With approximately six weeks left to file your 2020 income tax return, it is important for British Columbians to understand the tax changes that may affect their tax filing. Due to the COVID-19 pandemic, the 2020 tax year may be very different for some British Columbians, particularly those who have received government benefits.
Here are the key changes British Columbians should watch out for when filing their income tax return:
1. Taxable Emergency Benefits
British Columbians are reminded that both the Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB) should be considered personal income and recipients would have to pay applicable taxes on these benefits. CERB and CESB recipients in B.C. who earned higher than $10,949 can expect to owe taxes on these supports as no tax was withheld at source; and even though 10 per cent was withheld for the second round of benefits, recipients may still be responsible for paying additional taxes.
Anyone who received emergency benefits will receive a T4A or T4E tax reporting slip from the government. If you received benefits that have already been taxed at 10 per cent, you should note the dollar amount of these taxes (located in Box 022 of your T4A slip) and include this amount in line 43700 (total income tax deducted) of your personal income tax filing.
2. Non-taxable Emergency Benefits
While the benefits mentioned above are taxable, there have been some provincial and federal emergency benefits that do not require the recipient to pay tax, including the following:
- B.C. Recovery Benefit: A one-time, tax-free payment of up to $1,000 for eligible families and single parents and up to $500 for eligible individuals. Applications are open until June 30, 2021.
- B.C. Emergency Benefit for Workers: A one-time, tax-free payment of $1,000 for BC residents whose ability to work has been affected due to COVID-19.
- Canada Child Benefit: The amount of this benefit increased in July 2020 and the federal government also provided a one-time top-up of $300 per child in May of 2020. Parents who did not receive these funds can still apply to do so.
- Seniors Payment: A one-time, tax-free payment of up to $500 for those 65 and over.
3. Work-from-Home Expenses
British Columbians can claim up to $400 in remote working expenses with the CRA’s new temporary flat-rate method. The temporary flat-rate method does not require employees to keep track of any expenses or submit any forms from their employer. Anyone who worked more than half of the time from home for a period of at least four consecutive weeks in 2020 due to COVID-19 is eligible for the temporary flat-rate method of $2 per day.
For those who incurred significant remote working expenses, they can claim using the traditional method. Using this method, employees may be eligible to receive funds beyond the $400 maximum for the temporary flat-rate method, but it will require a signed Form T2200(S) or T2200 from their employer as well as other details.
As British Columbians prepare to file their tax returns, it is also important to stay aware of potential fraudulent activity. To help British Columbians navigate through the tax season safely, CPABC is hosting a virtual Fraud Protection session on March 24, 2021 at noon as a free public service. More information can be found on our registration page.