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Everything you need to know about tax season in Canada 2021, including what's changed this year, new deductions, filing deadlines, how to file your taxes, and more.

While most of us think tax season in Canada doesn’t really kick off until April, the truth is that you can—and should—start preparing your income tax return well before spring. It’s especially important to get a head start on your return this year if you collected any COVID-19 benefits in 2020, because you may be surprised to discover that you owe taxes instead of qualifying for a refund.

To make filing your taxes as stress-free as possible, we’ve developed this guide to give you all the information you need, including new and revised tax breaks available on this year’s return, and how COVID-19 affects Canada’s 2021 tax season.

What’s New for Taxes in Canada 2021

The federal government regularly adds, removes or changes eligible deductions, credits and benefits that can save you money on your annual tax return. As a result, it can be tricky to know which ones you should claim from year to year. Here are the major changes to look out for when you prepare your 2020 return, so you don’t miss any tax-saving opportunities.

  • Simplified Home-Office Expenses Deduction: Because millions of employed Canadians worked remotely in 2020 due to the COVID-19 pandemic, the government has made it easier to claim a deduction for home-office expenses this year. To qualify, you had to perform more than 50% of your usual work hours from home over a period of at least four consecutive weeks during 2020. If you meet that threshold, you can deduct $2 for every day you worked at home due to the pandemic, up to a maximum of $400, from your taxable income. If you use this new temporary flat rate method to claim the deduction, you don’t need any receipts or other documentation.
  • Canada Training Credit: If you paid for tuition or training in 2020, you may be able to claim this brand-new refundable tax credit. Here’s how it works. At the end of 2019, eligible workers aged 25 to 65 began automatically accumulating an annual sum of $250, up to a lifetime maximum of $5,000, in a Canada Training Credit account. Starting this year, you can claim the full balance in your Canada Training Credit account, or up to half your eligible tuition/training fees, whichever is less. Unused amounts remain in the account and can be claimed in future years. If you’re not sure whether you qualified for the Canada Training Credit or what your account balance is, check the Notice of Assessment that you got from the CRA after filing your 2019 return, or in your CRA My Account online.
  • Canada Pension Plan Enhancement Deduction: Introduced last year to help offset the financial blow of new “enhanced” CPP premiums on insurable earnings, this deduction is now even bigger. Employed individuals can reduce their 2020 taxable income by up to $165.60, while self-employed filers can deduct up to $331.20. The bad news: the reason for the larger tax break is an increase in those enhanced premiums, meaning you’re now paying more in CPP contributions.

COVID-19 and Taxes in Canada 2021

Any payments you may have received in 2020 from the Canada Emergency Response Benefit (CERB)Canada Emergency Student Benefit (CESB)Canada Recovery Benefit (CRB)Canada Recovery Sickness Benefit (CRSB), or Canada Recovery Caregiving Benefit (CRCB) is considered taxable income and must be reported as such on your return. The government agency (CRA or Service Canada) that issued the payments will mail you a T4A or T4E tax slip by the end of February, showing the total amount in benefits you received. (If you don’t receive your slip(s) by then, check your My Account for electronic copies.)

The problem is, the government did not withhold any taxes on some of these payments (namely CERB and CESB) and may not have withheld enough taxes on others, which means you could owe more money than you expected. Here’s how much you might owe, based on the type of benefits you collected:

  • CERB or CESB – No taxes were deducted at source, so you’ll now owe income taxes on the full amount received, calculated at your marginal tax rate. So, for example, if you live in Ontario and received the maximum of $14,000 in CERB payments and had $15,000 in other net taxable income in 2020, your marginal tax rate would be 20.5%. That means you’d owe $2,870 in taxes on the benefits you received.
  • CRSB or CRCB – 10% tax was withheld at source. Depending on your total income for 2020, you may need to pay more tax than that. (If your income was on the low end, 10% might be too much, which could mean a refund for you.)
  • CRB – 10% tax was withheld at source, so same as above. There’s an added wrinkle with CRB, however, for those with other income totalling more than $38,000 in 2020. In that case, you’ll have to reimburse $0.50 of the CRB for every dollar of net income above $38,000 (not including the CRB itself).

These possible tax hits could come as a surprise, especially if you don’t have enough deductions, credits or taxes withheld from your other sources of income to offset the amounts owing. Then you’ll have to come up with money to pay the CRA by April 30, 2021, or you’ll also face interest charges. (If you come up short, follow the advice in “What if I can’t pay my taxes in Canada?”) The same goes for any COVID-19 benefit payments you may have received for which you were not eligible, as the CRA will ask you to pay them back.

Tip: If all this worries you, use an online income tax calculator (like this one from Wealthsimple) to quickly estimate your federal and provincial taxes and find out how much money (if any) you may end up owing.

How to File Taxes in Canada

There are several ways for Canadians to file their taxes:

  • Mail in a paper copy: If you filed a paper return last tax season in Canada, the CRA should automatically mail you the 2020 income tax package by the end of February. Otherwise, you can view and download forms from the CRA website starting Jan. 18, 2021.
  • File Online: The CRA calls its online filing for individuals NETFILE (as opposed to EFILE, which is the service that tax preparers use). To send in your return via NETFILE, choose a certified desktop, online, or mobile software product to prepare your return and follow the prompts to submit it to the CRA. Aside from the convenience of filing online, using tax software such as TurboTax allows you to maximize your tax savings. It asks you a series of questions to determine which of the more than 400 deductions and credits you may be eligible for. Read our TurboTax review for all the info.
  • File by Phone – Canadians with low or fixed incomes, and whose tax situation doesn’t change much each year, are invited by letter to use the CRA’s automated phone service, File My Return.

Save up to 15% on TurboTax!

Frequently Asked Questions 

Tax season in Canada starts early, with forms and publications for the 2020 tax year available to view, download and order from the CRA website as of January 18, 2021. You can prepare your return as soon as you receive all the necessary slips and paperwork—such as T4s, T4As, T5s, T3s and RRSP receipts—from your employers, banks, government agencies, etc. (If you’re missing any slips, check your My Account for electronic copies as of February 2021.) The CRA will begin accepting returns online for the 2020 tax year on Feb. 22, 2021.
The tax filing deadline for most Canadians is April 30, 2021. Those who are self-employed have until June 15, 2021, to file their returns. Either way, you must pay any taxes that you owe on your 2020 income by April 30, 2021 to avoid incurring interest charges.
If you notice a mistake on a return that you’ve already filed, wait until you receive your Notice of Assessment from CRA and then file an adjustment request online, or by mail using Form T1-ADJ, T1 Adjustment Request. For paper adjustments, also include all the necessary supporting documents, including receipts, slips and schedules. Also, consult our article on The Biggest Mistakes Canadians Make on Their Taxes – and How to Fix Them.
A simple way to avoid tax mistakes is to use excellent online tax filing software like TurboTax. Just answer a series of questions accurately, and the system does all the hard work of putting together your return. You can also use the handy TurboTax Live Assist and Review. The virtual service lets you ask questions and get advice about your taxes from a real tax expert — from the comfort of your computer. The software even reviews your return line-by-line to make sure nothing is overlooked. And more good news: Young and Thrifty readers can now save 15% off any paid TurboTax package.
There is certainly no shortage of ways to remit your tax payment to the CRA. You can use your online banking service, pay by credit card, PayPal or Interac e-Transfer, set up a pre-authorized debit, use a third-party service provider, pay in person at bank or post office, or send a cheque by mail. If you pay your taxes by credit card, consider getting one of the best cash back credit cards or one of the best travel rewards credit cards so you can earn back a little something on the spend.
If you owe money on your taxes and do not file by the deadline, you’ll get dinged financially in two ways. First, you’ll pay a 5% late-filing penalty and an extra 1% for every month after that (up to 12 months). Second, CRA will charge you compound daily interest on your unpaid balance starting the day after your taxes were due. If you file on time but are late with your payment, you’ll pay interest charges but avoid the late-filing penalty.
Generally, you are required to file a return if you owe income taxes, or if the CRA asks you to file. There are a few other situations in which you’re obligated to file a return (e.g., if you’re repaying amounts you borrowed from your RRSP for the Home Buyers’ Plan or Lifelong Learning Plan). But even if it’s not a must, you should file anyway so you can collect a tax refund, and apply for various benefit programs, such as the GST/HST tax credit and Canada Child Benefit.

The Final Word

Tax time doesn’t have to be painful. There are plenty of resources online to help you through it as well as reliable online tax filing software like TurboTax to make it easier. Just schedule some time to get it done before the deadline. Late filers risk being hit with penalties. Wouldn’t you rather spend that money on something you want? And if you’re getting a refund, get those funds as soon as possible so you can do what you like with them. In either case, file on time!

Lastly, don’t forget to review our handy guide on How to Get More Money Back from your Tax Return! It could put a little more change in your pocket.

Article comments

17 comments
emma says:

your not saying when the earliest date is? you just say the earliest date is and then say nothing and just say the latest date. i hate people that a dishonest and just try to get people to read their page.

Lisa Jackson says:

Hi Emma,

I’m sorry you’re frustrated, but we are not being dishonest. At the time of writing in February 2019, the earliest filing date was not yet available to the public.

Paulo Baptista says:

How do I obtain printable tax forms 2019 in Canada

Lisa Jackson says:

Hi Paulo,

You can pick up printed tax forms at any Canada Post store.

Dave MacGowan says:

Apparently, printed tax forms are no longer available at Canada Post locations. I also went to a Service Canada location and they gave me a phone number to request printed income tax forms.

Paulo Baptista says:

How do I get printable 2019 tax forms

Winston says:

Can I claim fees a financial planner charges?

Robb Engen says:

Hi Winston,

In order for the fees to be deductible, they must be paid for advice on buying or selling a specific share or security by the taxpayer or for the administration or the management of the shares or securities of the taxpayer. The fees must be paid to a person whose principal business is advising others whether to buy or sell specific shares or whose principal business includes the administration or management of shares or securities.

Fees paid on a fee-based investment account would therefore generally be tax-deductible.

Fees paid to a fee-only, advice-only, fee-for-service financial planner are generally not deductible. According to the Canada Revenue Agency, “fees paid for other types of advice such as general financial counselling or planning are not within the provisions.”

Karen A Casey says:

Canadians pay the same basic tax as in Denmark and get absolutely nothing for their money except putting it in the hands of a bunch of crooks! Canada’s Tax system is a joke and the so-called rebates they hand out for the made-up taxes that they pocket are even worse, they’re a joke! I’m about as low income as one can get in Canada without actually living on the streets and this January 2020, I got a whopping $100 in rebates, explain how the taxes keep going up and our rebates keep going down, I got less this year than I EVER had, what a farce! Canada has one of the worst tax systems in the world and Canadian’s receive absolutely NOTHING for the money our ‘legal’ crooks in Ottawa take from them. But; own a Big Oil company or SNL Lavalin and you pay NADA in taxes! Our entire government and taxation system needs to be reformed and it’s time Canadian’s had a REAL Tax Revolt! I mean, how long are you going to allow these Federal crooks to rob us blind! If you won the lottery would you stay in Canada? Odds are you’d run as fast as you could! Time for a Major Canadian Tax revolt, and spreading the word is my new mission against these abusive governments on ALL levels, Federally, Provincially, Municipally (Calgarians are already there, just watch!) How stupid are we as Canadian’s?

Philip Rosen says:

Although you are right to insist on filing early, be careful not to file too early i.e. before you have received all your tax slips…the T3s and T5013s come through very late. Your broker (T3s and T5013s are related to share dividends) should give you a calendar so that you can know in advance when to expect them. If you have already filed then you have to submit adjustments and your taxes start to look like a dog’s dinner!

zoey zane says:

What are the softwares other than Turbotax?

Alex Ruttan says:

SimpleTax. it only costs you whatever you donate!

Ivan CG says:

I dont live in Canada anymore and I closed my bank account from there. Is there a way to file the tax and get the refund send (check) to another country by mail?

Simon lee says:

Can a person claimd the parents as dependents living in the same household who have no income and who are not infirm?

Mister Mister says:

Don’t invest in RRSP’s. Because if you happen to need that money for some unforeseen reason, the bank withholds 20%!!! And the interest earned on them sucks too. It’s better to invest your money or use TFSA’s.

Kate says:

You have to file taxes whether you’ve made money or not or you owe money or not. Not filing your taxes could mean you miss out on low income benefits, or could make it difficult for when you are applying for things like a loan, etc (if you don’t have a Notice of Assessment).
Everyone should file their taxes every year regardless of how much money you make, even if you make $0.
Also, even if you have a job and your taxes are deducted from your pay cheque so you think you don’t owe taxes, you should still file your taxes because you may have deductions or you may have been paying too much tax and be owed a refund.
You don’t get a refund if you don’t file your taxes.
Also if you worked two jobs and both are deducting CPP and EI, you may have over paid one of them and be owed a refund for that.

Laura says:

Great point about contributing to your RRSP. It seems like there is a lot of presure to maximize your RRSP. However, especially for people first starting their career it doesn’t make sense because of your tax rate. If you think you will make more in the future (most professional careers follow that path) reconsider contributing to your RRSP initially.

If you are in the first few years of your career consider fully funding your TFSA before begining your RRSP.