Wishing everyone all the best for this holiday season.  On the very Wet Coast of BC, I’m just really hoping that Mother Nature has had her fill with wreaking havoc on the province that I call home and will give us a bit of a reprieve.  Between the heatwave this summer and the mudslides and flooding that thousands of people are having to endure right now, I just feel that we all need a break.  

Before the calendar year ends, I do have a couple of notes that I’d like to pass along in the hope that these tips will help you prepare for the upcoming tax filing season.

Personal Tax Preparation Tips

Charitable Donations and Medical Receipts

• Make sure that you have copies of these in an easily accessible spot
  • This continues to be one of the most common areas that the CRA will follow up on when they review your tax return.  
• And if you’re thinking of making a donation, please make it before December 31, 2021.  This will allow you to receive a tax credit when you file your return in April 2022.
  • The first $200 of your total donations will net you a $58.00 tax credit
  • Anything over and above the first $200 will net you a tax credit of 15% of the donated amount.  
• Medical receipts can be bundled together for an entire family.  This is one area where you can group the receipts together and then figure out whose return it is more beneficial to claim the tax credit. 

Home Office Expenses

• Due to the ongoing pandemic, the Federal Government has extended the home office expense claim for another year.  If you don’t have receipts to support your expenses, you can claim a flat amount on your 2021 tax return.  The 2021 amount has been proposed to increase from $400 to $500.   However, please note that this increase has not been formally adopted in the legislation.  (Fingers crossed that this happens before April 2022).  

COVID-19 Benefits

• If you have been a recipient of the COVID-19 benefits, you will be receiving your T4 slips in February 2022.  These amounts will need to be reported on your 2021 tax return.
• If you have repaid a portion of the COVID-19 benefits, you can either request an adjustment to claim a deduction on your 2020 return or claim a deduction on your 2021 return.  

Bonus Tip

• RRSP Contributions:
  • If you are able to, don’t forget to make your RRSP contributions by March 1, 2022.  Any contributions made by this date can be deducted from your 2021 return.  

Corporate Tax Preparation Tips

COVID-19 Business Loans

• If you have been a recipient of the CEBA loan in the previous year, you will need to start repaying it by Dec 31, 2023. 
  • If you expect to take advantage of the forgivable amounts $10,000 on $40,000 or $20,000 on the $60,000 loan, then $30,000 and $40,000 respectively need to be repaid in FULL by Dec 31, 2023.
    • Start creating a plan to ensure that you have those funds available to repay by the deadline.

COVID-19 Subsidies

• A large number of the Wage and Rent subsidies stopped on October 23, 2021.  But there are still a few subsidies available for businesses that are still being affected by the pandemic.  
  • For the programs that have stopped, you still have time to apply for prior periods. 
    • You can apply up until 180 days after the end of a claim period.
  • Determine if you would qualify for the new Tourism & Hospitality Recovery Program or the Hardest-Hit Business Recovery Program (runs October 24, 2021 – May 7, 2022)
    • These programs have not been formally adopted by the government, so there isn’t an application process for them yet. 

Ensure the Maximum Amount of Deductions Available to Your Corporation

• When reviewing your year-end Income Statement, ensure that you are going to be able to pay out any accrued bonuses within 180 days of the accrual date.  
  • If they can’t be paid out by then, the expense will be disallowed as a deduction for 2021.  
• If you need to make large equipment purchases, consider purchasing them before the end of the year and ensure that they are installed and ready to use.
  • There are accelerated Capital Cost Allowances available for 2021 if the equipment meets the eligible property requirement.  
• Donations
  • If your corporation is making a donation in the year, ensure that the donation receipt is in the legal name of the company.  
    • The CRA will generally deny a charitable donation deduction if the name of the corporation does not match the name on the donation receipt.  
    • Most charitable organizations will be able to reissue a receipt if the name is incorrect. 

Best,

Dayna Holland, CPA, CA (she/her)

CEO of Dayna Holland Ltd.

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Are you a small business owner or self-employed and want to improve your bookkeeping habits so that you can get ahead in 2022? Be sure to check out this blog post for my top three recommendations based on conversations I’ve had this year with entrepreneurs.

Click here to learn more about Dayna Holland, CPA, CA.