Thousands of Canadians pay more income tax than they should. By
not taking full advantage of deductions, you may be one of those
generous Canadians without even knowing it. Are you aware of all of
the deductions that are available to you? Do you file your return
on time? Do you pay tax instalments quarterly to avoid interest
Here is a look at some of the important dates and some of the
commonly missed opportunities that could be contributing to your
larger than necessary tax bill.
Expenses you may be entitled to deduct
Employees who are required to use their own automobiles for work
(other than for travelling from home to and from their workplace)
without reimbursement from their employer can deduct the business
portion of their automotive expenses. If you are reimbursed and the
amount of the reimbursement is not “reasonable,” you can
still claim a deduction for the non-reimbursed portion. In order to
claim employment expenses, your employer will have to provide you
with a completed form T2200 Declaration of Conditions of
In 2020, the Federal Government announced a temporary simplified
home office deduction. Eligible employees could deduct a maximum of
$400 relating to home office expenses without needing to track the
details of the expenses. The Federal Government has announced that
it would extend the simplified home office deduction to the 2021
and 2022 tax years, increasing the maximum deduction to $500
The CRA also indicated that there would be relief in 2020 on
amounts that would normally be considered taxable employee
benefits. For example, the CRA announced that it will not consider
an employer’s reimbursement of up to $500 for home office
equipment to be a taxable benefit, as long as the employee requires
the equipment to perform their employment duties at home.
Reimbursements or reasonable allowances received from employers for
certain commuting costs, parking, internet, and cell phone costs
relating to employment purposes would also not be considered
taxable benefits. At this time, the CRA has not yet updated its
guidance on this relief for 2021.
You may be able to claim additional home office expenses related
to your workspace and office supplies. Your employer will need to
provide you with a completed form T2200 and you must ensure you
maintain records of receipts and expenses for any eligible home
office expenses incurred. The CRA has not yet updated its guidance
on deductibility home office expenses incurred in 2021 due to
COVID-19, however, you should keep records in case you are eligible
to claim these expenses.
Carrying charges and deductible interest
Borrowed funds must generally be used for the purpose of earning
income (e.g. investing) in order for the related interest to be
deductible. Maintaining proper documentation of loans and interest
payments will help support claims for interest deductions.
Deductible carrying charges may include investment counsel fees,
bank fees, or similar charges.
Subject to certain limitations, childcare expenses may be
deducted from income by the lower income spouse. These expenses
include daycare, babysitting, boarding school, and day camps. Note
that you will have to provide the Social Insurance Number of any
individual you paid for childcare and supporting documentation is
frequently requested by the CRA.
If you moved during the year to be at least 40 kilometres closer
to a new job, to run a business, or to attend a post-secondary
educational institute full-time then you may be able to deduct
certain moving expenses. The amount you can …….