We are right in the middle of tax season and it is that time when many of us feel stressed or confused about the various changes that come into effect every year. From documentation and deadlines, to provisions and exemptions, the Canada Revenue Agency (CRA) may alter the rules for numerous aspects of individual or business taxes. This year too, there have been several such changes, some of which may even put more money in your pockets!
Read on to learn more about the major changes affecting 2021 taxes and make the most of new credits or deductions that could positively impact your finances.
Key Takeaways for Filing Your 2021 Taxes
Accounting for the rising cost of living, the 2021 tax year features a change in the tax brackets, as well as many contribution amounts and limits.
1. Revised Federal Tax Brackets : Maintaining the buying power for Canadians in the face of inflation, the new federal tax brackets are 15% for income up to $49,020, 20.5% for the next slab up to $98,040, 26% for income up to $151,978, 29% for the next slab up to $216,511, and 33% for income above that amount.
2. Child Care Expense Tax Credit : The maximum amount of eligible child care expenses for a child with a severe or prolonged ailment has gone up from $13,445 to $14,230. For a child born after December 31, 2004, this amount has changed from $9,825 to $10,400.
3. Quebec Drug Insurance Plan : There is an increase in the contribution rates for the Quebec prescription drug insurance plan. The maximum contribution is now $662 for the period January 1 to June 30, 2021 and $710 for July 1 to December 31, 2021.
4. Work-from-Home Tax Credit : Work-from-home tax credit has increased from $400 to $500 to claim tax relief on expenses incurred on office supplies, utilities, phone and internet expenses, and more.
5. Other Significant Changes : There is an increase in several amounts and tax credits:
- Basic Personal Amount (BPA) : Line 350 BPA amount for the 2021 tax year is increased to $13,808.
- Infertility Treatments : There is a change in the tax credit eligibility conditions for certain in-vitro fertilization and artificial insemination expenses paid after November 14, 2021.
- Disability Support Deduction : There is a temporary relaxation in the eligibility criteria for the deduction of products and services for disability support.
- Remote Area Resident Travel Deduction : As of January 1, 2021, if you live in a designated remote area and you do not receive taxable travel benefits provided by your employer, you can claim a travel deduction of up to $1,200 (for northern area) and $600 if you live in an intermediate zone.
- Taxi Driver or Owner Tax Credit : If you lived in Quebec on December 31, 2021, you can claim a refundable tax credit taxi driver or owner up to a maximum of $301 as long as you meet the eligibility criteria defined in Line 462.
- Volunteer Respite and Caregiver Respite Tax Credits : Due to the introduction of the Tax Credit for Caregivers, the Volunteer Respite Tax Credit and Caregiver Respite Tax Credit are abolished as of January 1, 2021.
- Senior Assistance Tax Credit : The maximum amount of elder support tax credit has gone up from $206 to $400 for a single eligible individual, while the eligible couple amount has increased from $412 to $800.
Like every year, the maximum contribution limits for Canada Pension Plan (CPP) have been revised upwards and now stand at $3,766.10 in Québec and $3,499.80 in the rest of Canada. Similarly, the Registered Retirement Savings Plan (RRSP) annual dollar limits have also increased, and the maximum contribution amount for 2021 tax year will be $27,830 (capped at 18% of your earned income for the previous year).
Get Professional Help to Plan your Finances
At Nour Private Wealth , we offer comprehensive investment planning services that focus on wealth creation, tax savings and smart retirement finance strategies. Our team of investment planningadvisors service a diverse set of clients across seven Canadian provinces. We can help you curate robust investment plans that address your specific financial goals, while remaining aligned to your risk tolerance and applicable time horizon.
Get in touch with our knowledgeable and experienced wealth advisers for assistance with tax filing, RRSP contributions and other wealth management planning tools.
Reference Links
https://www.mtlblog.com/revenu-quebec-published-a-list-of-major-changes-affecting-2021-taxes?utm_campaign=MTLBlog&utm_medium=Social&utm_source=instagram
(original link provided by client)
https://www.revenuquebec.ca/en/citizens/income-tax-return/completing-your-income-tax-return/completing-your-income-tax-return/new-for-2021/
https://turbotax.intuit.ca/tips/9-biggest-tax-changes-canadians-need-to-know-2022-14386
