December 15, 2020

Your CFA Update on COVID-19

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Canadians working from home could qualify for new tax deduction

The Canada Revenue Agency has simplified the rules to make millions of Canadians working from home eligible for a tax deduction. Under the new rules, those who worked from home more than 50 per cent of the time over a period of at least four consecutive weeks in 2020 as a result of the pandemic will be now be eligible for the deduction.

Eligible employees who opt for the simplified deduction will be able to claim $2 for each day they worked from home during that period, plus any other days they worked from home because of the pandemic, up to a maximum of $400. Their employers will not have to sign a special form.

More than one person living at the same address can claim the deduction as long as each one qualifies for it.

While the temporary simplified deduction applies to the 2020 tax year, many Canadian workers have been told they can expect to work from home for several more months. CRA officials say they expect the number of people who work from home to be higher in the future than it was before the pandemic, but have not yet decided whether the simplified deduction will continue for the 2021 tax year.

Those who claim the simplified work-from-home tax credit will not be able to claim expenses related to using their vehicles for work.

Those with larger claims for home office expenses can still use the existing detailed method to claim a deduction. The CRA is making that easier too.

Under the existing rules, those working from home had to get their employers to fill out a special form, T2200, attesting to the fact that working from home was a condition of their employment. But many employers balked at filling out the complicated form. Now, the CRA has launched two new simplified forms (T2200S and T777S) and a calculator to help those who want to claim home office expenses. The CRA also has expanded the list of expenses eligible for the detailed working-from-home deduction and will now recognize home internet access fees as a deduction.

Quebec heads into 18-day lockdown; non-essential businesses to close from Dec. 25 to Jan. 11

Non-essential businesses will be closed across the province from Dec. 25 through Jan. 11, Premier François Legault announced in a Tuesday press conference.

For the period of time between Dec. 17 and Jan. 11, the province's yellow zones will be upgraded to orange and orange zones to red — the highest alert level — with restaurant dining rooms, gyms, museums and theatres shutting down as a result.

Grocery stores, pharmacies, banks, hardware stores and pet stores will be allowed to remain open. Big box stores will be allowed to open but will be restricted to selling essential goods, such as groceries and pharmacy products.

Provincially run liquor stores and cannabis stores will also remain open.

Dentists, optometrists and other health services will be allowed to stay open, but hair salons, spas and manicurists will have to close.

The lockdown, which Legault dubbed “the holiday break,” will also see the province's elementary schools have their holiday break extended to Jan. 11. Previously, elementary schools were supposed to re-open on Jan. 4. High schools will have an extended holiday break between Dec. 17 to Jan. 11.

Almost all office workers in both the private and public sectors will be required to work from home beginning on Dec. 17 and lasting until Jan. 11. 

Federal carbon tax increases coming

On Friday, Prime Minister Justin Trudeau released the federal government's strategy to reduce greenhouse gas emissions by 2030 — and its centrepiece is a gradual hike in the federal carbon tax on fuels from its current level of $30 a tonne this year to $170 a tonne by that year.

The carbon tax will increase significantly from its current level — the tax is just $30 a tonne this year — as part of a push to meet and surpass Canada's ambitious goal of reducing greenhouse gas (GHG) emissions by 30 per cent below 2005 levels by 2030.

The tax already was expected to hit $50 a tonne in 2022. With this new initiative, the tax will now increase by $15 a tonne each year for the next eight years in order to wean consumers off fossil fuels in favour of cleaner energy sources.

The tax hike will result in higher costs for consumers when they buy gasoline. The price at the pump will increase by 37.57 cents a litre by 2030 as a result of this new plan, and the cost of light fuel oil for home heating, natural gas and propane will rise as well.

$15B in new spending

Beyond the carbon tax hike, the government is also promising $15 billion in new spending on climate initiatives over the next 10 years — money earmarked for improvements to the country's electric vehicle charging infrastructure, rebates and tax write-offs for zero-emissions vehicles and funding for home retrofits, among dozens of other proposed policies.

Commitment to make it revenue neutral

To compensate for the cost-of-living increase, the government said it will continue to return most of the money collected by this program through rebates. Under the current system, the money is returned to individuals and families annually through the 'Climate Action incentive payment' when they file tax returns.

Starting in 2022, the carbon pollution rebate payments will be distributed on a quarterly basis. The average family of four in Ontario will collect roughly $2,018 a year in climate rebates by 2030. The cheques will be higher in provinces like Alberta and Saskatchewan — $3,242 for a family of four in Alberta and $3,829 for a similar family in Saskatchewan — because the people in those provinces generate more carbon emissions per capita.

Sask. restricting most private gatherings to household members only starting Thursday

More restrictions also to be implemented from Dec. 17 through Dec. 25. Saskatchewan residents will only be allowed to mingle indoors with people they live with starting Thursday, the province announced via a news release.

Starting 12:01 a.m. on Thursday, Dec. 17, private indoor gatherings will be limited to household members only. There are a few exceptions. People living alone can meet with one household that has less than five people living in it. Co-parenting arrangements are allowed to continue. Caregivers and support services workers are still allowed in a home as well.

Outdoor gatherings will be capped at 10 people, assuming that physical distancing between people from different homes can be maintained.

More rules coming Dec. 19, Dec. 25

On Saturday, Dec. 19, casinos and bingo halls will have to shut down.

Personal services such as hair salons, massage therapy and tattoo parlours will only be allowed to operate at half capacity, the province says, adding that staff are included in that capacity.

Event venues, such as conference halls, arenas, museums and movie theatres, can still host events with up to 30 people. During the events, all guests must be seated. Food and drink are not permitted "unless explicitly stated in the order," the province said.

Starting Christmas Day, retail services will be reduced to half capacity and large retail locations — retailers with an area larger than 20,000 square feet — will be reduced to 25 per cent capacity.

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