Personal Income Tax

Personal Tax Preparation in Calgary, AB

C. Lough-Li Professional Corporation provides personal tax preparation services in Calgary.

Our firm focuses on staying current on the income tax changes and legislation in order to minimize your income taxes and comply with the constant changes within the income tax regulations and legislation.  

We attempt to offer a very thorough and personalized service in preparing your personal income tax returns.  Our process is based on supplying you with updates in the income tax rules on a yearly basis so we can capture these changes on your personal tax return.  We follow up with an initial interview for your first year of filing and on a continual basis when your personal tax situation is changing.  These changes occur often with the constant changes in a person’s life, whether it is brought about by a marriage, divorce, having a child,  a disability or a death and many other scenarios.  Regardless we can deal with all of your income tax requirements to comply and minimize your tax liability.   After the preparation of your returns we follow-up with a final interview to review these returns and answer any questions you may have.   You don’t leave our office without knowing why you owe money to the government or why your refund is the amount it is.   

We pride ourselves in our personal income tax process. 

Contact our personal tax accountants to know more about personal income tax services provided by us.

WHAT’S NEW IN PREPARING YOUR 2021 PERSONAL INCOME TAX RETURN

TAX

Changes to federal COVID-19 support for individuals and businesses

With much of Canada returning to a modified lockdown due to the spread of the Omicron variant of COVID-19, the federal government has enhanced and extended some of its support programs for individuals and businesses.

Here are the highlights of the changes announced from fall 2021 through to January 12, 2022.

Support for individuals

Canada Worker Lockdown Benefit

To be eligible, workers must:

  • be Canadian residents who are at least 15 years old
  • have earned at least $5,000 in 2020, 2021 or in the 12 months before they applied for the CWLB from:
    • employment income
    • net self-employment income
    • Employment Insurance benefits (including maternity and paternal benefits), or COVID-19 benefits
  • have not received other government benefits for the period for which they are applying
  • have filed a 2020 tax return
  • have either lost their job or were unable to continue their self-employment work, or had their average weekly income reduced by 50% as compared to the previous year

The CWLB will not be available to those who:

  • leave their job voluntarily
  • turn down reasonable work
  • were laid off because they refused to get vaccinated against COVID-19

On December 22, 2021, the government announced that the CWLB would be extended beyond a complete lockdown to support eligible individuals affected by capacity-limiting public health restrictions of more than 50%.

Canada Recovery Sickness Benefit and Canada Recovery Caregiving Benefit

The October announcement also extended these two benefits until May 7, 2022, and increased the maximum duration of these benefits to six weeks and 44 weeks, respectively.

Employee home office deduction calculation method

In the December 14, 2021 federal Economic and Fiscal Update (economic statement), the government announced that the optional simplified method of calculating an employee’s home office deduction, introduced in 2020, will be extended for 2021 and 2022. This method is available to employees who were required to work from home due to the COVID-19 pandemic and are not claiming any other employment-related expenses (such as the use of a car, or paying for a substitute or supplies, etc.).

The deduction is calculated as a flat rate of $2 per day worked at home. The maximum deduction under the simplified method has also been increased from $400 in 2020 to $500 for 2021 and 2022. Employees who claim other employment-related expenses may continue to use the detailed method to calculate their home office expense deduction.

You can read more about this calculation method in the December 14, 2021 Economic and Fiscal Update (economic statement).

Standby Charge Benefits

Due to Covid 19, an employee may have driven the employer’s vehicle less for business activity which may increase the personal use of their vehicle and not allow them to claim a reduced standby charge. Temporary measures were put in place to allow employees to use their 2019 automobile usage for 2020 and 2021 to determine their eligibility of the reduced standby charge.

Educator school supplies tax credit

The economic statement also enhanced the refundable eligible educator school supplies tax credit by increasing the tax credit rate from 15% to 25%, expanding the list of eligible expenses to include certain electronic devices, and eliminating the requirement that the supplies be used in a school or childcare facility.

Child Care Expenses

Under the income tax rules, a person claims child care expenses when the child care expenses are related to your ability to work whether it is to go to an office or other employment, work towards your own business, attend secondary or post-secondary education or engage in a research grant. Due to Covid 19, these rules were relaxed in to allow a child care expense deduction to a tax payer receiving the Canada Emergency response benefit or other Covid 19 support payments.

Support for businesses

New targeted wage and commercial rent support programs

In October, the government announced two new programs to replace the Canada Emergency Wage Subsidy and the Canada Emergency Rent Subsidy, both of which ended on October 23, 2021. These programs, the Tourism and Hospitality Recovery Program and the Hardest-Hit Business Recovery Program, are both available until May 7, 2022.

The government also announced that the Canada Recovery Hiring Program would be extended to the same date. Eligible employers can claim whichever of these programs gives them the highest amount for each claim period.

Local Lockdown Program

The October announcement also introduced the Local Lockdown Program (LLP). It is available to businesses that experienced both of the following:

  • A complete lockdown for at least seven days of at least one location that accounted for at least 25% of their total revenue
  • A decline in revenue of 40% or more in the current month

On December 21, 2021, the government announced the expansion of the LLP to also cover businesses that have capacity-limiting public health restrictions of 50% or more. They also reduced the minimum decline in revenue threshold to 25%. Eligible businesses will be entitled to receive wage and commercial rent subsidies from 25% up to a maximum of 75%.

New tax credits

The December 14 economic statement also introduced two new tax credits for businesses. The first is a new 25% refundable tax credit for small businesses that meet these conditions:

  • They incurred expenses for air quality improvements in qualifying locations between September 1, 2021 and December 31, 2022.
  • Eligible expenses are limited to $10,000 per location, and $50,000 across all locations for affiliated businesses.
  • The credit is available to unincorporated sole proprietors and Canadian-controlled private corporations with taxable capital of less than $15 million employed in Canada in the preceding year.
  • Partners who meet these same requirements can also claim the tax credit for their share of a partnership’s eligible expenses.

The second is a refundable tax credit for farmers in provinces without federally-approved carbon pricing systems. This credit will return the federal fuel charge proceeds directly to farmers based on their eligible farming expenses. To be eligible for the credit, farms must incur farming expenses of at least $25,000.

Repayment deadlines extended

On January 12, 2022, the government announced that they were extending the repayment deadlines for the Canada Emergency Business Account and the Regional Relief and Recovery Fund from December 31, 2022 to December 31, 2023 for eligible businesses. Loans repaid by that date may be eligible for forgiveness of up to one third of the value of the loan.

As government assistance to respond to COVID-19 emerges and evolves, we will continue to keep you informed so that you and your business can get all the benefits to which you are entitled.

New digital news subscription tax credit

There is a new, non-refundable digital news subscription tax credit that will be available from 2020 to 2024. This tax credit is calculated at 15% of the eligible amounts paid, to a maximum of $500, to access primarily original written news in a digital format from a qualified Canadian journalism organization (QCJO).

If your subscription provides access to content in a non-digital format, or to content not from a QCJO, only the cost of a stand-alone digital subscription to the content of the QCJO is eligible for the credit; if there is no stand-alone digital subscription, one half of the amount paid is considered an eligible expense.

New Canada Training Credit (CTC)

The CTC is a new refundable tax credit introduced in 2020. If you are between 26 and 65 years old, you will accumulate $250 towards their Canada Training Credit Limit (CTCL) account in 2020 if both of the following apply to you:

  • You had at least $10,000 of “working income” in 2019.
  • Your total 2019 net income was less than or equal to $147,667 (the level at which the 29% tax bracket started that year).

Working income generally includes employment and self-employment income, research grants, scholarships, bursaries, prizes, and maternity and parental EI benefits.

Who qualifies, and how to calculate your CTC balance

If you meet both the minimum working income limit and the maximum total income limit in subsequent years, the CTCL account will continue to accumulate over time to a maximum of $5,000; both limits will be indexed to inflation.

You can claim up to 50% of the costs of taking a course or enrolling in a training program against the balance in your account in the year you paid the tuition. The remaining 50% of the program costs may be eligible for the tuition tax credit, as the CTC uses the same eligibility criteria as are used for the tuition tax credit. You would see the balance in your CTC account for 2020 on your notice of assessment for 2019. Any unused CTCL will expire when you turn 65.

For example, Sohil was a 28-year-old Canadian resident in 2020. From 2019 to 2023, he met both the minimum working income limit and the maximum net income limit, so the balance in his notional CTCL account as reported on his 2023 notice of assessment was $1,250 (five years x $250 per year). In 2024, he enrols in a continuing education program at a local community college to upgrade his skills. The tuition he pays for the program is $2,000.
On his 2024 tax return, Sohil can claim a refundable CTC of $1,000 (50% of the $2,000 tuition), and he can claim a non-refundable tuition tax credit of 15% on the remaining $1,000 of tuition fees not eligible for the CTC. Sohil’s CTCL for 2025, assuming he meets both the working income and net income criteria for 2024, would be $500 ($1,250 opening balance – $1,000 CTC claimed in 2025 + $250 added based on his income in 2024).

 

Capital Cost Allowance for Zero-Emission Vehicles

A first year CCA rate of 100% is effective for off-road automotive vehicles and equipment. The measures have also been expanded to include classes 54 and 55 for zero-emission vehicles for have been previously used or acquired for use.

Lifetime Capital Gains Exemption

  • The lifetime capital gains exemption has increased based on the indexation to inflation from $883,384 to $892,218 in 2021. Qualified farm or fishing property continues to be eligible for a maximum total limit of $1,000,000 for 2021.

Tax-Free Savings Account

  • For 2021, the tax-free savings account will have a proposed annual contribution limit of $6,000 subject to inflation for subsequent years. The maximum amount from 2009 – 2021 that an individual can contribute to a Tax Free Savings Account is $75,500. Contribution room is accumulated for only those years in which the individual was at least age 18.

Non-eligible and Eligible dividend rates

In 2021, non-eligible dividends had the gross-up factor of 15% and the dividend tax credit adjustment is 9/13 for an effective dividend tax credit rate of 9.00% of the grossed up dividend. In 2021 the eligible dividends had a gross up factor of 38% and the dividend tax credit adjustment is 6/11 for an effective dividend tax credit rate of 20.73%.

Registered Retirement Savings Plan

Your maximum RRSP limits for 2021 and 2022 respectively are $27,230 and, $29,210.

Marginal Rates

There have been no changes in the overall federal marginal tax rates; however, the thresholds for taxable income have been changed as indicated in the comparison table below.

2021 Taxable Income Federal Alberta 2021 Taxable Income
On the first $49,020 15.0% 10% On the first $ 131,220
$49,020 up to 98,040 20.5% 12% $131,221 up to 157,464
$98,040 up to 151,978 26.0% 13% 157,465 up to 209,952
$151,978 up to 216,511 29.0% 14% 209,953 up to 314,928
Over $216,511 33.0% 15% Over $314,929

Other changes for 2021

Tax brackets and non-refundable tax credits

The federal tax brackets and most non-refundable credit amounts will increase by 1.0% for 2021. The enhanced amounts for the basic personal amount and the maximum amounts for spouses and eligible dependants will be $13,808, in order to achieve the government’s target of $15,000 for 2023.

Employment Insurance and Canada Pension Plan

Employment Insurance premiums remain unchanged for 2021, but the maximum insurable earnings have increased from $54,600 in 2020 to $56,300.

The maximum pensionable earnings for the Canada Pension Plan have increased from $58,700 in 2020 to $61,600; the employee and employer contribution rates have also increased from 5.25% to 5.45% in 2021.

The contribution limit for Tax Free Savings Accounts remains unchanged at $6,000 for 2021.

Treatment of certain stock options

Effective July 1, 2021, the value of grants by larger corporations of employee stock options on which the deduction for half the taxable benefit can be claimed is capped at $200,000 per employee per vesting calendar year.

Find out more about personal income tax services in Calgary by scheduling an appointment with our personal tax accountants or calling our office at (403) 209-3275.

C. Lough-Li Professional Corporation - accounting firm in Calgary provides: Accounting And Assurance Services | Audit Services | Income Tax Services | Personal Income Tax Services | Corporate and Business Income Tax Services | Estate Planning and Succession Planning | Not-For-Profit and Charity Income Tax Services | Bookkeeping Service | Payroll Services | Financial Consulting Services

Our personal tax accountants at C. Lough-Li Professional Corporation service the entire Calgary and surrounding areas.