What’s New for 2021 T1 Tax returns?
As practicing CPAs, we need to be updated with the changes made by either government or CRA towards businesses. We have to be very active as our one mistake can make millions of dollars loss for the client. Let’s understand what CRA changes in 2021’s T1 return filling program.
Here we mention some changes to keep in mind for the busy tax season.
1. Electronic communication with the CRA
To digitalize the touch, the 2021 budget proposed to send notice of assessment digitally without the taxpayer’s authorization. It will apply to those individuals who are either filing their tax returns electronically themselves or taking help from a tax preparer. It won’t affect individuals who file T1 return to CRA in paper format.
Home Office Expenses: The guidelines issued to employees last year who are working from home due to COVID-19 are extended, and this deduction will be available to them. There are two methods for computing deductions from home office expenses – Temporary flat rate method & detailed method
2. Employer-provided benefits and allowances:
a. Commuting cost: If the employee continues to perform their employment duties at the office and the employer provides the commuting cost reimbursement during a pandemic, then this reimbursement will not include the additional income.
Suppose the employee is working from home and has to travel for transferring the necessary equipment, and the employer provides a motor vehicle or an additional amount. In that case, CRA will not charge the additional amount into the employee’s income.
b. Home office equipment: Any amount reimbursed by the employer to the employee for computer and home office equipment for performing their duties is out of taxable income by CRA up to $500 per employee. If the amount reimbursed by the employer is more than $500, then the excess amount beyond $500 will be added to the employee’s income.
c. Meal cost: If the meal cost of an employee is paid or reimbursed by the employer at the regular place of employment, then the amount paid by the employer is added to the employee’s income as a taxable allowance.
3. Climate Action Incentive (CAI):