The due date for filing your 2020 personal tax return is currently scheduled for April 30, 2021.
In order to minimize your tax obligation, make sure you take advantage of the new additions and improvements that you may be able to apply to your 2020 return.
Key Change #1: Expanded Eligibility of the Home Buyers’ Plan
The Home Buyers’ Plan (HBP) allows first-time home buyers to withdraw funds from their RRSP to buy or build a home for themselves or a person with a disability. By taking advantage of the HBP, you can increase your down payment without any tax penalty. You have up to XX years to repay the funds to your RRSP.
In 2019, the Canada Revenue Agency increased the withdrawal limit from $25,000 to $35,000. The 2020 tax year will also open the eligibility of this program to those who have suffered from a marriage or common-law breakdown.
When considering eligibility because of a marriage or common law breakdown, you must meet the following criteria:
- You must live separate and apart from your spouse or common-law partner for a period of at least 90 days as a result of a breakdown in your partnership;
- You have two years after the HBP withdrawal to sell your previous principle residence (if you are buying out the share of your ex-spouse or common-law partner, this requirement is waived); and
- You will not be eligible if you move into a home occupied by a new spouse or common-law partner.
Key Change #2 New Canada Training Credit
The Canada Training Credit is a refundable tax credit that is available to help offset the costs of eligible tuition and other fees paid for courses taken in 2020.
The program has been designed to help working Canadians acquire in-demand training and competitive labour market skills. The credit allows eligible workers to receive up to $250 a year and $5000 a lifetime towards the cost of training fees.
To be eligible you must meet the following criteria:
- You file an income tax and benefit return for the year;
- Your Canada training credit limit for the year is greater than zero;
- You are resident in Canada throughout the year;
- Tuition or fees are paid to an eligible educational institution in respect of the year; and
- The tuition and fees are otherwise eligible for the existing tuition tax credit.
Key Change #3 – Simplifying Home Office Expenses
The Canadian government recognizes that for many people their workspace changed in 2020 as the pandemic encouraged workers, where possible, to stay home and work remotely. To adapt to these changes and to best support Canadians they have made the eligibility for home office expense claims more accessible.
There are two methods to choose from when looking to take advantage of this claim:
- Temporary fixed rate method of $ 2 dollars a day that you worked from home due to COVID-19 with maximum deduction amount of $400.
- Detailed method: This option allows you to deduct the actual expenses that you paid for working at home. This method requires additional invention from your employer, they will need to fill out a form declaring that you will incur employment expenses from working at home
If you would like to learn more regarding claiming home office expenses check out our Blog Post: How can I best claim home office expenses during COVID-19?
Key Change #4: Claiming Digital News Subscription Expenses
New in 2020, you can now claim up to $500 for any Digital News Subscriptions you paid from a qualified Canadian journalism organization. To claim this benefit, the organization you are subscribed to cannot hold a license to broadcast and must be creating original news content.
Key Change #5: Expanded List of Eligible Organizations for Donations and Gifts
Being able to claim donations or gifts to eligible institutions is not a new concept to this tax season. In the past, you could claim all or part of the eligible amount, up to the limit of 75% of your net income. What is new, effective January 1, 2020, is that registered journalism organizations (RJOs) were added to the list of qualified organizations.
These are just some of the changes you can find that will apply to the 2020 tax year. Connect with a tax professional if you have any questions about how to minimize how much tax you are paying!