Earned a small amount of income? Here’s why you should still file a return.

Here’s 5 reasons why you should still file a return, no matter how much income you earned this year.

1. The basic personal amount: a tax credit for every Canadian.

Every Canadian resident is entitled to claim the basic personal amount, a tax credit which reduces the amount of tax you owe. Beginning in 2020, the amount you can claim will depend on your income. However, as long as you earned less than $150,473, you’ll be able to claim the maximum amount of $13,229. This means if you’re reporting less than $13,229 in income, you won’t owe federal taxes this year. You can also claim a corresponding provincial basic personal amount – the amount you’ll receive for this tax credit depends on which province or territory you live in.

2. The Canada employment amount: another tax credit.

You can claim the Canada employment amount if you reported employment income for the year (even if it wasn’t a lot). This amount is designed to help Canadians with some of their work-related expenses such as uniforms, home computers, and supplies they needed to do their job.

In 2020, you’ll be able to claim $1,245 or the total of the employment income that you reported on your return (whichever amount is less). If you’re a resident of the Yukon and you’re eligible for the federal amount, you can also claim an additional $1,245 against your taxes!

Keep in mind, you won’t be able to claim this credit if you’re only reporting self-employment income. You’ll need to report income from a T4 slip to be eligible for the Canada employment amount.

3. You can claim even more provincial tax credits.

The government needs the information from your return to confirm your eligibility for federal benefits like the Canada Child Benefit (CCB) and the GST/HST Credit, as well as provincial benefits like the BC Recovery Benefit and the Ontario Trillium Benefit. If you don’t file a return, you’ll miss out on these payments.

4. Lower the taxes you owe through payroll deductions.

Your employment income is subject to deductions every time you get paid (whether that’s weekly, monthly, or any other frequency). If you’re between the ages of 18 and 65, these deductions include Canada Pension Plan (CPP) or, if you’re a Québec resident, Québec Pension Plan (QPP) premiums. Your payroll deductions also include Employment Insurance (EI) premiums, which all employed Canadians pay, regardless of their age. However, you can claim a non-refundable credit both federally and provincially for these contributions, to lower the taxes you owe!

As a bonus, when you add the amount of your EI contributions and CPP/QPP contributions to the basic personal amount, it increases the amount of income you’ll need to earn before you owe taxes.

5. Build up your RRSP contribution room.

Even if you only earned a small amount of employment income, filing your return builds your future RRSP contribution room. Your RRSP contribution room is increased by 18% of the earned income you report on your tax return. For example, if you report $10,000 of employment income on your 2020 return, you’ll be able to contribute $1,800 more to your RRSP the following year. Even if you don’t want to contribute to an RRSP right now, the extra $1,800 you can contribute might be useful in the future.

What’s new for Canadian taxes in April 2021.

Revenu Québec extended the deadline to pay taxes owing.

If you’re a Québec resident who owes the provincial government money this year, the deadline to pay your balance is now May 31, 2021. This means Revenu Québec won’t charge late-filing penalties or add interest to the amount you owe until June 1, 2021.

Keep in mind, if you received Employment Insurance (EI) benefits or COVID-19 emergency benefits in 2020 and your taxable income was less than $75,000, you won’t have to pay the taxes you owe until April 30, 2022. You still need to file your return by your filing deadline to avoid late-filing penalties.

Revenu Québec will accept electronic signatures on these tax forms from now on.

To make filing your Québec return more convenient, from now on, Revenu Québec will accept electronic signatures for the following forms (no more paper copies needed):

New subscriptions that qualify for the digital news subscription tax credit.

The CRA added over 100 news subscriptions you can claim for the digital news subscription tax credit. To read the full list of eligible subscriptions, visit the CRA website.

2021 federal budget: more benefits, new taxes, and more.

The 2021 federal budget was announced on April 19, 2021. It includes extended COVID-19 emergency benefits, new tax credits, and new taxes. To learn more about the proposed changes, check out this blog.

2021 British Columbia budget: delayed credits, extended credits, and repaying COVID-19 emergency benefits.

The 2021 provincial budget for British Columbia was announced this month. The following changes might impact your tax situation.

Raising the climate action tax credit has been postponed.

The climate action tax credit increase that was scheduled for July 2021 to June 2022 has been delayed until July 2022 to June 2023, because the increase of the carbon tax has also been delayed.

This means for now, you’ll still receive $174 for you and your spouse, and $54 for each of your children (as applicable). Between July 2022 and July 2023, this will be raised to $193.50 for each adult and $56.50 for each child in your household.

Some tax credits have been extended.

The following tax credits have been extended:

You might not have to repay your B.C. emergency benefit for workers.

If you earned at least $5,000 in gross self-employment income (the amount you made before deducting your work-related expenses), you might not have to repay the B.C. emergency benefit for workers anymore.

2021 Manitoba budget: lower education property taxes and more credits.

Here are some changes from the 2021 provincial budget for Manitoba announced this month.

New property tax rebates.

Starting June 2021, you’ll receive the new education property tax rebate before your property tax bill is due every month, to lower the amount you need to pay out of your own pocket. You’ll receive this rebate automatically if you own a home in Manitoba.

This new rebate means the amount you can claim for some of the provincial property tax credits will be lower when it’s time to file your 2021 return:

Tax credit and rebate reductions20202021
Manitoba education property tax credit (EPTC) and advanceUp to $700Up to $545
Seniors education property tax creditUp to $400, minus 1% of your family’s net incomeUp to $300, minus 0.75% of your family’s net income
Seniors school tax rebate (based on the total you receive for the basic and seniors school tax credit)Up to $470, minus 2% on your family’s net income over $40,000Up to $353, minus 1.5% on your family’s net income over $40,000

The farmland school tax rebate will also be lowered from 80% to 60%, meaning you’ll now receive up to $3,750 for this rebate.

If you own commercial property, you’ll receive a 10% rebate of the total school division levy and education support levy.

The new teaching expense tax credit.

The teaching expense tax credit is a new refundable credit for teachers in Manitoba. Like the federal eligible educator school supply tax credit, you can claim 15% of your eligible supplies worth up to $1,000, for a refund of up to $150.

The same supplies that are eligible for the federal educator school supply tax credit are eligible for the Manitoba teaching expense tax credit. This means you can claim what you paid for items like construction paper, flashcards, and art supplies.

Changes to provincial tax credits.

The following credits are now permanent:

The following credits have been extended until December 31, 2022:

  • The cultural industries printing tax credit; and
  • The community enterprise development tax credit.

The highest eligible investment for the small business venture capital tax credit has been raised from $400,000 to $500,000, increasing the highest credit you can receive from $67,500 to $120,000.

Retail sales tax added to more services.

As of December 1, 2021, the retail sales tax will be paid on:

  • Booking fees charged by online accommodation platforms like Airbnb; and
  • Personal services such as hair services, non-medical skin care and aesthetician services, body modifications, and spas.

2021 Québec budget: support for seniors and corporate tax changes.

The 2021 Québec budget included the following changes which might impact your tax situation.

Changes to the tax credit for home support services for seniors.

Beginning in 2022, the Québec tax credit for home support services will gradually increase, while the highest amount of income you can earn to be eligible for this credit will gradually decrease.

Here’s how these changes will be made:

202120222023202420252026
Non-dependent Seniors
Tax credit rate35%36%37%38%39%40%
1st income reduction threshold*$60,135$61,155$62,195$63,250$64,325$65,420
1st reduction rate3%3%3%3%3%3%
2nd income reduction thresholdN/A$100,000$101,700$103,430$105,190$106,980
2nd reduction rateN/A7%7%7%7%7%
Dependent Seniors
Tax credit rate35%36%37%38%39%40%
Income reduction threshold*$60,135$61,155$62,195$63,250$64,325$65,420
Reduction rate3%3%3%3%3%3%

* The highest income you can earn while being eligible for this credit.

Starting immediately, seniors living in an apartment can now claim up to $1,200 for their monthly rent (the previous limit was $600). If they’re 70 or older, the lowest monthly rent they can claim for this credit is now $600. This means that even if their actual rent is lower than $600 per month, they’ll be able to claim $600 on your return.

Also beginning in 2022, seniors living in an apartment who don’t apply for this credit on their return will automatically receive it! The amount they receive will be based on the minimum eligibility requirements, not their actual tax situation.

Lower small business tax rate.

As of March 21, 2021, the small business tax rate will be lowered from 4% to 3.2% on the first $500,000 of business income. The dividend tax credit for non-eligible dividends has also changed, with the gross-up rate lowered from 4.01% to 3.42% for non-eligible dividends received after 2021.

Other corporate tax measures.

Other corporate tax measures were also announced, including:

2021 Saskatchewan budget: more credits for families, lower taxes for small businesses.

The 2021 provincial budget for Saskatchewan was announced this month, including the following changes.

The active families benefit is back.

The active families benefit is back. This is a refundable tax credit meant to help families pay for their children’s activities, beginning in January 2021.

Like before, families whose yearly household income is less than $60,000 can claim up to $150 (or $200 for children with disabilities) for fees to register in cultural activities, recreational activities, or sports. Be sure to keep your receipts!

New Saskatchewan home renovation tax credit.

The Saskatchewan home renovation tax credit is designed to make the improvements you need for your home more affordable. You can claim expenses for home renovations that began in October 2020 on your 2021 tax return.

Saskatchewan technology start-up incentive extended.

The Saskatchewan technology start-up incentive has been extended until 2026. This is a non-refundable tax credit for Saskatchewan-based individuals or businesses who invest in early-stage technology start-ups, worth up to 45% of the amount they invested.

Raising the small business tax rate.

The small business tax rate was lowered to zero in October 2020. It will be raised to 1% on July 1, 2022, and raised again to 2% on July 1, 2023.

How COVID-19 benefits might affect your taxes this year.

Tax interest relief

The Canada Revenue Agency (CRA) and Revenu Québec won’t charge interest on the taxes you owe from your 2020 return until April 30, 2022.

You’re eligible for this interest relief if your taxable income is less than $75,000 and you received any of the following emergency benefits in 2020:

  • Canada Emergency Response Benefit (CERB)
  • Canada Emergency Student Benefit (CESB)
  • Canada Recovery Benefit (CRB)
  • Canada Recovery Caregiving Benefit (CRCB)
  • Canada Recovery Sickness Benefit (CRSB)
  • Employment Insurance (EI) benefits
  • Incentive Program to Retain Essential Workers (IPREW)
  • Similar provincial emergency benefits

You’ll still need to file your return by April 30, 2021 to avoid late filing penalties.

Federal COVID-19 relief measures

Tax-free COVID-19 relief measures

Some of the federal emergency benefits for individuals and families were tax-free. You won’t be taxed on the following amounts:

  • An extra Canada Child Benefit (CCB) payment
  • An extra payment because of a disability
  • An extra payment of the GST/HST credit
  • An extra payment of the Old Age Security (OAS) pension

Canada Emergency Response Benefit (CERB)

What’s this?

CERB provided temporary income support to employed and self-employed Canadians who lost their income due to COVID-19. This includes employed, self-employed, wage earners, and contract workers. CERB provided a payment of $2,000 per month for 7 months.

How will it affect my taxes?

You’ll need to pay tax on your CERB payments when you file your return. This benefit will be included in your income for 2020, so it might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

If you received your CERB payments from the CRA, you’ll find this amount in box 197 of your T4A slip. If you received your CERB payments from Service Canada, this amount will be included with your regular Employment Insurance (EI) benefits in box 14 on your T4E slip. If you’re a resident of Québec, you’ll find this amount in box O of your RL-1 slip. You’ll need to report these amounts when you prepare and file your return.

If you received CERB payments but later found out you weren’t eligible for the benefit, you’ll need to return or repay the amount you were given. If you repaid your CERB amounts before December 31, 2020, you won’t need to pay tax on them when you file your return.

In February 2021, the Government of Canada announced that fewer self-employed Canadians need to repay the CERB amounts they received. Check out this blog on what you need to know about repaying COVID-19 benefits to learn more.

Temporary changes to the Employment Insurance (EI) program

What’s this?

Many Canadians received EI benefits once their CERB payments ended. To make it easier for more Canadians to access their benefits, the federal government made temporary changes to the EI program.

How will it affect my taxes?

EI benefits are taxable. But don’t worry – you’ll receive a T4E slip, or a T4E(Q) slip if you’re a resident of Québec, showing the employment insurance you received or repaid this year, and that will help you figure out how much tax you owe.

Keep in mind, EI benefits are also subject to a clawback, meaning that if your net income is more than $67,750, you’ll need to repay a portion of your EI benefits to the CRA.

Canada Emergency Student Benefit (CESB)

What’s this?

The CESB provided temporary income support to post-secondary students and recent graduates who couldn’t find work due to COVID-19. The CESB provided $1,250 per month for 4 months. Students who had a disability or dependants could also get an extra $750 per month.

How will it affect my taxes?

You’ll need to pay tax on your CESB payments when you file your return. This benefit will be included in your income for 2020, so it might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

You’ll find this amount in box 198/199 of your T4A slip. If you’re a resident of Québec, you’ll find this amount in box O of your RL-1 slip. You’ll need to report this amount when you prepare and file your return.

If you received CESB payments but later found out you weren’t eligible for the benefit, you’ll need to return or repay the amount you were given. If you repaid your CESB amounts before December 31, 2020, you won’t need to pay tax on them when you file your return. Check out this blog on what you need to know about repaying COVID-19 benefits to learn more.

Canada Recovery Benefit (CRB)

What’s this?

The CRB provides income support to employed or self-employed Canadians who don’t qualify for Employment Insurance (EI) benefits. The CRB provides $1,000 every 2 weeks, for up to 38 weeks. This benefit is still open for applications.

How will it affect my taxes?

This benefit is subject to 10% tax withholding. This means 10% was sent to the CRA before you received it, which reduces the amount of taxes you owe.

The CRB is also subject to a clawback, meaning that if your net income is more than $38,000, you’ll need to repay a portion of your benefit to the CRA.

You’ll find this amount in box 202 of your T4A slip. If you’re a resident of Québec, you’ll find this amount in box O of your RL-1 slip. You’ll need to report this amount when you prepare and file your return.

Canada Recovery Sickness Benefit (CRSB)

What’s this?

The CRSB provides income support to employed or self-employed Canadians who can’t work because they’re sick or need to self-isolate, or because they have an underlying health condition that puts them at greater risk of getting COVID-19. The CRSB provides $500 per week, for up to 4 weeks. This benefit is still open for applications.

How will it affect my taxes?

This benefit is subject to 10% tax withholding. This means 10% was sent to the CRA before you received it, which reduces the amount of taxes you owe.

You’ll find this amount in box 203 of your T4A slip. If you’re a resident of Québec, you’ll find this amount in box O of your RL-1 slip. You’ll need to report this amount when you prepare and file your return.

Canada Recovery Caregiving Benefit (CRCB)

What’s this?

The CRCB provides income support to employed or self-employed Canadians who can’t work because they need to care for a family member, including family members who need supervision if they’re under the age of 12 and their school is closed, or because they’re sick and need to self-isolate due to COVID-19. The CRCB provides $500 per week for up to 38 weeks. This benefit is still open for applications.

How will it affect my taxes?

This benefit is subject to 10% tax withholding. This means 10% was sent to the CRA before you received it, which reduces the amount of taxes you owe.

You’ll find this amount in box 204 of your T4A slip. If you’re a resident of Québec, you’ll find this amount in box O of your RL-1 slip. You’ll need to report this amount when you prepare and file your return.

Alberta COVID-19 relief measures

Emergency Isolation Support

What’s this?

This relief measure provided income support to employed and self-employed Albertans who couldn’t work because they needed to self-isolate, or because they needed to care for a dependant who was self-isolating. Eligible workers received a one-time payment of $1,146.

How will it affect my taxes?

You’ll need to pay tax on the Emergency Isolation Support when you file your return. This support payment will be included in your income for 2020, so it might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

You’ll find this amount in box 200 of your T4A slip. You’ll need to report this amount when you prepare and file your return.

Working Parents Benefit

What’s this?

This is a one-time payment of $561 per child for families who paid for childcare so that they could continue working during the pandemic and whose annual household income is less than $100,000. Applications are open on the provincial government website until March 31, 2021. Keep in mind, if you incurred your childcare expenses while collecting CERB or EI benefits, you won’t be eligible for this benefit.

How will it affect my taxes?

This benefit is tax-free, but the amount you receive for the Working Parents Benefit will lower the amount you can claim for childcare expenses on your 2020 return. If you’ve already filed your 2020 return but want to apply for this benefit, you’ll need to request a change to your return.

Critical Workers Benefit

What’s this?

This is a one-time payment of $1,200 for eligible frontline workers. If you work in public healthcare, social services, or education, you’ll receive this benefit automatically. If you work in the private sector or in a First Nations community, your employer has to apply for this benefit on your behalf. Applications are open on the provincial government website until March 19, 2021.

How will it affect my taxes?

These support payments will be subject to payroll deductions (including tax and EI deductions) if you receive them. You’ll find this amount included with your regular salary on your T4 slip. You’ll need to report this amount when you prepare and file your return.

Keep in mind that these support payments will be included in your income for 2020, so they might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

British Columbia COVID-19 relief measures

Tax-free COVID-19 relief measures

Some of the emergency benefits for individuals and families offered in British Columbia were tax-free. You won’t be taxed on the following amounts:

  • B.C. Emergency Benefit for Workers
  • B.C. Recovery Benefit
  • An extra payment of the B.C. Low-Income Climate Action credit
  • A temporary increase of the B.C. Seniors Supplement

Temporary pandemic pay

What’s this?

Between March 15 and July 4, 2020, eligible frontline workers (such as nurses or other hospital staff) were paid an extra $4/hour for the straight-time and overtime hours they worked. This amount was paid as a lump sum.

How will it affect my taxes?

These support payments were subject to payroll deductions (including tax and EI deductions) when you received them. You’ll find this amount included with your regular salary on your T4 slip. You’ll need to report this amount when you prepare and file your return.

Keep in mind that these support payments will be included in your income for 2020, so they might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

Manitoba COVID-19 relief measures

Tax-free COVID-19 relief measures

The Disability Economic Support Program was a tax-free benefit. If you received the one-time payment of $200 in June 2020, you won’t be taxed on this amount.

Manitoba Risk Recognition Program

What’s this?

Eligible frontline workers (such as staff at supermarkets or gas stations) who worked at least 200 hours between March 20, 2020 and May 29, 2020 received a one-time payment of $1,515 before taxes.

How will it affect my taxes?

This benefit was subject to 10% tax withholding. This means 10% was sent to the CRA before you received it, which reduces the amount of taxes you owe.

You’ll find this amount in box 200 of your T4A slip. You’ll need to report this amount when you prepare and file your return.

New Brunswick COVID-19 relief measures

New Brunswick Workers Emergency Income Benefit

What’s this?

Eligible workers received a one-time payment of $900 as temporary income support between the time they lost their job or closed their business after March 15, 2020 and the time CERB payments started.

How will it affect my taxes?

You’ll need to pay tax on this benefit when you file your return. This benefit will be included in your income for 2020, so it might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

You’ll find this amount in box 200 of your T4A slip. You’ll need to report this amount when you prepare and file your return.

Newfoundland and Labrador COVID-19 relief measures

There were no provincial relief measures offered to individuals and families in Newfoundland and Labrador.

Nova Scotia COVID-19 relief measures

Provincial relief measures offered to individuals and families in Nova Scotia will not affect tax returns.

Ontario COVID-19 relief measures

Tax-free COVID-19 relief measures

Some of the emergency benefits offered to individuals and families in Ontario were tax-free. You won’t be taxed on the following amounts:

  • Support for Families program
  • Support for Learners program

Temporary pandemic pay

What’s this?

Between April 4 and August 13, 2020, eligible frontline workers (such as nurses or other hospital staff) were paid an extra $4/hour by their employer. This amount could have been paid as a lump sum or added to their hourly wages.

How will it affect my taxes?

These support payments were subject to payroll deductions (including tax and EI deductions) when you received them. You’ll find this amount included with your regular salary on your T4 slip. You’ll need to report this amount when you prepare and file your return.

Keep in mind that these support payments will be included in your income for 2020, so they might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

Prince Edward Island COVID-19 relief measures

Tax-free COVID-19 relief measures

Some of the emergency benefits offered to individuals and families in Prince Edward Island were tax-free. You won’t be taxed on the following amounts:

  • Temporary Rental Assistance Benefit
  • Employee Gift Card Program

COVID-19 Income Support Program

What’s this?

The COVID-19 Income Support Program provided up to $750 for workers who were laid off due to COVID-19, $250/week for workers who kept their jobs but with reduced hours, and up to $500/week for self-employed workers.

How will it affect my taxes?

You’ll need to pay tax on any support payments you received when you file your return. This benefit will be included in your income for 2020, so it might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

You’ll find this amount in box 200 of your T4A slip. You’ll need to report this amount when you prepare and file your return.

COVID-19 Support for Essential Workers

What’s this?

Eligible essential workers who earned less than $3,000/month (or $18.75/hour) could receive a one-time payment of $1,000. Their employer needed to apply for this benefit on their behalf.

How will it affect my taxes?

This support payment was subject to payroll deductions (including tax and EI deductions) when you received it. You’ll find this amount included with your regular salary on your T4 slip. You’ll need to report this amount when you prepare and file your return.

Keep in mind that these support payments will be included in your income for 2020, so they might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

Québec COVID-19 relief measures

Incentive Program to Retain Essential Workers (IPREW)

What’s this?

This program provided temporary income support to essential workers in Québec. If you qualified, you earned $100 per week for up to 16 weeks in addition to your regular wages.

How will it affect my taxes?

You’ll need to pay tax on any IPREW payments you received when you file your return. This benefit will be included in your income for 2020, so it might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

You’ll find the amount you need to report in box O-5 on your RL-1 slip. You’ll need to report this amount when you prepare and file your return.

Farm Worker Bonus

What’s this?

This program provided temporary income support to farmers in Québec. If you qualified, you earned $100 per week for up to 16 weeks in addition to your regular wages.

How will it affect my taxes?

You’ll need to pay tax on any Farm Worker Bonus payments you received when you file your return. This benefit will be included in your income for 2020, so it might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

You’ll find this amount in box O-5 on your RL-1 slip. You’ll need to report this amount when you prepare and file your return.

Saskatchewan COVID-19 relief measures

Self-Isolation Support Program

What’s this?

This emergency benefit provided temporary income support to employed or self-employed individuals in Saskatchewan who couldn’t work because they needed to self-isolate due to COVID-19. Eligible workers received $450/week for a maximum of 2 weeks.

How will it affect my taxes?

You’ll need to pay tax on the support payments you received when you file your return. This benefit will be included in your income for 2020, so it might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

You’ll find this amount in box 200 of your T4A slip. You’ll need to report this amount when you prepare and file your return.

Temporary Wage Supplement

What’s this?

Between March 15 and July 4, 2020, eligible home care workers (such as attendant care workers, cooks, or janitors) received an extra $400/month if their regular wages were less than $24/hour. Between November 19, 2020 and January 13, 2021, eligible home care workers received an extra $400/month, no matter what their regular wages were.

How will it affect my taxes?

You’ll need to pay tax on the Temporary Wage Supplement when you file your return. This benefit will be included in your income for 2020, so it might make your total income higher than last year. This means you could find yourself in a different tax bracket and you could have to pay more tax this year than you did last year.

You’ll find this amount in box 200 of your T4A slip. You’ll need to report this amount when you prepare and file your return.