If you are earning income, you know that the tax filing season is around the corner and you need to account for every single dollar that you have earned.

After accounting for every Canadian dollar that you have earned, you need to list all your relevant expenses for tax purposes, subtract them from your income and calculate your tax liability. Whether you are a juristic person or a natural person this applies to you.

Last year, the government announced increases to the basic personal amount for 2020 and subsequent years beyond the normal inflationary adjustment. Learning about these changes will help dearly in filing your tax return this year.

We know that not paying your taxes can get you into serious trouble with the government. You can actually go to jail for it. It’s a good practice to pay your taxes and in time, that’s what a good citizen does.

What is the tax filing deadline ?

The government has extended the tax filing period for personal returns and owing balances because of the coronavirus outbreak. The deadline for the year 2019 filing was supposed to be 30 April 2020 but was extended to 1 June 2020, for personal tax payers. For self employed taxpayers it was adjusted to 15 June 2020.

The deadline has been increased by a month for personal taxpayers and over a month for self employed taxpayers. Because of the coronavirus scare, the deadlines may be increased but we will have to be in the look for that.

If you are owing any balance on your 2019 returns you have until 31 August 2020 to pay the remainder of the outstanding balance. That is four months from the initial deadline of 30 April 2020. Interest may be incurred if you pay later than 31 August 2020 for the 2019 year of assessment.

Income Tax Table for Individuals

  • 15% on the first $48,535 of taxable income, plus
  • 20.5% on the next $48,534 of taxable income (on the portion of taxable income over 48,535 up to $97,069), plus
  • 26% on the next $53,404 of taxable income (on the portion of taxable income over $97,069 up to $150,473), plus
  • 29% on the next $63,895 of taxable income (on the portion of taxable income over 150,473 up to $214,368), plus
  • 33% of taxable income over $214,368

Each province also has its own set of provincial tax brackets. Most of which have also been indexed to inflation, however, using their respective provincial indexation factors.

Basic Personal Amount Tax Filing

For the purpose of affordability of all needs to all Canadians, the federal government puts emphasis on not imposing any taxation on the specific amount of income that individuals earn.

For the 2019 year of assessment $12,069.00 is the maximum amount that a person needs to earn to exempt from tax filing.

Individuals will need to earn up to this amount before they can get taxed. For each assessment the BPA is indexed to inflation, however, exceptions are made by the government to adjust the amount year to year.

The government aims to increase the BPA to $15,000 in 2023, the year of assessment ,of which it will increase by 23% from date. With the basic personal amount for the fully employed, the government says that it will translate to lower tax costs for more than 20 million Canadians in 2023.

This will save Canadians $300 in additional taxes. It would also relieve an additional 1.1 million Canadians from paying any federal tax. The cost of the increase to the BPA is projected to be $25.2 billion over the next five years.

Enhanced CPP Contributions

You can now claim a deduction for any enhanced contributions to the Canada Pension Plan (CPP) or the Quebec Pension Plan. From last January employees were required to contribute 0.15% of their pensionable earnings.

The maximum annual contribution amounted to $80.00. These contributions resulted in non-refundable tax credit and as such can be claimed as a tax deduction. They must not be confused for a tax credit and can only be claimed for a reduction when calculating your tax liability.

Canada Workers Benefit

This is a tax credit for individuals and families who earned below certain thresholds. It includes those families and individuals that were in the world force during the tax filing period.

Working income tax benefits, gives out tax credit for 2 thresholds to those who earned $12,820 or less and those who earned not more than $17,025.

There are maximum benefits attached to these thresholds:

  • Maximum benefit of $1,335 for individuals who earned $12,820 or less during the assessment
  • Maximum benefit of 2,335 for individuals who earned not more than $17,025.

Those who are enrolled in a full-time education program are not eligible for this tax benefit.

Home Buyers’ Plan

For the 2019 tax filing assessment, the home buyers plan withdrawal limit has increased massively from $25,000 to $35,000 for withdrawals made after March 2019.

This is a 40% increase from the previous year. For the first time, if you are a home buyer, you can claim a $5,000 tax credit if you have purchased your new home in the current year of assessment.

This is definitely not something that can be overlooked.

Cannabis as a Medical Expense

If you are authorized by the government to produce Cannabis you can make claims for tax filing purposes as medical expense tax credit. Only certain Cannabis products are allowed for medical expense tax credit.

Climate Action Incentive

This incentive will be earned depending on the province you live in. If you are a resident in Ontario, you will receive an increase in incentives compared to the previous tax season.

If you are a resident in New Brunswick you will not benefit from this incentive as this doesn’t apply to you. However, if you are a resident in Alberta you can benefit from this incentive for the first time.

Employees Insurance Premiums

The employees insurance premiums has decreased from 1,62% to 1.58% for the year of assessment. The employer will contribute 1,42 times the amount that the employee will be paying.

Conclusion

It is your duty as a taxpayer to understand these tax benefits so that you can take advantage of them. Best way to go about your tax returns is to gather every information that you need to make a tax credit or reduction.
Keep checking the news to get updates on coronavirus as it might further interrupt your 2020 tax filing.

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