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2020 Year-end Tax Planning Guide for Individuals

December 15, 2020

The following year-end tax planning guide is geared towards individuals and outlines various programs and tax tips that should be considered in order to save tax. 

COVID-19 Relief Programs:

Canada Recovery Benefit (CRB)

If you are not eligible for employment insurance (EI), you may qualify for the Canada Recovery Benefit (CRB), which began on September 27, 2020, and runs until September 25, 2021. Eligible applicants can receive a taxable benefit amount of $500 per week, for up to 26 weeks. However, applicants must re-apply after every two-week period for which the support is needed. The deadline for applying for any two-week period is 60 days after the end of that period. Unlike the CERB, it will be withholding 10% in taxes on the CRB payments. Moreover, you may be required to pay back the CRB at a rate of $0.50 for each dollar of CRB received if your total income (excluding the CRB) was over $38,000 in 2020.

Canada Recovery Sickness Benefit (CRSB)

If you are employed or self-employed and you are unable to work because they are sick or need to self-isolate due to COVID-19, or have an underlying health condition that puts them at greater risk of getting COVID-19, the CRSB may provide a $500 ($450 after taxes withheld) per week taxable benefit, for up to two weeks. The CRSB is available from September 27, 2020, to September 25, 2021. Eligible applicants can submit their application after the specific claim week ends. There is an application deadline, for any one-week period, of 60 days after the end of that period.

Canada Recovery Caregiving Benefit (CRCB)

If you are self-employed and unable to work because you must care for a child under 12 years old or a family member who needs supervised care, such as their school, regular program or facility is closed or unavailable to them due to the COVID-19 pandemic, or because they are ill, self-isolating, or at risk of serious health complications due to COVID-19, the CRCB provides a $500 ($450 after taxes withheld) per week taxable benefit, for up to 26 weeks. The CRCB is also available from September 27, 2020, to September 25, 2021. Similar to the CRSB, eligible applicants can submit their application after the particular claim period ends. There is an application deadline, for any one-week period, of 60 days after the end of that period.

Family with disabilities:

One-time COVID-19 payment to persons with disabilities

Eligible individuals with disabilities are eligible for a one-time, non-taxable payment of up to $600, in recognition of the unexpected expenses incurred by these individuals during the ongoing COVID-19 health crisis.

You should automatically receive this one-time payment if you:

  • Have an existing, valid Disability Tax Credit (DTC) certificate,
  • Are eligible and apply for the DTC by December 31, 2020,
  • Were a beneficiary as of July 1, 2020, of the Canada Pension Plan Disability, Quebec Pension Plan Disability Pension, or certain disability supports provided by Veterans Affairs Canada.

Make renovations for home accessibility

Seniors and those eligible for the disability tax credit can apply for the Home Accessibility Tax Credit (HATC). The HATC is non-refundable and will provide assistance to eligible applicants with certain home renovations. The HATC equates to 15% of up to $10,000 of expenses per year towards renovations that permit these individuals to gain access to or to be more mobile or functional within their home, or reduce their risk of harm within their home or from entering their home. The HATC will apply in respect of payments made by December 31st for work performed or goods acquired in 2020. A single expenditure may qualify and be claimed for both the HATC and the medical expense tax credit.

Registered Disability Savings Plan (RDSP)

An RDSP is a long-term savings plan for people with disabilities. You may wish to have someone assist you with the application process for an RDSP.

  • For every $1 put in an RDSP account, the federal government can match with up to $3 (if your family income is below $97,069);
  • For people living on a low-income (less than $31,711), the federal government will put in $1000 each year for 20 years;
  • For people living on an income between $31,711 – $48,535 they can still receive a partial bond;
  • Anyone can contribute to an RDSP, which gives people who want to help a way to do so.
  • The money can be invested to grow. Also, the RDSP is exempt from most provincial disability and income assistance benefits, meaning it does not need to be paid back and it does not reduce disability benefits payments. People with disabilities can choose what to do with the money when it comes out, with no restrictions.

If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.

Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.

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