The Tax Blog for Smart Canadians

Home office expenses - extension of the temporary flat rate method

This method of claiming home office expenses was introduced for the 2020 tax year for workers who were required to work from home due to the COVID-19 pandemic.

You can only claim this deduction if you worked from home more than 50% of the time for a period of at least four consecutive weeks in 2021 due to COVID-19. You can claim $2 for each day that you worked from home during that period, plus any additional days you worked from home in 2021 due to COVID-19.

The federal government has extended the availability of this method of claiming home office expenses, and for 2021, the maximum you can claim has been enhanced from $400 (200 working days) to $500 (250 working days).

You still have the option to use the detailed method instead of the temporary flat rate method. For more details, please see last year’s tax update article.

Canada workers benefit (CWB) enhancement

The CWB is a refundable tax credit available to lower-income individuals who earned working income (employment or self-employment income). It has been enhanced by increasing the “phase out” thresholds (amount of income where the credit starts to decrease) across the board. As the income increases, the credit is reduced progressively until it is eliminated.

For example, in 2020, the credit for a single individual started to decrease with $13,194 of income; for 2021, this threshold is $22,944. For single parents and families, the credit started to decrease with $17,522 of income; for 2021, this threshold is $26,177.

The federal government also introduced the secondary earner exemption which allows the spouse or common-law partner whose working income is lower to exclude up to $14,000 of their working income in the calculation of the credit.

Combined, these measures will allow more taxpayers to be eligible for this credit.

COVID-19 benefits repayment

Repayments of COVID-19 benefits (such as EI, CERB and CRB) can be deducted for the year in which the benefit amount was received rather than the year in which the repayment was made. Normally, you can only deduct such a repayment for the year it is made.

Climate action incentive (CAI) now paid as a benefit

The CAI is a tax-free amount paid to help individuals and families offset the cost of the federal pollution pricing. It is available to residents of Alberta, Saskatchewan, Manitoba and Ontario. It consists of a basic amount and a 10% supplement for residents of small and rural communities.

The CAI was previously delivered as a refundable credit on the tax return, but starting in July 2022, it will become a quarterly benefit. Therefore, you will no longer get this credit on your tax return as it will instead be deposited in your bank account in quarterly instalments.

You still have to file your tax return to get the benefit, and if you live in a small or rural community, you have to file a Schedule 14 with your return to get the 10% supplement.

Eligible educator school supply tax credit enhancement

The Eligible educator school supply tax credit is a refundable credit targeted at teachers of elementary or secondary schools or regulated childcare facilities who paid out of pocket for supplies required for their work. Eligible educators can claim up to $1,000 of eligible supplies for the credit.

For 2021, the federal government has enhanced the tax credit rate from 15% to 25% of eligible expenditures (up to $1,000) for a maximum credit of $250.

The government has also removed the requirement that the teaching supplies be used in a school or a regulated childcare facility in order to be eligible for the credit.

Eligible educators can now also claim supplies purchased in order to teach from an online platform due to COVID-19; these include web cams, microphones, headphones, laptops and tablets (for laptops and tablets, the purchase is only eligible if they were not made available by the employer).

Quebec

Extraordinary cost of living allowance

The Quebec government will make a one-time payment of $200 per adult ($75 extra if living alone) to individuals eligible for the Solidarity tax credit for July 2021 to June 2022. The payment will be deposited in the week of January 24, 2022.

Senior assistance tax credit enhancement

The Senior assistance tax credit is a refundable credit for low-income seniors age 70 or over whose income is below a certain threshold. The maximum amount has been enhanced from $209 to $400, and the income thresholds have been increased to

• $31,575 for seniors living alone
• $54,340 for couples where both spouses are 70 years of age or older
  

Tax credit for the treatment of infertility

Due to the restoration of the medically assisted reproduction (MAR) program, there are no longer any limits on the number of cycles eligible for this refundable tax credit. In addition, the cost of artificial insemination for individuals who do not qualify for the MAR program is now eligible for this credit regardless of the woman’s age.

A person who does not have access to the services covered by the MAR program may receive assistance ranging from 80% to 20% of the eligible costs, based on their family income and family status, for a maximum of $20,000 in eligible expenses annually. This tax credit represents a maximum annual assistance of $16,000 to $4,000 depending on the applicable rate.

Tax credit for childcare expenses enhancement

Under a temporary measure, individuals receiving employment insurance benefits, the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB), the Canada Recovery Caregiving Benefit (CRCB) or the Canada Worker Lockdown Benefit (CWLB) can now claim this refundable tax credit

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