As we approach the end of 2020, the year of the Covid pandemic, I have listed a few things to consider before the end of the year, for your 2020 personal tax return.
Visit the CRA website for the various subsidies still available to help people in need during this pandemic.
CRA Covid subsidies
Subsidies such as CERB are taxable in 2020 and you will get a tax slip in Feb/21.
Note that no tax was withheld on CERB when issued to you so any taxes owing will be payable on filing in Apr/21. Plan your cashflow for this unusual situation.
Many people who usually get a refund might owe this year due to subsidies.
Some may have cashed in RRSP’s during the year to help with cash flow. A small percentage of the RRSP is withheld for taxes but not enough. The balance will be due on filing in Apr/21.
Avoid unnecessary penalty and interest. If you were required to pay installments for 2020, ensure that this has been done. The final installment is due by Dec.15th.
The holiday season is a popular time to make donations and those made prior to Dec.31st. will qualify for a tax deduction in 2020.
You can donate your investment shares to a charity and save the capital gains tax and get a donation receipt as well. A win win. Talk to your financial advisor for more information about this act of charity and tax planning opportunity.
Capital cost allowance
If you are planning to buy a vehicle, computer or other capital item on which you plan to claim capital cost allowance, you should consider doing it now. You can claim half of the % rate allowed in the first year and deduct it in 2020.
Car expense deduction
Ensure you have a summary of your car operating expenses and a log of your business KM vs. total KM driven in 2020. Without a log you risk denial of your car expenses by CRA. Keep actual receipts as backup for your car expenses and do not rely just on your visa statements. Start your 2021 mileage log in January.
I hope you find this general information helpful. Please consult with your accountant or myself if you have any questions.
I wish everyone a joyous holiday season and a healthy and safe 2021!
This material is provided for general information and is subject to change without notice. Please consult with your professional advisor before you act on any of the above information to ensure it’s right for you.
Andre La Rosa has had a public practice for over 25 years. His office s at 31 Wright Street, Richmond Hill, across from RHCPA's parking lot.
He can be contacted by phone at 416-648-4418 or email at [email protected]