April in Canada means two things: winter is nearly over and income tax returns will be due soon. While the arrival of spring is more pleasant than the arrival of tax season, this guide will give you all the information you need — including what’s new and what has been updated for this year’s return — to make filing your taxes as stress-free as possible.
What’s New for Taxes in Canada 2020
The federal government regularly adds, removes or changes eligible deductions, credits and benefits that can save you money on your annual tax return. This year is no exception, with the following brand-new items you should be aware of:
- Canada Pension Plan Enhancement deduction: Working Canadians had to pay a little bit more in CPP premiums in 2019 (an extra 0.15% for those who are employed, or 0.3% for self-employed), which are referred to as “enhanced” contributions. To slightly offset this added financial burden, you get to claim a deduction for these enhanced contributions, which could lower your taxable income by up to $80.85 for employed, and up to $161.70 for self-employed.
- Canada Training credit: At the end of 2019, eligible workers between the ages of 25 and 65 will begin accumulating an annual sum of $250, up to a lifetime maximum of $5,000, in a Canada Training credit account, which can later be claimed by those who paid tuition or training fees. Starting next tax year, filers can claim a refundable tax credit equal to their Canada Training Credit account balance, or up to half of their eligible tuition/training fees, whichever is less.
What’s Changed for Taxes in Canada 2020
Similarly, take note of the following credits and tax-related programs that have been revised on this year’s return:
- Cannabis and the Medical Expenses credit: In addition to the usual out-of-pocket medical expenses (e.g., prescriptions, dental care, uninsured tests, health insurance premiums, etc.) that were already eligible for this tax credit, you can now also claim the cost of some cannabis products, if they were prescribed by a physician for medical reasons.
- Climate Action Incentive credit: Last year, residents of Saskatchewan, Manitoba and Ontario were already eligible to receive this credit meant to offset the cost of the carbon tax and is determined by family size. This year, residents of Alberta join the club, while those living in New Brunswick lose the incentive altogether.
- Canada Workers Benefit: This refundable tax credit for low-income working Canadians used to be called the Working Income Tax Benefit. Aside from the new name, it also differs in that the maximum credit is increasing to $1,355 from $1,059 for individuals (and to $2,335 from $1,922 for families). The income threshold where benefits begin to be reduced is rising to $12,820 from $12,015 for individuals (and to $17,025 from $16,593 for families).
- Home Buyers’ Plan increase: The maximum amount you can withdraw from your registered retirement savings plan (RRSP) under the Home Buyers’ Plan increased to $35,000 from $25,000 for withdrawals made after March 19, 2019.
How to File Taxes in Canada
There are several ways for Canadians to file their taxes:
- Mail in a paper copy: If you filed your taxes on paper last year, the CRA should have automatically mailed you the 2019 income tax package in February. Otherwise, you can view and download forms from the CRA website.
- 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.
Frequently Asked Questions
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.