Small Business
Advisors

Tax Tips for 2020 Returns

Personal Income Tax Checklist 2020 Returns

2020 was an extraordinary year like no other. Due to the Key COVID-19 related Federal government support significant changes from the COVID-19 pandemic, there are numerous tax issues to be aware of this year. For example, many individuals received support in a variety of forms from various levels of government. Others may have changed how they carried on their employment duties or business operations, including working from home or using their vehicle for employment or business reasons. We have outlined the key issues in the checklist below. Please let us know if you have received other support or incurred other costs related to your income earning activities due to the COVID-19 pandemic.

Information all Clients Must Provide

1. All income, support and benefits received under COVID-19 relief programmes. Official tax slips may have been issued for some, but not all. For support where no slip is available, details surrounding the amount and types of payments is required. Some of these benefits are taxable while others are not. Please provide details on all Federal, provincial/territorial, and other support received.

   Programme	Taxable?
   Canada Emergency Response Benefit (CERB)	Yes
   Employment Insurance (EI) programme	Yes
   Canada Recovery Benefit (CRB)	Yes
   Canada Recovery Sickness Benefit (CRSB)	Yes
   Canada Recovery Caregiving Benefit (CRCB)	Yes
   Canada Emergency Student Benefit (CESB)	Yes
   One-time payment - disability support	No
   One-time payment - GST/HST credit	No
   One-time payment - Canada child benefit	No
   One-time payment - OAS/GIS	No

   Key COVID-19 related Federal goverment support for business, rental or other income:

   Programme	Taxable?
   Canada Emergency Wage Sudsidy (CEWS)	Yes
   Canada Emergency Rent Sudsidy (CERS)	Yes
   Canada Emergency Business Account (CEBA)	Yes*

   * The Forgivable portion of the interest-free loan under CEBA is taxable. Please provide the details.
   
   As no slips are provided specific to these programmes, please provide the amounts received and the period to which they relate.

2. All information slips such as: T3, T4, T4A, T4A(OAS), T4A(P), T4E, T4PS, T4RiE T4RSR T5, TIO, T2200, T2202, T101, T1163, T1164, TL11A, B, C and D, T5003, T5007, T5008, T5013, T5018 (Subcontractors), and corresponding provincial slips
3. Details of income for which no T-slips have been received. such as:
   • other employment income (including any tips or gratuities received, details on stock option plans and Election Form T1212),
   • business, professional, partnership, and rental income (including all amounts received from the sharing economy, such as AirBnB, VRBO, Uber, etc),
   • alimony, separation allowances. child maintenance (including divorce/separation agreement),
   • pensions (certain pension income may be split between spouses),
   • interest income earned but not yet received (such as amounts from Canada Savings Bonds, Deferred Annuities, Term Deposits, Treasury Bills, Mutual Funds, Strip Bonds, Compound Interest Bonds),
   • scholarships, fellowships. and bursaries, and
   • any other income received (e.g. director fees, executor fees, etc).
4. Details of other investments, such as:
   • capital gains/losses realized (this may be obtained, in some circumstances, from your investment advisor)
   • real estate, or oil and gas investments -- including financial statements,
   • bitcoin or other cryptocurrency transactions,
   • and any other investments.
5. Details of other expenses, such as
   • business, professional, investment and rental expenses (including capital purchases, such as vehicles, and equipment, including the invoice or bill of sale),
   • employment related expenses - provide Form T 2200 ? Declaration of Conditions of Employment, signed by employer, as well as the invoices and receipts for required employment expenses. See item 5 for details on work space in home.
6. Details related to working from home. Due to the COVID-19 pandemic, many individuals worked from home during a portion of 2020. In some cases, a deduction may be available.
   
   

   Option 1 - Flat Rate Method (Employees Only)

   Employees that worked from home more than 50% of the time for at least four consecutive weeks in 2020 due to COVID-19, and were not fully reimbursed for their expenses, can deduct $2/day that they worked from home. Please provide the number of days you worked from home if you met this test. No employer certification is required.
   
   

   Option 2 - Detailed Method (Employees and Non- Employees)

   For expenses related to working from home to be deductible under this method, one of the following has to be met: The home was where the individual mainly (more than 50% of the time) did their work (for employees, this test can be met for a four-week period); or The individual used the space exclusively to earn business/employment income, and used it on a regular and ongoing basis for meeting clients, customers or other people in respect of the business/ employment.
   
   Employees must also provide either a T 2200 or T 2200S (if no other employment expenses are claimed) from their employer. If these tests are met, even for a portion of the year, a reasonable claim can be made. To make a claim, please provide details on the portion of your home that was used as a work space (e.g. approx. square footage of work space versus other space). If the space was not used exclusively for business/employment purposes, provide the approx. time it was used for business/employment purposes. Also, provide the period that you worked from home and met one of the above tests, and the expenses incurred that related to working from home. Such expenses include, for example, home internet access fees, rent, utilities, and office supplies.
   
7. Details and receipts for other deductions and tax credits, such as:
   • moving expenses (please advise us if you have, or may have, immigrated or emigrated to/from Canada),
   • child care expenses (if the services are provided by an individual, their SIN should be on the receipt),
   • alimony, separation allowances, child maintenance (including divorce/separation agreement)
   • adopted related expenses,
   • interest paid on qaulifying student loans,
   • professional and union dues,
   • medical expenses for you and any dependent persons,
   • charitable donations and political contributions,
   • clergy residence deduction information (including Form T1223),
   • tuition fees for both full-time and part-time courses for you or a dependant - including mandatory ancillary fees, and Forms T2202, TLlIA, B, C and D where applicable ,
   • disability supports expenses (speech, sight, hearing, learning aids for impaired individuals and attendant care expenses),
   • mining tax credit expenses,
   • Registered Retirement Savings Plan and any other pension plan contributions and withdrawals (including withdrawals and repayments for the Home Buyers Plan and Life Long Learning Plan)
   • film and video production expenditures eligible for a tax credit
   • tools acquired by tradespersons and eligible apprentice mechanics,
   • scientific research and experimental development expenses,
   • Home Accessibility Tax Credit - Certain expenditures (up to $10,000) may be eligible for a tax credit if made in relation to a renovation or alteration of your home to enhance mobility or reduce the risk of harm for an individual who is either, eligible for the Disability Tax Credit, or 65 years of age or older at December 31, 2019. Examples of eligible expenditures include amounts relating to wheelchair ramps, walk-in bathtubs, wheel-in showers and grab bars.
   • Eligible Educator School Supply Tax Credit - if you are a teacher or early childhood educator, please provide receipts lup to $1,000) for eligible school supplies purchased in the year. An eligible supply expense is an amount paid in the year for supplies used or consumed in the school or regulated child care facility in the performance of your employment. Supplies include consumable goods such as construction paper, flashcards, items for science experiments, art supplies, and stationary items, and durable goods limited to games, puzzles, books, containers and educational support software. Please also provide a certification from your employer attesting to the eligible supplies expense.
   • NEW - Canada Training Credit (CTC) - A refundable tax credit may be available to reimburse up to half of eligible tuition and fees associated with work-related training for individuals aged 25 to 64 years old at the end of the year. Please provide details on tuition and other fees related to training. Amounts refunded through the CTC will not also be eligible for the tuition tax credit. The maximum credit available in 2020 is $250, based on $500 of eligible expenses. To get the credit this year, you had to meet a number of conditions in the 2019 year, such as filing a tax return, being resident in Canada throughout the year, being 25 to 64 years at the end of year, having at least $10,000 from maternity/paternity benefits or working income, and having net income that does not exceed $147,667. And,
   • NEW - Digital News Subscription Tax Credit - A non-refundable tax credit based on up to $500 of amounts paid for a qualifying digital news subscription (primarily engaged in the production of original written news content) will qualify for this credit,
8. Details on the disposition of your principal residence or other real property. If disposing of your principal residence. please provide: proceeds of disposition, a description of the property, and the year the property was acquired. If disposing of ether real property, please provide the cost of the property in addition to the requirements listed above. This is required even if there is no gain on the disposition of the property. In addition, please indicate if you have a change-in-use of your property. This could include, for example, converting some or all of your principal residence into an income earning property, such as a rental suite.
9. Name, address, date of birth, social insurance number (SIN), and province of residence on December 31, 2020, if changed in the current year.
10. Personal status - single, married, common-law, separated, divorced, or widowed. If there has been a status change in the year, please provide the date of the change.
11. List of dependants/children including their income, birth date, and SIN.
12. Details regarding residence in a prescribed area which qualifies for the Northern Residents Deduction.
13. Details on 2020 income tax instalments, or payments of tax
14. 2019 Notice of Assessment/Reassessment and any other correspondence from CRA (including correspondence received after the filing of this personal tax return) .
15. Details of foreign property owned at any time in 2020 including cash, stocks, digital currency (such as Bitcoin), trusts, partnerships, real estate, tangible and intangible property, contingent interests, convertible property, etc. Required details include: description of the property. related country, maximum cost in the year, cost at year- end, income. and capital gain/loss for each particular property.
    
    For property held in an account with a Canadian securities dealer or Canadian trust company, please provide the country for each investment, fair market value of the investments at each month-end, income or loss on the property, and gain/loss on disposition of the property.
16. Details of income from, or distributions to, foreign entities such as foreign affiliates and trusts.
17. Copy of any foreign tax returns filed and any associated tax assessments.
18. If we are not preparing your spouse or common-law partner's personal tax return, please provide their return for review and tax planning.
19. Internet Business Activities - if you have business, professional, farming, or fishing income, please indicate whether you have Internet business activities. According to CRA, Internet business activities include any activity where you earn income from your webpages, websites. or Apps. Information only webpages and websites like directories or ads wilmot generally trigger this information requirement.
    
    If you have Internet business activities, please provide:
    • The number and address of webpages or websites that your business generates income from. If you have more than 5. provide the 5 that generate the most income.
    • The percentage of income generated from the Internet (if you do not know the exact percentage, provide an estimate).

Additional Information - New Clients Must Provide

1. All CRA correspondence for the past three years.
2. Details of previously claimed capitalgain exemptions. business investment losses and cumulative net investment loss accounts.
3. A listing or copy of receipts for significant capital assets purchased previously, which are currently held.
4. Details of carry-forward amounts from previous years (ex. losses, donations. forward averaging amounts, RRSP).

Questions to Answer

1. Did you receive interest, dividends, or benefits from a business in which a relative is a key party (in terms of ownership or involvement)?
2. Are you a U.S. citizen. Green Card Holder. or were you, or your parents born in the United States? You may have U.S. filing obligations.
3. Are you an aboriginal person? Special tax rules may apply.
4. Are you or any of your dependants disabled? if so. provide Form T2201, Disability Tax Credit Certificate. The transfer rules allow claims for certain dependent relatives. In addition, are you, or would you like to provide support to a disabled person? Tax planning opportunities may be available, such as the establishment of a Registered Disability Savings Plan.
   
   Persons with disabilities may also receive tax relief for the cost of disability supports(e.g. sign language services, talking textbooks, etc.) incurred for the purpose of employment or education. If you or your dependents are disabled but do not ha./e a T2201 Form please provide details so v/e can explore v/hither you are eligible for special credits or benefits.
5. Are you the caregiver for any infirm family members? Did you provide in home care for an infirm dependent relative?
6. If you have children up to the age of 17, have you received the Canada Child Benefit (CCB)? The CCB is an income tested benefit and therefore may not be provided to certain higher income individuals who previously received the Universal Child Care Benefit which ceased in mid-2016.
7. Have there been any other significant life events in the past year, such as the death or impairment of a loved one? There can be tax planning opportunities.
8. Did you incur costs to access medical intervention required in order to conceive a child which was not previously allowed as a medical expense? Amounts may be claimed in respect of any such expense for the previous 10 years (if amounts were incurred in 2010. a claim must be made by the end of 2020).
9. Did you purchase a new home in 2020? if so. you may be eligible for the new residential property GST/HST rebate. Also, are you a first-time home buyer in 2020? A federal tax credit based on $5,000 (@15% = $750) may be available.
10. Have you spent more than 200 hours acting as a volunteer firefighter or a search and rescue volunteer? You may be eligible for a federal tax credit.
11. Have you made any contributions to a gifting tax shelter?
12. Did you receive any significant prizes or awards from your, or a related person's place of employment?
13. Did you receive a retroactive lump-sum payment over $3,000 (for example, spousal support)? in certain cases. some tax relief may be available.
14. Do you want your tax refund deposited directly into your account at a financial institution?
15. Do you authorize CRA to give your name, address. date of birth, and citizenship to Elections Canada to update the National Register of Electors?

Other

1. Instalments required for 20121 A Pre-Authorized Debit Arrangement is an online service-payment opts on which authorizes CRA to v/ithdraw a pre- determined payment amount directly from a bank account on a specific date to pay taxes(Debit option). This may help avoid penalties on late and/or missing instalment payments.
2. MYCRA mobile App -- This web App allows you to access and view key portions of your tax informahon such as your notice of assessment, tax return status, benefit and credit information, and RRSP and TFSA contribution room.
3. Canada Job Grant -- 2/3rds of certain employee training courses may be eligible for this grant. If interested in improving your skills, ask your employer about this opportunity.
4. CRA Online Services -- Account Alerts -- Individuals can register with CRA to be notified by email when CRA's record of an individual's address has changed, banking information for direct deposit has changed, or if mail sent by CRA was returned.
5. CRA Online Services -- Link between CRA's My Account and My Service Canada Account -- Individuals can now access these two accounts through a single sign-in session. When switching between Accounts, users must authorize their SIN to be transmitted to the other department. My Service Canada administers a number of programs such as Employment Insurance, Old Age Security, Guaranteed Income Supplement and Canada Pension Plan.
   
   Also, the Government has released a new Direct Deposit Sharing Initiative which will allow CPP recipients to update and share their direct deposit banking information between CRA and Employment and Social Development Canada (ESDC). CPP recipients can update their direct deposit banking information using CRA's My Account, MVCRA mobile app, or ESDC's My Service Account. With consent, the individual's banking information will be shared between both organizations, providing updated information for various programs such as the GST7 HST credit, Canada child benefit, the working income tax benefit (Canada workers benefit, commencing in 2019), and income tax refund.
6. Additional provincial/territorial credits and programs may be available (such as the Ontario Seniors' Public Transit Tax Credit).
7. First-Time Home Buyer Incentive (FTHBI) - Broadly, first-time home buyers and those who have recently experienced a marriage or common-law relationship breakdown may be eligible to obatin 5% or 10% (newly constructed homes only) of the purchase price of a home under a shared-equity mortgage. The borrower(s) must repay the FTBHI (being 5% or 10% of the value of the property at repayment) at the earlier of the sale of date or 25 years. Alternatively, the borrower may voluntarily choose to repay the full amount back at an earlier time without a pre-payment penalty. No partial payments are permitted. Access to the programme is limited to those borrowers (all who are on title) whose total combined income is not greater than $120000 . The maximum homwe price depends on a number of factors, including the total combined income of all borrowers and the deposit on the property, however, in the most extreme cases, must be less than just over $500000 . To determine the maximum home price, based on your specific factors, go to FTHBI eligibilty- savings-calculator.
8. Canada Student Loan and Canada Apprentic Loans Relief - Effective November 1, 2019, student loans will enjoy lower floating rates of prime (rather than prime plus 2.5%). As well, fixed interest rates will be reduced to prime plus 2% (rather than prime plus 5%). Also, student loans will not accumulate any interest during the six-month non-repayment period ( the "grace period") after a student loan borrower leaves school.
9. Zero-Emission Vehicles - Individuals or businesses can now receive a federal incentive of up to $5000 when they purchase or lease a zer-emission vehicle (on or after May 1, 2019). A listing can be found at Transport Canada. Alternatively, certain zero-emission vehicles for business use may enjoy a temporary first-year CCA rate of 100%. A business can access only eith the purchase incentive or the enhanced CCA in the first year.
10. Guaranteed Income Supplement (GIS) - The GIS earnings exemption currently allows low-income seniors and their spouses to each earn up to $3500 per year in employment income without triggering a reduction in GIS benefits. Effective July 2020, the earning exemption would also apply to self-employment income. Also, the full exemption available for up to $3500 of earnings will be increased to $5000 per year. In addition, a partial exemption of 50% would apply to the next $10000 of annual employment and self-employment income beyond the initial $5000 .