programs starts on July 1, 2020 and both eligibility for, and the amount of any benefit payable is based on information provided in the 2019 tax return. A delay in the filing of the 2019 return could mean a delay in receiving benefits starting in July 2020. As well, regardless of when they file, taxpayers will have until September 1 to pay any tax balance owed for 2019.

Change to June 15 installment payment deadline
Many Canadians pay their current year (i.e. 2020) income taxes quarterly, through the income tax installment system. Such installment payments of tax are normally made on March 15, June 15, September 15 and December 15.

The federal government has indicated that taxpayers who would normally make an installment payment of tax on June 15 will instead have until September 1, 2020 to make that payment. No interest or penalties will be assessed where the payment is made on or before September 1.

One-time increase to GST/HST tax credit
The federal government will be providing a one-time increase to the GST/HST tax credit, which is usually paid to qualifying individuals in January, April, July and October of each year.

Those individual Canadians who are eligible for the GST/HST credit will receive a special one-time payment in early May 2020. While precise figures have not been provided, the federal government announcement indicates that the payment will be “close to” $400 per individual and $600 for couples.

Increase to Canada Child Benefit
Eligible Canadian families receive a monthly non-taxable payment of the Canada Child Benefit, with the amount of that payment based on family size and income.

The federal government has announced that, for the 2019-20 benefit year only, the amount of the Canada Child Benefit will be increased by $300 per child. There is no need to make any application, as the increased payment will be added automatically to the regular May 2020 payment, which is scheduled to take place on May 20, 2020.

Change to registered retirement income fund withdrawal requirements
Canadian taxpayers are required to collapse their registered retirement savings plans (RRSPs) by the end of the year in which they turn 71. Most Canadians convert their RRSPs into registered retirement income funds (RRIFs) and they are then required to make annual withdrawals from those RRIFs.

The amount of such annual withdrawal is, by law, a specified percentage (based on the taxpayer’s age) of the balance in the RRIF as of January 1 of the year. There has been a significant decline in the markets since the beginning of this year and, consequently, many RRIF holders will have seen a corresponding decline in the value of their investments.

So that RRIF holders are not penalized by those events (by having to liquidate investments at a loss in order to make a required withdrawal) the federal government has reduced the amount of required withdrawals, for the 2020 taxation year only. Specifically, the minimum withdrawal requirement for RRIFs for 2020 has been reduced by 25%.

It’s important to note, however, that individuals who have already withdrawn more than the reduced 2020 minimum amount will not be permitted to re-contribute to their RRIFs an amount up to the 25% proposed reduction.

Finally, the changes announced also apply to the minimum amount for individuals receiving variable benefit payments under a defined contribution registered pension plan or pooled registered pension plan. Such amounts will also be reduced by 25%, for 2020 only.

Student loan repayments suspended
As of March 30, required repayments of Canada Student Loans will be suspended for a period of 6 months, and no additional interest will accrue on unpaid amounts during that time. There is no requirement that an application be made, as the moratorium on payments during that period will be implemented automatically.

Canada Emergency Response Benefit
Canadians who have no source of income as a consequence of the pandemic may receive $2,000 per month, for a four month period, with that amount provided under under the Canada Emergency Response Benefit (CERB). The CERB is available to a broader group of Canadians than would normally be eligible for income replacement under the Employment Insurance system. Specifically, the CERB applies, in addition to wage earners, to contract workers and self-employed individuals who would not normally qualify for EI.

CERB will be available for Canadians who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19, as well as working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures. In addition, those who are still employed but are not currently receiving any income from their employer – i.e. are laid off – can qualify.

The specific requirements for an individual to receive CERB, as set out on the federal government website, are as follows:

Residing in Canada, who are at least 15 years old;
Who have stopped working because of COVID-19 or are eligible for Employment Insurance regular or sickness benefits:
Who had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
Who are or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period. For subsequent benefit periods, they expect to have no employment income.
The federal government has indicated that applications for the CERB can be made online at https://www.canada.ca/en/services/benefits/ei/cerb-application.html as of April 6. As thousands of applications are expected, applicants are asked to apply in the following order:

on April 6, for those with dates of birth in January, February and March;
on April 7, for those with dates of birth in April, May and June;
on April 8, for those with dates of birth in July, August and September;
on April 9 for those with dates of birth in October, November and December.
Payments will be made within 3-4 days by direct deposit and within10 days if sent by mail.

Detailed information on the CERB, including a list of FAQ, can be found on the federal government website at https://www.canada.ca/en/services/benefits/ei/cerb-application.html?utm_campaign=not-applicable&utm_medium=vanity-url&utm_source=canada-ca_coronavirus-cerb.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

COVID-19 tax measures - overview (April 2020)

The current pandemic has changed the lives of Canadians in innumerable ways, and the tax system has not been exempt from those changes. In fact, since we are currently in what would in normal circumstances be the peak of the filing, payment and return processing season, the usual tax-related obligations which apply to both individuals and businesses have been altered or extended in a number of ways to accommodate current realities.

In addition to providing extensions of time with respect to filing and payment obligations, the federal government has increased a number of benefits which are delivered, at least in part, through the tax system. As well, new benefits intended to mitigate the economic impact of the pandemic have been created.

This issue of the Newsletter summarizes the changes and new programs which affect both individuals and businesses in Canada. As is the case with most things right now, each of these is subject to change as the federal government determines what is needed as the situation evolves. The information below is current to April 1, 2020 and more information on these changes and any future ones can be found on the government of Canada website at https://www.canada.ca/en/department-finance/economic-response-plan.html.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

What to do when you can't pay your tax bill (March 2020)

Most taxpayers sit down to do their annual tax return, or wait to hear from their tax return preparer, with some degree of trepidation. In most cases taxpayers don’t know, until their return is completed, what the “bottom line” will be, and it’s usually a case of fearing the worst while hoping for the best.

Most taxpayers are, of course, hoping for a refund – the bigger the better. A lot would be happy to find that at least nothing is owed to the Canada Revenue Agency (CRA), or that an amount owing is not significant.

The worst-case scenario, for all taxpayers, is to find out that they are faced with a large tax bill and an imminent payment deadline, and that they just don’t have the money to make the required payment by that deadline. For those who don’t have the means to pay a tax bill out of existing resources, that likely means borrowing the needed funds. And, while that will mean paying interest on the borrowing, the interest cost incurred will likely be less than that which would be levied by the CRA on the unpaid tax bill.

If a tax bill can’t be paid in full out of either current resources or available credit, the CRA is open to making a payment arrangement with the taxpayer. While, like most creditors, the CRA would rather get paid on time and in full, its ultimate goal is to collect the full amount of taxes owed. Consequently, the CRA provides taxpayers who simply can’t pay their bill for the year on time and in full with the option of paying an amount owed over time, through a payment arrangement.

There are two avenues available to taxpayers who want to propose such a payment arrangement. The first is a call to the CRA’s automated TeleArrangement service at 1-866-256-1147. When making such a call, it is necessary for the taxpayer to provide his or her social insurance number, date of birth and the amount entered on line 150 of the last tax return for which the taxpayer received a Notice of Assessment. (For taxpayers who are up to date on their tax filings, that will be the Notice of Assessment for the return for the 2018 tax year). The TeleArrangement Service is available Monday to Friday, from 7 a.m. to 10 p.m., Eastern time.

Taxpayers who would rather speak directly to a CRA employee can call the CRA’s debt management call centre at 1-888-863-8657 or can complete an online form (available at https://apps.cra-arc.gc.ca/ebci/iesl/showClickToTalkForm.action) requesting a callback from a CRA agent.

The CRA also provides on online tool, in the form of a Payment arrangement calculator (available at https://apps.cra-arc.gc.ca/ebci/recc/pac/prot/welcome), which allows the taxpayer to calculate different payment proposals, depending on his or her circumstances). That calculator includes interest charges since, no matter what payment arrangement is made, the CRA will levy interest charges on any amount of tax owed for the 2019 tax year which is not paid on or before April 30, 2020. Interest charges levied by the CRA tend to add up quickly, for two reasons. First, the interest charged by the CRA on outstanding tax amounts is, by law, higher than current commercial rates. The rate charged is currently 6%. Second, interest charges levied by the CRA are compounded daily, meaning that each day interest is levied on the previous day’s interest charges. It is for these reasons that a taxpayer is, where at all possible, likely better off arranging private borrowing in order to pay any taxes owing by the April 30 deadline.

Finally, there is one strategy which is, in all circumstances, a bad one. Taxpayers who can’t pay their tax bill by the deadline sometimes conclude that there is no point in filing if payment can’t be made. Those taxpayers are wrong. Where an amount of tax is owed and the return isn’t filed on time, there is an immediate tax penalty imposed of 5% of the outstanding tax amount – and interest charges start accruing on that penalty amount (as well as on the outstanding tax balance) immediately. For each month that the return isn’t filed, a further penalty of 1% of the outstanding tax amount is charged, to a maximum of 12 months. Higher penalty amounts are charged, for a longer period, where the taxpayer has incurred a late-filing penalty within the past three years. In a worst-case scenario, the total penalty charges can be 50% of the tax amount owed – and that doesn’t count the compound interest which is levied on all penalty amounts, as well as on all unpaid taxes. In all cases, no matter what the circumstances, the right answer is to file one’s tax return on time. This year, for most taxpayers, that means filing on or before Thursday April 30, 2020. For self-employed taxpayers (and their spouses) the filing deadline is Monday June 15, 2020. However, for all taxpayers the payment deadline for all 2019 income tax owed is Thursday April 30, 2020.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

Claiming medical expenses for 2019 (March 2020)

The Canadian tax system provides individual taxpayers with a tax credit for out-of-pocket medical and para-medical expenses incurred during the year. Given that such expenses must be incurred at some time by virtually every Canadian, that credit is among the most frequently claimed on the annual return. Unfortunately, however, the rules governing such claims are detailed, somewhat complex and frequently confusing.

Taxpayers who wish to make a claim for the cost of medical expenses must make the following determinations. Which, if any, of the medical expenses incurred qualify for the medical expense tax credit? For what time period should the claim be made? What documentation, if any, is required to support the claim(s) being made? And, finally, which family member should make the claim?

Even the basic “formula” with respect to the amount of medical expenses which may be claimed is not straightforward. That basic rule is that a taxpayer can make a claim for qualifying medical expenses incurred in any 12-month period which ends during the taxation year, to the extent that the amount of such expenses exceeds 3% of net income or $2,352, whichever is less. Each component of that formula clearly requires some explanation.

Qualifying medical expenses
While Canada has a publicly funded medical care system, there is nonetheless a large (and growing) number of medical and para-medical expenses which must be paid for by the individual on an out-of-pocket basis. The more common of these expenses include the costs of prescription drugs, dental care, physiotherapy, medical equipment, and ambulance transport.

However, it is not the case that all such expenses can be claimed for tax purposes, or can be claimed in all circumstances. Where an expense does qualify, additional requirements may be imposed before a claim for such expense can be made. Finally, the question of whether an expense is claimable for tax purposes, and the requirements which must be met, aren’t necessarily intuitive.

To assist taxpayers in that regard, the Canada Revenue Agency (CRA) publishes a very lengthy list of medical expenses which do qualify, together with information on any additional requirements (such as a doctor’s prescription) which must be met in order to make such claim. That listing can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html.

For what time period should the claim be made?
While it might seem logical that only medical expenses incurred during 2019 could be claimed on the return for that year, the rules are actually more flexible that that. Specifically, those rules allow a claim to be made on the return for 2019 for qualifying medical expenses which are incurred in any 12-.month period which ends during 2019.

Taking advantage of that rule requires the taxpayer to identify the 12 month period ending sometime in 2019 during which the greatest amount of qualifying medical expense were incurred.

It’s sometimes the case that it makes better sense, from a tax perspective, to not make a claim in the first year that that claim is available. Take, for instance a taxpayer who must incur significant costs for dental care, with such costs being incurred between October 2019 and March 2020. In order to maximize the claim to be made, it could make sense not to make a claim for the expenses incurred in the fall of 2019 on the 2019 return, but instead to wait and make a claim on the return for 2020 for all costs incurred between October 2019 and March 2020.

There is, unfortunately, no formula or rule of thumb which can be used to determine the optimal 12-month period for a medical expense claim in all circumstances. Rather, the taxpayer must determine, on a case-by-case basis, the optimal time period in their particular circumstances. Tax return preparation software can be helpful in this regard, by running what-if scenarios to determine the optimal tax result.

What documentation is required to support claims made?
It’s obvious that the number and kind of different medical expenses which might be incurred by individuals over the course of the year is virtually limitless. In all cases, the taxpayer must be prepared to support and document the nature and cost of each such expense, as well as the date on which it was incurred. For some expenses, taxpayers must meet additional requirements – most often the need for a doctor’s prescription. As well, in some cases, particular medical expenses can be claimed only by taxpayers who are also eligible for the disability tax credit. A very lengthy list of the expenses which qualify for the medical expense tax credit, and the documentation and other requirements which apply for each, can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html.

Who will make the claim?
Medical expenses incurred by either spouse or any of their minor children can be combined and claimed on a single return. In some circumstances, medical expenses paid by the taxpayer for other relatives may also combined and included in the taxpayer’s claim.

Since only the amount of medical expenses which exceeds 3% of net income or $2,352 (whichever is less) can be claimed, it usually makes the most sense to combine family medical expenses and for a single claim for those combined expenses to be made by the lower income spouse, as long as that spouse has tax payable equal to at least the amount of the credit to be claimed.

It is readily apparent that determining, calculating, and claiming the medical expense tax credit for a particular tax year isn’t an easy or straightforward process. The CRA does publish a separate guide to the rules which govern such claims, and that Guide — RC 4065, Medical Expenses — can be found on the CRA website at https://www.canada.ca/content/dam/cra-arc/formspubs/pub/rc4065/rc4065-19e.pdf.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

Filing your tax return for 2019 - when & how (March 2020)

Between now and June 15, more than 26 million income tax returns for the 2019 tax year will be filed by individual Canadian taxpayers. The vast majority of those returns will be filed by electronic means, through the website of the Canada Revenue Agency (CRA). A minority will be filed in hard copy, using the paper return, and an even smaller number will be filed using a touch-tone telephone.

While Canadians have a choice of method when it comes to filing their annual return, the deadline by which those returns must be submitted to the CRA isn’t a matter of choice. For the vast majority of Canadian taxpayers, the income tax return for 2019 must be filed with the CRA on or before Thursday April 30, 2020. Self-employed taxpayers (and their spouses) have a little more time, as their returns must be filed with the CRA on or before Monday June 15, 2020,

Another deadline for which there is no leeway is the date by which all taxes payable for 2019 must be paid. That date, for all taxpayers (self-employed and otherwise) is Thursday April 30, 2020. Where payment isn’t made in full on or before that date, interest charges are levied beginning on May 1.

This year, there are five possible methods by which individual taxpayers can file a return for 2019 – EFILE, NETFILE, TELEFILE, paper filing or File My Return (telephone filing). While the filing and payment deadlines are the same, regardless of the filing method used, there are rules and requirements which apply to each such method, as follows.

E-FILE
Based on filing statistics compiled by the CRA, E-FILE is the filing method most often utilized by Canadian taxpayers as, in 2019, just under 60% of individual income tax returns were filed using E-FILE.

There are likely a couple of reasons for that – returns filed by electronic means, through the CRA website, are processed more quickly than returns which are paper filed – a particular benefit to the taxpayer who is expecting a tax refund. As well, where a taxpayer chooses E-FILE, a third party – usually an accountant or tax return preparer – files the return on the taxpayer’s behalf. And, almost always, the E-FILE service provider also prepares the return which they are filing. Consequently taxpayers who use E-FILE don’t have to either prepare or file their own return (although, like all taxpayers, they are responsible for the information provided and claims made on that return).

The majority of Canadians who would rather have someone else deal with the intricacies of the Canadian tax system on their behalf can find information about E-FILE for 2019 tax returns on the CRA website at http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/fl-nd/menu-eng.html That site will also provide a listing (searchable by postal code) of authorized E-FILE service providers across Canada, and that listing can be found at https://apps.cra-arc.gc.ca/ebci/efes/epcs/prot/ntr.action.

NETFILE
Taxpayers who want to enjoy the benefits of filing their tax return electronically but who are willing and able to prepare the return on their own can do so using NETFILE. There are a substantial number of Canadian taxpayers who fit that description – In 2019, just over 9 million individual income tax returns, representing 30% of such returns filed, were submitted using NETFILE.

Most returns filed by individual residents of Canada will be eligible for NETFILE, although there are some exceptions – for instance, a return for someone who declared bankruptcy in 2018 or 2019 cannot be filed using NETFILE. Information on the NETFILE service for 2019 tax returns, including eligibility requirements, can be found on the CRA website at http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/netfile-impotnet/menu-eng.html.

A return can be filed using NETFILE only where it is prepared using tax return preparation software which has been approved by the CRA. While such software can be found for sale just about everywhere at this time of year, approved software which can be used free of charge is also available. A listing of free and commercial software approved for use in preparing individual tax returns for 2019 can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/netfile-overview/certified-software-netfile-program.html.

Paper filing
A much smaller (although still substantial) number of returns were filed in 2019 by taxpayers completing and submitting the tax return form on paper. Specifically, 3.6 million returns, representing 12% of all individual income tax returns, were paper filed.

The CRA website indicates that individuals who paper-filed their 2018 tax return will be sent a copy of the 2019 Income Tax Return and Guide package by mail. Those who do not receive such a package by mail but want to obtain hard copy of the 2019 Income Tax Return and Guide package have a few options.

First, copies of the 2019 tax return and guide package can be ordered online, at https://apps.cra-arc.gc.ca/ebci/cjcf/fpos-scfp/pub/rdr?searchKey=ncp%20, to be sent to the taxpayer by regular mail. Taxpayers can also download and print hard copy of the return and guide from the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package.html. Finally, the CRA has made a “limited” number of tax packages available at Service Canada offices and post offices across the country.

File My Return
In 2019, the CRA reinstated, for some taxpayers, a tax return filing option that was previously discontinued. For several years, taxpayers with simple returns had the option of filing their returns using a touch-tone telephone. That option, now called File my Return service will be available again this year to eligible Canadians with low or fixed incomes whose situations remain unchanged from year to year, even if they have no income to report, so that they receive the benefits and credits to which they are entitled. That option is, however, available only to taxpayers who are advised by the CRA of their eligibility for the File my Return service, and those individuals will have been notified by letter during the month of February 2020.

Free Tax Return Preparation Clinics
Finally, taxpayers who are not comfortable preparing their own returns, but for whom the cost of engaging a third party to do so is a financial hardship, have another option. During tax filing season, there are a number of Community Volunteer Tax Preparation Clinics where taxpayers can have their returns prepared free of charge by volunteers. A listing of such clinics (which is regularly updated during tax filing season) can be found on the CRA website at https://www.canada.ca/en/revenue-agency/campaigns/free-tax-help.html.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

What's new on the 2019 tax return? (March 2020)

The one constant in income tax is change and consequently, while Canadian taxpayers must prepare and file the same form – the T1 Income Tax and Benefit Return – every spring, that return form is never the same from one year to the next.

Some of the changes are the “automatic” result of the indexing of income tax brackets and credit amounts. As the result of such indexing, basic personal credits which can be claimed by most taxpayers increase every year, as do the income brackets which determine the tax rate which applies at each level of income, as both are changed to reflect the rate of inflation.

Changes in tax credit amounts or tax bracket figures are largely invisible to the average taxpayer, as they don’t require any change to the layout or organization of the tax return form, or the process of completing it. The more significant changes are those which provide new credits or deductions to qualifying taxpayers or, conversely, eliminate such credits or deductions which taxpayers might have claimed in previous years. What follows is a listing of some of the changes which will affect a significant number of taxpayers with respect to their 2019 tax situation.

Increased Canada Pension Plan/Quebec Pension Plan contributions
Changes to the Canada Pension Plan and Quebec Pension Plan which were implemented in 2019 meant that working Canadians contributed more to such plans in 2019 than in previous years. The silver lining to such increased contribution amounts is that the non-refundable tax credit which is claimed on the annual return for such contributions will also increase, resulting in a lower overall tax bill for the year.

Canada Training Credit
As of January 1, 2019, eligible taxpayers are able to save $250 per year (to a lifetime maximum of $5,000), with such amount used to calculate the new Canada Training Credit. Savings information provided on the return will be used by the Canada Revenue Agency (CRA) to determine an individual’s Canada Training Credit Limit.

In 2020 and future years, the taxpayer may then be able to claim a Canada Training Credit equal to the lesser of his or her Canada Training Credit Limit for the year, or 50% of eligible tuition and fees paid by the taxpayer to an educational institution in Canada.

Canada Workers Benefit
For several years, the federal government has provided a refundable tax credit – the Working Income Tax Benefit – for lower income working taxpayers. For 2019, that Benefit is replaced by the new Canada Workers Benefit (CWB). The new CWB is claimed on Schedule 6 to the annual return.

Home Buyers’ Plan
The maximum amount which an individual can withdraw from his or her registered retirement savings plan (RRSP) under the Home Buyers’ Plan (HBP) increased from $25,000 to $35,000 for withdrawals made after March 19, 2019. The HBP permits qualifying home buyers to withdraw funds from their RRSP on a tax-free basis, with such funds being re-contributed to the RRSP over several subsequent years, on a prescribed schedule.

Medical Expenses Tax Credit
For expenses incurred after October 16, 2018, certain cannabis products purchased for a patient for medical purposes will be considered eligible medical expenses for the medical expense tax credit.

Zero-emission vehicles
Taxpayers who are self-employed or who claim employment expenses may be able to claim capital cost allowance on zero-emission vehicles. As of 2019, there is a temporary enhanced first-year capital cost allowance of 100% for eligible zero-emission vehicles. In order to qualify for the enhanced capital cost allowance, eligible vehicles must be acquired after March 18, 2019, and become available for use before 2024.

The changes to the income tax return which will be most apparent to taxpayers aren’t any of the substantive tax changes outlined above. Rather, it’s the layout and organization of the form which will look unfamiliar. In previous years, the return package has been comprised of the basic 4-page T1 form, together with numerous supporting Schedules, on which tax payable for the year, or various tax credit or deduction amounts were calculated, with that information then transferred to the T1 form. This year, the CRA has eliminated some of those Schedules by incorporating them into the T1. The result is that the T1 General Form is now 8 pages long.

In part as a consequence of that re-organization of the T1 form, the CRA has found it necessary to change the line numbering on the return. Each line of the return has a corresponding number by which it is identified in the Income Tax Guide. In previous versions of the T1 Form, those identifying numbers were three digit numbers, but they have now been increased to five digits. Fortunately for taxpayers trying to make their way through the new return form, in most cases the numbering change has simply meant adding two zeros to the end of the existing number – for instance line 210 on the 2018 return has become line 21000 on the 2019 form.

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

Sandra and Priya Working

Please contact our office for more information on your specific tax or financial situation. We serve Regina and area.