As we begin a new calendar year, a few things to consider:
Your January payment is the last remittance for the 2020 calendar year. Ensure you are up to date with your remittances and that it is correct to avoid showing a balance due when filing the T4 summary in February.
New 2021 payroll tax tables are now available on CRA web site and will be available for download from your accounting software by mid-January at latest. Ensure you download the new payroll tax tables for 2021 if you do your own.
Tax Free Savings Account (TFSA)
A new year means you can contribute $6,000 to your TFSA for 2021. If you have withdrawn funds from a TFSA check with your banker or accountant on rules if you want to put the funds back.
Annual filers should have received the 2020 HST filing form with the access code. Keep this handy. Beware of your filing deadline to avoid penalties and interest. If you had to pay HST installments, last payment for 2020 is due by January 31, 2021.
Employment Related Expenses
Ask your employer to sign form T2200 if you were required to pay for employment related expenses that were not reimbursed, such as car mileage, cell phone, etc.
If you are self-employed or have rental properties, now is a good time to find and summarize all your 2020 expense receipts, if you have not already done so. Note that receipts are required for all deductions, in case of audit.
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 on just your visa statements. Start your 2021 mileage log in January.
Self-employed individuals often keep poor records. If your 2020 record keeping is causing you stress now, consider setting up a proper set of books for 2021 on QuickBooks. It can be fast and easy if trained properly. You can recap 2020 too.
Ensure you backup your files regularly but also good to have a year end backup.
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.