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COVID and taxes (personal income tax)

COVID and taxes (personal income tax)

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1.What are the deductible expenses for employees who have worked from home (teleworking) due to Covid-19?

EMPLOYMENT EXPENSES

It is possible to deduct them from your income if the following are applicable :

  • They are not reimbursed by the employer.
  • Have worked 50% of the time for at least 1 month from home.
  • Eligible expenses.

In addition, your employer must provide you with a T2200 form that you must give to your accountant for your employment expenses.

Eligible Expenses

  • Rent
  • Hydro
  • Home Insurance
  • Phone
  • Hospitality expenses (meals/transportation/accommodation)

Non-eligible

Expenses that were not incurred in order to earn your income.

For more details. (eligible expenses):

https://www.canada.ca/fr/agencerevenu/services/formulaires publications/publications/t4044/depenses-emploi.html#P220_10437

EMPLOYEE BENEFITS

Your employer covers your costs related to setting up your teleworking space at home. From a tax point of view, these expenses are ‘taxable benefits’. Employee benefits are added to employment income (T4).

Computer hardware/office equipment:

  • Up to $500 non-taxable.
  • The difference +$500 will be taxable.

Meal expenses:

  • Taxable.

Unless otherwise stated:

  • Max. $23 per meal (reasonable).
  • At least 2h and + in extra hours for the day.
  • Occasional overtime. 

Telephone/internet:

The portion reimbursed by the employer will not be a taxable benefit.

For more details on taxable benefits: https://www.canada.ca/fr/agence-revenu/campagnes/mise-a-jour-covid-19/prestations-credits-mesures-soutien-covid-19/avantages-fournis-employeur.html

2. Financial assistance received from the government (ECP, ERCP, etc.). The impact on my taxes?

EMPLOYMENT INSURANCE vs ECPs

  • Taxes are already deducted from your Employment Insurance, but you may have to pay taxes based on your total income for the year.
  • Taxes are not deducted from ECP, so you should expect to pay taxes on the amount you received in the year. The payable taxes will depend on your total income for the year.

You should receive your T4A statement that must be included on your personal tax return.

3. The child care centre closed and I received child care payments?

Advance payments of the Child Care Expense Tax Credit.

You may have to repay the overpayment if you received payments during the period that the child care centre was closed because of the covid-19. The estimate is approximately $700 for 7 weeks of daycare closure.

4. Tax filing deadline?

For the moment, the usual dates remain the same. The government will issue a press release if the dates are extended..

  • Individuals: April 30, 2021
  • Self-Employed: June 15, 2021
  • Incorporated companies: 6 months after year end

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