Filing Taxes for Canadians During the Pandemic

It’s safe to say that 2020 was highly unusual – and the 2020 tax season is gearing up to be more of the same.

Filing taxes will almost certainly be complicated for a year that was marked by economic fluctuations, shifting regulations, business closings and reopening, and newly created government subsidies. Nearly everyone will have something new to claim on their taxes, and you’ll want to be as prepared as possible.

If you have questions about how filing taxes in Canada (Whether you live in Vancouver, Toronto or anywhere else) will work during the pandemic, don’t panic: you’ve come to the right place.

In the sections below, we’ll answer your most pressing questions to help you get your 2020 taxes neatly and accurately filed. Whether you run a business or just want to file your taxes as individual.

Kindly note that we don't give any official advice so we highly recommend that you talk to your accountant or lawyer for further information.

Did you receive COVID-19 emergency or recovery benefits in 2020?

If you got COVID-19 emergency or recovery benefits during 2020, these are taxable benefits that you will need to claim.

Not sure how much you received? You can put your calculator away; your T4A slip should contain an itemized list of all CRA-administered benefits. If you didn’t receive a T4A slip in the mail, or if you misplaced it, you can always create an online CRA account and access it there.

You should receive a T4A slip if you got any of the following benefits during 2020:

• Canada Emergency Response Benefit (CERB)
• Canada Emergency Student Benefit (CESB)
• Canada Recovery Benefit (CRB)
• Canada Recovery Caregiving Benefit (CRCB)
• Canada Recovery Sickness Benefit (CRSB)
• Provincial or territorial COVID-19 financial assistance payments

Keep in mind that your Canada Emergency Response Benefit (CERB) may have been administered by either the CRA or by Service Canada. If your CERB came from Service Canada, you’ll receive a T4E slip instead. You’ll also get T4E if you received Employment Insurance (EI) during 2020.

What about tax-free COVID-19 relief?

Luckily, not all COVID-19 relief needs to be claimed on your tax return. The Canadian government sent a few rounds of one-time, tax-free payments for COVID-19 relief in 2020. These included:

• A one-time GST/HST credit payment ($300 per child)
• A one-time OAS pension and GIS payment ($500 for seniors who receive both OAS and GIS)
• A one-time payment to citizens with disabilities (up to $600)

Since they aren’t taxable and do not need to be reported as income, you will not receive a slip for these types of payments.

If you have the ability, saving the funds from such payments is the best strategy.

Did you work from home during 2020?

One of the defining features of 2020 was an emphasis on encouraging employees to work from home to allow for better social distancing measures. The good news is that working from home can get you a break on your 2020.

To use the “flat-rate method,” you’ll need to have worked from home more than 50 percent of the time for at least four consecutive weeks due to COVID-19.

If you fit that criteria, you can use Form T777S to claim $2 for each day you worked at home. You can claim up to $400, and don’t need to submit any additional documentation on your work-from-home expenses. Using this “flat-rate method” also means you won’t need to get any signed documentation from your employer (a big plus).

The other option is the “detailed method.” This lets you deduct a portion of 2020 expenses like rent, utilities, and internet. Of course, you won’t be able to deduct all of your bills; you’ll need to base your deduction on the space that can reasonably be called your home office (i.e., square footage of your working space compared to the rest of the home).

This type of deduction takes a bit of planning, but it may allow you to get a bigger break on any taxes owed. If this is your first time working from home and you want to take advantage of the “detailed method,” your best bet will be to partner with a tax professional to ensure that you are getting the most out of your return.

Are you eligible for interest relief on 2020 taxes due to COVID-19 benefits?

If you received COVID-19 benefits during 2020 and owe taxes, you may be eligible for interest relief while you pay off any remaining balance owed. You’ll need to meet the following criteria to be eligible:

• You received at least one COVID-19 benefit in 2020 (includes the list above, as well as Employment Insurance benefits)
• Your total taxable income for 2020 was $75,000 or less
• You filed your 2020 income and benefit return

Those who meet the criteria will have interest-free payments on their balance owed until April 30, 2022. Of course, to get the maximum benefit, you’ll need to make sure you file your taxes on time – penalties for late filing will still apply for your 2020 taxes.

What’s your deadline to file taxes in Canada?

The deadline for filing personal taxes for 2020 is April 30, 2021. If you, your spouse, or your common-law partner are self-employed, your deadline is extended to June 15. Any taxes owed are also due on the filing deadline. Payments can be made through any of the below methods:

• Online through the CRA’s My Payment service
• Online through your tax servicer
• Online through the CRA’s My Account debit agreement
• By credit card, e-transfer, or PayPal
• In person with cash or by a debit card at any Canada Post outlet (note: a fee does apply, and you will need a QR code in order to pay at Canada Post)
• Through your financial institution’s online banking portal

Discussions on whether to extend the deadline for 2020 taxes are ongoing. If you haven’t filed by April, keep a close eye on news headlines to see if you might get a few extra weeks.

What if you can’t pay your full tax amount by the due date?

Planning ahead for tax season is difficult even in normal years, but the economic ups and downs of 2020 may have made it impossible. So what happens if you owe money on your 2020 taxes and can’t pay them right away?

Thankfully, the CRA provides the option to sign up for a payment agreement. This agreement essentially puts you on an instalment plan for the amount owed on your taxes, with agreed-upon monthly payments. Once the CRA has reviewed your financial details (i.e., debt, expenses, total taxes due, etc.), they will work with you to outline your payment terms.

How will tax processing times be affected by COVID-19?

The fastest (and safest) way to file your 2020 return and receive any money owed is to file online. If you file online and sign up for direct deposit, your return (and refund) can be processed in as little as eight days. Filing in-person or by mail is still allowed with social distancing measures, but you should expect delays in mail shipments and deliveries to impact your return.

Delays from COVID-19 are also expected for those who need to make changes to their 2020 tax return once it’s filed. Any applicable refunds from an adjustment will be available within two weeks when you’ve filed online. For paper-based adjustments, you can expect a delay of between 10 to 12 weeks before processing is complete.

The financial effects of COVID-19 are significant, with many individuals and businesses continuing to struggle in 2021. If you still have questions about how to best maximize your tax breaks for 2020, don’t hesitate to reach out to a tax professional. With so many new rules and regulations, the additional cost is more than worth it for your peace of mind.