Top 10 Tax Changes You Need to Know about for 2020
Every family plans their own budget monthly or annually, whatever, suits them the most. The budget includes planning for one’s transportation, food, mortgage/rent, children’s education and all the miscellaneous expenditure that comes along as a part and parcel of family life.
Although all the mentioned expenditures are to be considered for sure, there is one major expenditure that cannot be ignored and that is the Income-tax. Yes, you heard it right. Income tax is one of the major expenses for most Canadian residents.
Last year, i.e.2019 saw a lot many changes in the income tax requirements. 2020 is no different. Tax changes are brought into effect keeping in mind the Covid-19 pandemic as well. Changes are an ongoing process when we talk about taxes and there may be quite a few changes that may come into effect, however, planning in advance always works out by keeping your budget in place.
The Canada Revenue Agency is making a number of changes in 2020. These include filing and payment extensions, along with a number of extra cash transfers. Let us have a look at some of the major tax changes in the year 2020.
Top 10 Tax Changes for the year 2020
1. Tax Filing:
Tax filing is one of the biggest changes that took place in 2020. The tax filing deadline has been extended to June 1 which was earlier supposed to be filed on the 30th of April.
This change certainly came as a refreshing one for almost everyone, including investors. If you trade stocks, you have to report the dividends and capital gains with your personal income. It is a sigh of relief for all those who used to struggle calculating the adjusted cost base of the shares as they can be time consuming and exhausting.
By extending the deadline to file the taxes, CRA has given time to the investors to calculate the dividends which have in return, made the chances of missing the deadline, quite bleak. No late-filing penalties will be applied if returns are filed and payments are made by September 30, 2020.
It simply suggests that an individual wouldn’t have to pay any interest or penalties, that may have been the scenario otherwise. The tax Filing deadline has seen the changes when it comes to individuals, trusts and corporates.
- Individuals- As mentioned above, 2019 personal tax returns are delayed from April 30, 2020, to June 1, 2020. No late-filing penalties will be applied if returns are filed and payments are made by September 30, 2020.
- Trusts: with a taxation year-end on December 31, 2019, the filing due date for income tax returns is deferred to May 1, 2020
- Corporations: The filing due date for a corporate income tax return, which was earlier March 18 and before May 31, 2020, is deferred to June 1, 2020.
2. Tax Brackets for 2020:
For 2020, we will continue to have five federal income tax brackets, but they will all be indexed to inflation using the 1.9 per cent rate. The 2020 federal brackets will be: zero to $48,535 of income (15 per cent); above $48,535 to $97,069 (20.5 per cent); above $97,069 to $150,473 (26 per cent); above $150,473 to $214,368 (29 per cent); and anything above that being taxed at 33 per cent.
3. Tax Payment:
Not just the tax filing deadline but even the tax payment deadline has been extended by the CRA. This gives you more time to calculate and send the money to CRA, especially if you an investor
4. Interest on Existing Tax Debt:
On July 27, 2020, the CRA announced to waive off the arrears interest on existing tax debts related to individual, corporate and trust income tax returns from April 1, 2020 to September 30, 2020. A an outcome of this, an existing tax debt will not continue to grow due to arrears interest charges during this period.
5. Tax Brackets:
- With the increase in inflation and to keep up with it, federal and provincial brackets have been increased.
- Employment Insurance (EI) premiums decreased from 1.62% in 2019 to 1.58% in 2020.
- the Canada Child Benefit will continue to be indexed to inflation. In 2020, the maximum a parent can receive is $6,639 for children under age 6 (up from $6,496 in 2019) and $5,602 for children ages 6 to 17 (up from $5,481 in 2019).
- The pension plan has seen an increase in $58,700 in 2020, up from $57,400 in 2019. Even when it comes the employee and employer contribution rates for 2020 will be increasing by 5.25%, up from 5.1% in 2019.
6. Changes for Individuals and Families
The Home Buyers’ Plan has come up with a marked variation. Withdrawals have increased under the – The maximum amount you can withdraw from your registered retirement savings plan under the Home Buyers’ Plan increased from $25,000 to $35,000 for withdrawals made after March 19, 2019.
7. Audit activities:
The Canada Revenue Agency (CRA)also declared that it will no small or medium (SME) businesses will be contacted by them for the initiation of any new GST/HST or income tax audits for the next four weeks.
The Canada Revenue Agency also announced the temporary suspension of interaction with taxpayers and representatives for audits already in progress for the vast majority of businesses.
8. Philanthropic Work:
On March 27, 2020, the Government of Canada announced that the filing deadline for all charities with a Form T3010, Registered Charity Information Return due between March 18, 2020, and December 31, 2020, is extended to December 31, 2020.
9. Objections
On March 27, 2020, the Government of Canada announced that the deadline for any objection originally due between March 18, 2020, and June 30, 2020, is now June 30, 2020.
10. Miscellaneous Benefits
2020 has seen many new and beneficial changes that have proved fruitful for the Canadians. One of them also happens to be the Canada Emergency Response Benefit. The new benefit, the Canada Emergency Response Benefit (CERB), pays $2,000 a month to those out of work. The benefit includes GST/HST rebates and Canada Child Benefits. This benefit comes extremely handy to those who have a dependent or who fall in the groups of lower-income can enjoy the benefit.
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