What’s New for 2020 Tax Returns:

Personal Tax - CERB and CRB

All benefits received before December 31, 2020 will be reported on T4a slips and are to be included in your 2020 income tax return. If you received benefits in error, you would still receive a slip and must report the income. If benefits must be repaid, you will receive a deduction in the year of repayment.

Covid benefit sites for information — be sure click through to the area you are interested in, and do not forget to review the FAQ’s:

https://www.canada.ca/en/services/benefits/covid19-emergency-benefits.html

The government of Canada has introduced a web page to help you find benefits that may apply to your situation:

https://benefitsfinder.services.gc.ca/hm?GoCTemplateCulture=en-CA

Benefits and their effect on taxes:

https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html

Working From Home

Many people are working from home due to Covid, and to allow for that, the federal government has expanded the allowable deductions for employees working from home. There is a simplified deduction that does not require any proof from your employer or receipts, and a more detailed deduction that does require you to provide proof of expenses (if requested) and a signed form from your employer.

We will review your records to determine the most beneficial method. To ensure you are eligible for the detailed method if we deem it more beneficial, we suggest you ask your employer to complete this form and give it to you for submission with your 2020 tax documents:

https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2200s.html

Business Tax

Canada – The government of Canada has a web page with links for all the federal benefits available affecting businesses.

https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html

Ontario – Small business supports grants: https://www.ontario.ca/page/businesses-get-help-covid-19-costs Submit applications as soon as possible.

Program details here: https://covid-19.ontario.ca/covid-19-help-businesses-ontario#financial-relief

Find the application here: https://www.app.grants.gov.on.ca/msrf/#/

General notes for businesses on how Covid benefits are treated for tax purposes:

  • CEWS/TEWS payroll subsidies for employers: These amounts will reduce your payroll costs and are counted as a reduction of expenses in your financial records.
  • CEBA – business loans. https://ceba-cuec.ca/ Intended to assist businesses to cope in the pandemic. Funds can be used to defray costs, either due to loss of revenue or increased operating costs. Initial loans were offered for $40,000 and the program recently expanded to allow for a further $20,000. Business that received the initial loan can apply for the expansion (if needed), while new applicants can apply for the full $60,000. Application deadline for this program is March 31, 2021.
  • CEBA loans will not incur any interest charges or require repayment until December 31, 2022, at which time the loan will convert to a regular business loan, with monthly repayments required beginning January 2023.
  • OF NOTE: A portion of the CEBA loan is forgivable and does not need to be repaid – provided you are able to repay the remainder of the loan in full, by December 31, 2022. If you received $40,000 then $10,000 is forgivable, and if you received the full $60,000 then $20,000 is forgivable. The forgivable portion is taxable income that must be reported in the year the funds were received. If it happens that December 2022 rolls around and you are not able to repay the loan in full, then you no longer qualify to have a portion be forgivable, and you will have to repay the entire loan. In this case, you would already have paid tax on the portion assumed to be forgivable when you received the funds, and you would now be able to take a deduction for that same amount.