Canadian Tax Change Highlights for 2021
CRA moving away from mailed Notices of Assessment or Reassessment, some flexibility about when to deduct repaid COVID-19 benefits, more Canadians will be able to claim the Canada Workers Benefit.
Electronic Notices for E-Filers
Sometime in 2022, the Canada Revenue Agency (CRA) will start the process of switching to electronic notices of
assessment or reassessment when you file your income tax and benefit return.
COVID-19 Benefits Received
If you received COVID-19 benefits such as the Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), or Canada Recovery Caregiving Benefit (CRCB), you will
receive a T4A slip reporting the income. If you received the CRB, you may have to repay all or part of the amount received if your net income after certain
adjustments is more than $38,000.
If you are self-employed and received COVID-19 assistance for your business, such as the Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS), Canada Recovery Hiring Program (CRHP) or Fish Harvester Benefit and Grant Program (FHBGP), you have to include these amounts in your business income or reduce your expenses by the amounts you received. If you received a government loan, the loan is not taxable but you have to include in your business income any portion of the loan that is forgivable.
If your CRB, CRCB, or CRSB income is exempt under section 87 of the Indian Act, complete Form T90 Income Exempt from Tax under the Indian Act, and file your tax return to claim the tax withheld on your payments.
Federal COVID-19 Benefits Repayments
If you repaid federal COVID-19 benefits (CERB, CESB, CRB, CRCB, or CRSB) in 2021 that you received in 2020, the amount repaid will be reported in box 201 of a T4A slip or on a T4E slip along with other employment insurance (EI) amounts repaid. You can choose to claim a deduction on your return for the repayment in the year that the benefit was received or in the year that the benefit was repaid. You may also choose to split the deduction between these two returns as long as the total deduction is not more than the amount repaid.
Canada Workers Benefit
Changes to the Canada Workers Benefit (CWB) rates and income thresholds, and a new "secondary earner
exemption," mean that more taxpayers will be able to claim it. The benefit is calculated on Schedule 6 Canada Workers Benefit.
Climate Action Incentive
For residents of Saskatchewan, Manitoba, Ontario and Alberta: the Government of Canada has announced its intention to deliver the Climate Action Incentive (CAI) as a quarterly benefit. If you are eligible, you would automatically receive your CAI payments four times a year, starting in July 2022. To receive your payments, you have to file a tax return even if you did not receive income in the year.
Zero-Emission Vehicles
The definition of zero-emission vehicle has changed for vehicles acquired after March 1, 2020. A vehicle may still qualify as a zero-emission vehicle if the vehicle was subject to a prior capital cost allowance (CCA) or terminal loss claim, provided the vehicle was not acquired by the taxpayer on a tax-deferred "rollover" basis, or previously owned or acquired by the taxpayer or a non-arm's length person or partnership.
Measures Not Finalized
Changes to the Disability Tax Credit rules, Northern Residents deductions, and RRSP contribution room calculations for recipients of postdoctoral fellowship income are in progress, but the legislation for these measures has not been finalized at this time.