As the famous Benjamin Franklin quote goes, there are two things in life that are unavoidable – death and taxes. Luckily, at least one of those can be made easier with the right knowledge. With filing deadlines fast approaching, here are a few things to know this season.
Individuals in Canada must file their income tax returns by April 30, which falls on a Friday this year. If you are self-employed, or your spouse is, the deadline to file is extended to June 15 although any balance must still be paid by April 30.
There are a few federal homeowners tax credits you should know about when preparing your return.
First-Time Home Buyers' Tax Credit
If you purchased your first home in the 2020 tax year, or if you haven't lived in a home owned by you or your spouse in the last four years, you may qualify for the First-Time Home Buyers' Tax Credit (HBTC) of $5,000, which adds $750 to your tax refund.
If you paid Goods and Services Tax (GST) on a home that was newly built or substantially renovated last year, you might be able to take advantage of a new housing rebate on part of the tax.
Home Accessibility Tax Credit (HATC)
The Home Accessibility Tax Credit (HATC) could help you save taxes on an eligible renovation costing up to $10,000 if you and the property meet specific criteria. The renovations have to be permanent, make the home more accessible or reduce the potential harm to the qualifying individual, and be completed by qualified professional tradespeople.
Rental income deductions
If you rent out all, or even just part, of your property you must declare the income on your taxes. The good news is you can also claim allowable expenses such as advertising fees, property taxes, insurance, and interest on money you borrowed to purchase or renovate the rental property
If you moved to attend school full time, launch a new business, or take a new job, your moving expenses – like moving company bills, hotel bills, and legal fees - could be tax-deductible.
Working from home
Like any year, if you are a business owner or self-employed and work from home, you can claim certain expense related to your work that could include a portion of your utility bills, homeowners' insurance, internet bills, office supplies, and more.
In 2020, because of COVID-19, there are additional working-from-home expenses that you may be eligible for. The CRA allows all employees who worked from home during the COVID-19 pandemic in 2020 to claim up to $400 as a flat rate or $2 per day in employment expenses. Read more about eligibility here.
This information is for general use and does not constitute legal or financial advice. Please speak to an accountant about your specific situation.