Five new tax changes that may affect your 2020 return
First-Time Homebuyers Thinking of buying your first home? You can now borrow up to $35,000 from your RRSP account to help with the down payment of your first home. Usually, withdrawals from your RRSP account are taxable in the year of withdrawal, however, if you designate that the withdrawal is to assist in the purchase of your first home, then it is not taxable in the year of withdrawal (but it must be repaid to your RRSP account over a period of 15 years).
Attending College or University There are a couple of tax changes that you should be aware of if you or a family member are attending a college or university. The first is that there is now a new refundable tax credit, the Canada Training Credit, that will be available to claim on 2020 and subsequent tax returns. The actual benefit of this credit will be between $250 and $5,000, with additional specific criteria to be eligible for this credit.
The second is that, starting in 2020, the Alberta government has eliminated the education and tuition tax credit. Any credits that have accumulated and not been claimed before 2020 will continue to carry forward until used. However, anyone going to school in 2020 and onward will no longer be eligible for the provincial portion of the tuition tax credit. The federal portion of the tuition tax credit is still available to individuals who attend a college or university.
Digital Subscription Personal Tax Credit As of January 1, 2020, individuals who subscribe to Canadian digital news produced by a qualified Canadian journalism organization will be eligible for a 15% non-refundable tax credit on up to $500 of subscription costs annually for a maximum benefit of $75. Eligible subscriptions provide access to content written and produced by a qualified Canadian journalism organization (QCJO). This tax credit is temporary and will only be available for eligible subscriptions paid between January 1, 2020 and December 31, 2024.
Working from home due to COVID-19 As a result of many of us needing to work from home in 2020 due to the pandemic, the CRA has made it easier to claim home office expenses related to employment income with the introduction of the Temporary Flat Rate method and the Simplified Detailed Method. For more information on these, please refer to our article Claiming office expenses if you worked from home due to COVID-19.
Business Income If you have business income, you can now claim an accelerated CCA (depreciation) on assets purchased after November 21, 2018. Claiming the accelerated CCA will triple what you could have claimed under the old rules in the first year of owning the asset. This accelerated rate stays in effect until 2023. The rate will decrease from 2024-2027 to be double the usual amount instead of triple. Then, starting in 2028, the rules prior to the change on November 21, 2018 will be back in effect.
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