When taxes are due—and other things to know about your 2021 income taxes

Last year, as COVID-19 lockdowns forced many Canadians to work from home, taxpayers naturally wondered what employment-related expenses they might be allowed to write off. There were questions about claiming masks, office furniture, the $400 home office credit, and internet/phone usage. Then there were concerns about how government benefits like the Canada Emergency Recovery Benefit (CERB) and its successor, the Canada Recovery Benefit (CRB) would be taxed. 

This year, some of those same questions remain, as it’s unclear whether the emergency claims from 2020 will be carried over as is, changed or eliminated. There’s also a lack of clarity on when several new and amended deductions, credits and benefits that the federal government promised in the last budget and/or during the recent election campaign will come into effect. We will be updating this story as the information comes out. But with that in mind, here’s the latest info on filing your 2021 tax return.

When is income tax due for 2021?

For most Canadians, the deadline to file your 2021 income tax and benefit return is April 30, which is a Saturday this year, so personal income tax returns are due on May 2, 2022. If you’re self-employed, you have until Jun. 15, 2022. Either way if you owe taxes the payment deadline is May 2, 2022. As of the date of this article, there are no announcements about extensions.

What is the Canada Worker Lockdown Benefit?

After the Liberal party won another minority government in the Sept. 20 election, it announced plans to help Canadians, including the Canada Worker Lockdown Benefit. The new benefit, which came into effect on Oct. 24 following the end of the CRB, gives $300 a week to workers who were affected by lockdowns. This benefit is also accessible to people who couldn’t get Employment Insurance. It runs until May 7, 2022.

Both the CERB and CRB are considered taxable income and must be reported on your 2020 and 2021 income tax returns. The new benefit will likely be treated the same way. Depending on your tax bracket, that could lead to a bigger tax bill in April 2021.

What expenses can be claimed on a T2200?

In 2020, eligible employees who worked remotely could deduct up to $400 in home expenses from their taxable income, without the need to keep receipts or get a signed T2200 form from their employer. Furthermore, companies were allowed to reimburse employees up to $500 for home office equipment—such as desks and chairs—as a tax-free benefit. 

“I think it was really helpful for so many employees to have access to the home office deduction, especially since people are still working from home,” says Shannon Lee Simmons, certified financial planner and founder of the New School of Finance. “Having the flat rate was a really good piece of legislation, it was easy [to claim], got the job done and acknowledged that people were using their own space and internet.” 

The government agrees: Its election platform included a promise to extend the simplified deduction through the 2022 tax year, and increase the allowable amount to $500, although specific details have yet to be made available. 

Is digital news subject to tax?

It depends. If you pay for a subscription to a Canadian online news source, you’ll be interested in this new federal non-refundable tax credit. To be eligible, you must have paid for digital news subscription expenses after 2019 and before 2025, and the news source(s) must be on the list of qualified Canadian journalism organizations. 

You can claim this credit on line 31350 of your tax return for the years 2020 to 2024. As with other federal non-refundable tax credits, the credit amount is calculated by multiplying the lowest federal personal income tax rate (15%) by the total of all your qualifying subscriptions, up to a maximum claim of $500. 

In other words, the credit could save you up to $75 in taxes. 

Minimum 15% tax for high-income individuals

In its election platform, the Liberal party pledged to create a minimum tax rule so that the high earners (those who made more than $216,511 in 2021) would have to pay at least 15% in taxes per tax year. The plan is to remove high earners’ use of deductions and credits to pay little to no tax. As of the publication of this article, this measure hasn’t been passed by the government or confirmed by the CRA. 

Home buyers: Tax credits and other measures for 2021

The government has a slew of tax-related proposals for Canadian home buyers, including: 

• A new 15% Multigenerational Home Renovation tax credit on up to $50,000 in renovation and construction costs, for those who add a secondary unit to their home for immediate or extended family. This could result in up to $7,500 in tax savings. 
• An increase to the 15% First-time Home Buyers’ tax credit, which would double the allowable claim to $10,000 from the current $5,000 and lead to a possible tax savings of up to $1,500. 
• A new tax-free First Home Savings Account for Canadians under-40, so they can save up to $40,000 towards their first home. Contributions would be tax deductible and withdrawals tax-free with no strings attached. Unlike the Home Buyer’s Plan, which allows individuals to borrow up to $35,000 tax-free from their registered retirement savings plans (RRSP), the funds must be paid back within 15 years. 
• A new 15% home appliance repair tax credit on up to $500 in fees paid to a technician for fixing an appliance in your home; do-it-yourself repairs do not qualify. 

Unfortunately, these proposed housing-related tax changes are just that—proposals. So don’t start planning that in-law suite just yet. Like all financial experts, Simmons is waiting to see if these measures come into effect. But she’s also realistic about who the credits are likely to benefit and who might get left out: namely, those struggling to buy their first home. 

“If you’ve already got the down payment, you’ve been able to buy a house and you’ve got the income to support a mortgage, then great, you’re going to get some money back,” she says. “I love that it helps those who did purchase, but it’s neither here nor there as far as helping people get into the housing market.” 

How to get updates on federal proposed tax changes

If any of the tax proposals described above do pass and become law, there are several ways to find out: 

• Your accountant or tax-preparer should be up to date on the latest tax changes. If you’re not sure, ask them. 
• Tax software generally incorporates changes so the credits will be applied automatically if you qualify.
• You can keep track of any changes at the Department of Finance which publishes news releases.
• Bookmark this page and check back here, as we plan to provide updates as they become available.

When to get started on your 2021 taxes

The Canada Revenue Agency (CRA) does not typically make the new annual tax return available until sometime in January, and you may not receive all the tax slips you need to file your return until the end of February. However, there is at least one tax-related task Simmons would like to see every Canadian do before the year is out: Take 20 minutes to figure out your potential tax bill. 

“Use an online tax calculator to figure that out,” she says. “So, if you have a big bill, it won’t come as a shock and you’ve got four months to prepare for it.” Plus, she says, it will help you work past the fear of owing money to the CRA, which makes tax season scary and is the main reason people procrastinate on their returns. You can also check your annual income against our tax bracket guide, too. 

In the meantime, I’m personally hoping for that 15% home appliance repair tax credit. I’ve already paid a plumber $900 to fix my kitchen sink—and that doesn’t include the cost of parts or the takeout I ordered because I had nowhere to wash dishes. The credit would at least give me a little buffer for the next thing that breaks down. I’m looking at you, fridge.

READ MORE ON 2021 TAXES:

• “Where do we pay income tax if we retire abroad?”
• Capital gains taxes, explained
• 6 strategies to help you (legitimately!) pay less capital gains tax
• 7 ways the tax man is watching you