Tax-filing season started on Feb. 22, 2021, with April 30 set as the deadline for individual taxpayers (Getty Images/izusek)
It’s tax season again. Barring a government announcement, the majority of Canadians will have to meet their tax-filing obligations by April 30.
CPA Canada has received feedback from tax preparers—mostly small- and medium-sized firms—that a filing extension is needed for T1s. These concerns have been communicated to senior officials at the Canada Revenue Agency (CRA) and Finance Canada. But, as it now stands, there appears to be no reason to expect that there will be a filing extension for T1 returns. For the latest on where things stand, see our Canadian tax news and COVID-19 updates page.
In addition, CPA Canada also highlighted the discrepancy between individual taxpayers meeting the April 30 deadline and a tax preparer’s ability to do the same. “Tax preparers are predicted to be busier than usual this year,” says Bruce Ball, FCPA, vice-president of taxation at CPA Canada. “Some members are behind in their work due to pandemic assistance applications, some have lost resources due to the pandemic and social distancing/remote work is also impacting their tax preparation practice.”
For taxpayers planning to file their own personal taxes, the process may be a little different this year, especially if you were one of the millions of Canadians who collected pandemic benefits or transitioned to teleworking. [See Home office expense claims: how the new rules work.]
“These two reasons explain in part why those who usually file their own returns should be very careful when filing to make sure they claim every possible deduction,” says CPA Annick Breton, a tax partner at Raymond Chabot Grant Thornton.
To stay ahead, here are the deadlines and other information to keep in mind.
DEADLINES YOU NEED TO KNOW
Earliest date for filing taxes: Tax-filing season started on Feb. 22, 2021.
Deadline for filing for individual taxpayers: April 30, 2021.
Deadline for payment for individual taxpayers: Unless you have specific circumstances that require you to pay taxes by instalment (such as a second job or revenue from an income property), your tax balance is due April 30, 2021.
Deadline for filing for self-employed taxpayers (and their spouse or common-law partner): June 15, 2021.
Deadline for payment for self-employed taxpayers (and their spouse): Despite not being required to file their return until June 15, self-employed taxpayers (and their spouse) are required to pay their taxes by April 30, 2021.
Deadline for filing and payment by deceased taxpayers: If the death occurred between Jan. 1 and Oct. 31, 2020, that person’s tax return must be filed by April 30, 2021. If it occurred between Nov. 1 and Dec. 31, 2020, it must be filed within six months of the date of death.
Deadline for filing and payment by deceased taxpayers who were carrying on a business at the time of death: If the death occurred between Jan. 1 and Dec. 15, 2020, while the business was active, that person’s tax filing is due on June 15, 2021. If it occurred between Dec. 16 and Dec. 31, 2020, the tax filing is due within six months of the date of death.
COVID-19 EMERGENCY AND RECOVERY BENEFITS
Canadians who received the Canada Emergency Response Benefit (CERB), the Canada Recovery Benefit (CRB), the Canada Emergency Student Benefit (CESB), the Canada Recovery Sickness Benefit (CRSB) or the Canada Recovery Caregiving Benefit (CRCB) will receive a T4A slip from the CRA before March 10, 2021 (residents of Quebec will also receive an RL-1 slip). The benefit amounts indicated should be reported as income on your 2020 income tax and benefit return.
“The CRA has confirmed that if they received a CERB or CESB repayment on or before Dec. 31, 2020, they will reduce the taxable CERB amount on the T4A slip accordingly”, explains Ball. “Repayments received after Dec. 31, 2020 will be reported on a 2021 T4A slip issued in 2022. This amount can be deducted at line 23200 on the 2021 T1 return.”
The federal government also announced that CRA and Service Canada will return any repaid CERB payments to self-employed individuals who have already voluntarily repaid their CERB payments and whose net self-employment income was less than $5,000, as long as they met eligibility requirements.
Finally, the government will also provide interest relief to Canadians who received COVID-related income support benefits. Once individuals have filed their 2020 income tax and benefit return, they will not be required to pay interest on any outstanding income tax debt for the 2020 tax year until April 30, 2022.
That being said, “Canadians who received benefits should expect to pay taxes on these amounts,” reminds Breton. If you received the CRB for example (one of the benefits for which a 10 per cent tax was withheld at source, which may not necessarily cover the additional tax owing), be prepared to potentially reimburse part or all of it if your net income after certain adjustments is greater than $38,000.
“Those who received employment income will also notice additional boxes on their T4, which specify during which weeks they received income. The goal is to help CRA confirm whether benefits were overpaid during 2020,” says Breton. The amounts reported in these boxes will have no impact on your tax return.
WAYS TO FILE AND PROCESSING TIME
According to the CRA, 90 per cent of tax returns are already filed electronically. The usual processing time for T1s produced this way is two weeks in 95 per cent of cases, explains Ball.
This year more than ever, the CRA encourages taxpayers to sign up for direct deposit and file their 2020 return online. “COVID-19 may cause significant delays in processing paper returns, as well as delivering notices of assessment and cheques in the mail,” says Ball. “The CRA will process paper returns in the order it receives them. Tax preparers and their clients should be aware that processing paper-filed returns as well as paper-filed T1 adjustments could take about 10 to 12 weeks (compared to eight weeks normally).”
However, according to the Government of Canada website, “These delays do not impact processing electronic returns.” Taxpayers who file their return online and choose direct deposit should receive their reimbursement within eight working days.
STAY ORGANIZED WITH YOUR TAXES
Learn how CPAs can simplify their client’s personal taxes during the pandemic, familiarize yourself with the new rules when claiming office expenses and read about what you need to know when filing returns for an incorporated or unincorporated business.
You can also visit CPA Canada’s tax blog for the latest updates and analysis on the 2020 tax season and sign up for our tax blog by checking Tax Blog under My Subscriptions in your profile.