It is important for all Canadians to file their income tax returns whether they have any outstanding balance or not. If you don’t have any balance to pay it to the CRA, still you need to submit your income tax return as there are certain benefits and tax credits which are entitled to you and you will receive only if you file on time.
COVID-19 Benefits And Your Taxes
COVID-19 benefits are all taxable and if you received any income under CERB, CRB, or any other provincial or territorial COVID-19 benefits, you need to report such income in your income tax return. You will receive T4A slips against your COVID-19 benefits. You will receive all such slips from the CRA before March 10, 2021. You can also download such slips from the CRA My Account.
If you have any balance owing for your 2020 taxes and you have received any COVID-19 benefits, you can be eligible for the interest relief provided that you submit your taxes before the due date and your total taxable income was $75,000 or less. If you meet all eligibility criteria, the CRA will automatically apply for interest relief on your 2020 taxes owing. This can be a great relief by the CRA as you will not have to pay interest on any amount owing from your 2020 taxes until April 30, 2022.
2020 Income Tax Package
The CRA has made many changes to the 2020 income tax package to facilitate taxpayers. These changes have been made to not only facilitate taxpayers but and to make the tax structure less complex.
If you worked from home in 2020 due to COVID-19, you can claim up to $400 without any receipts provided you meet the criteria of working at home for at least 04 consecutive months. The CRA has also increased tax credit amounts under various categories and your tax software will calculate your eligible tax credits based on the new changes of the 2020 income tax package.
Before filing your income tax return with the CRA, you need to make sure that your personal information is updated and you have successfully set up your direct deposit to get payments and refunds faster. You should be well aware of your entitlements, rights, and tax obligations. The CRA expects you to pay the correct amount that is required under the law; no more and no less than the correct amount.
If you feel that the CRA has not assessed your income tax correctly in determining your tax liability and tax credits, you have the right to go for a formal review and then an appeal.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.