What's new for your 2021 taxes

Home office expense deduction for employees

The simplified rules that were introduced last year have been extended for 2021 and 2022. This likely doesn't affect you, since these changes are only applicable to employees - which doesn't apply to most holistic healthcare practitioners. Self-employed practitioners can continue to claim home office expenses, as usual, if they meet the usual criteria.

• Using the simplified method, you don't have to keep receipts or measure the size of your home office. Instead, you'll claim a flat rate of $2 per day, up to $500.

• If you choose to use the traditional, detailed method, you still need to keep your receipts and prorate your expenses over the space you use in your home. You also need your employer to sign Form T2200 or the simplified Form T2200S.

• The rules are still being finalized for 2021, but these were the eligibility criteria for 2020:

  • You worked from home during the year due to Covid

  • You worked more than 50% of the time from home for at least 4 consecutive weeks during the year

  • You're not claiming any other employment expenses

  • Your employer didn't reimburse you for all your home office expenses

Capital cost allowance (tax depreciation)

Usually the cost of capital goods (big purchases that are used for multiple years) are deducted over several years. Certain businesses are now eligible to deduct the entire cost in the year of purchase for eligible capital goods.

This enhanced deduction is only available to Canadian Controlled Private Corporations (most incorporated professionals would qualify). Unfortunately, sole proprietors are not eligible. The item must have been purchased from April 19, 2021 onwards and must be available for use by December 31, 2023. Most capital goods qualify, but certain property like buildings, intangible property doesn’t. There’s a limit of $1.5 million per year.

You don’t need to do anything differently in your bookkeeping. If you qualify, we’ll apply these savings automatically when we’re preparing your corporate tax return.

Ontario Refundable Jobs Training Tax Credit

The Ontario government introduced a new refundable tax credit worth up to 50% of eligible expenses, up to $2,000 per year. Most tuition fees paid in 2021-22 and which are eligible for the federal tuition tax credit are eligible for this credit, along with fees paid to certain bodies in respect of an occupational, trade or professional examination taken in 2021 or 2022. The eligibility requirements are the same as the Canada Training Credit.

Ontario Staycation Tax Credit

This tax credit will give you a refund of 20% of eligible accommodation expenses you incur in 2022, up to $1,000 for an individual ($200 refund) or $2,000 for a family ($400 refund). You’ll apply for this on your 2022 tax return (in Spring 2023). Find out more here.

Other changes

• The Canada Workers Benefit has been enhanced to increase the amount of income individuals and families can earn before the benefit is clawed back. 

• The Climate Action Incentive payment is now being paid in quarterly instalments starting in July 2022 instead of being paid as part of your tax return. This means you might have a higher amount owing on your tax return (or might receive a lower refund) compared to previous years.

• The interest-free deadline for repaying the Canada Emergency Business Account has been extended to December 31, 2023.