April 16, 2021 by David Christianson
Well, we are halfway through April (and apparently halfway through winter) and the Canada Revenue Agency has not announced any extension to the April 30 tax filing deadline.
With the third wave of Covid infections causing lockdowns in Canada’s most populous provinces, that’s a bit of a surprise. However, I guess it’s time to give up hope, stop stalling and file your 2020 tax return, if you have not already.
Herewith, we provide a convenient checklist, a list of new or improved tax benefits and credits and a reminder that you have to provide details of any real estate sale you made in 2020, even if it was a tax-free sale covered under your principal residence exemption.
First, a reminder that you must report all of your income. Seems elementary, but this you may be more challenging, with Covid benefits and other unusual amounts in 2020.
My first suggestion is start by reviewing last year’s tax return and reminding yourself of all the sources of income. Then think through anything new that might’ve come your way this year.
Also set yourself up on CRA’s online MyAccount service, and you can review all of the tax slips that have been provided to CRA with your name on them. This is a great way to make sure that you’ve accounted for everything for which the Taxman will be looking.
If you are one of the record number of people who sold your home in 2020, you must report the details on Form T2091 if you want to claim your Principal Residence Exemption (PRE) and make the gain on the sale tax-free. If you don’t file this form, you could be denied the PRE and even assessed a late filing penalty of up to $8,000. There’s no benefit to any of that.
If you sold a rental property, then you would claim that on Schedule 3, then transferring 50% of the gain to line 12700. If you buy and sell property as your business, however, you must claim all gains as your gross business income.
By the way, “first time” home buyers (not owned a home in previous four years) can claim a credit on $5,000 of income if they purchased a home.
Here’s a partial list of items that are new or improved for 2020:
Other benefits, deductions or credits that can be missed include:
This list is not exhaustive but will hopefully help motivate you to get that tax return filed.
After all, it beats shoveling snow!
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Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.
Please consult legal, tax, insurance and investment experts for advice on your unique situation.
David Christianson, BA, CFP, R.F.P., TEP, CIM is recipient of the FP Canada™ Fellow (FCFP) Distinction, and repeatedly named a Top 50 Financial Advisor in Canada. He is a Senior Wealth Advisor & Portfolio Manager with Christianson Wealth Advisors at National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.