The 2021 federal budget: more benefits, new taxes, and more.

The 2021 federal budget was announced this month, including these proposed changes:

• Extended COVID-19 emergency benefits
• Extended wage and rent subsidies for businesses
• Claiming your repaid COVID-19 emergency benefits
• Changes to Employment Insurance (EI) benefits
• You can now electronically sign these federal forms
• Other electronic filing changes
• More Old Age Security (OAS) payments
• Changes to the disability tax credit
• Changes to the Northern residents travel deduction
• More Canadians can claim the Canada workers benefit (CWB)
• The new Canada recovery hiring program (CRHP)
• Immediate expensing for Canadian-Controlled Private Corporations (CCPCs)
• Limiting excessive interest deductions
• A new tax on some luxury goods
• A new tax on vacant homes in Canada owned by non-residents of Canada
• A new tax on digital services
• Interest-free loans for retrofits
• Federal tax rates
• Federal personal amounts

Extended COVID-19 emergency benefits.

The following COVID-19 emergency benefits have been extended:

• You can now receive the Canada Recovery Benefit (CRB) for up to 50 weeks (the previous limit was 38 weeks). Keep in mind, after you’ve already received the benefit for 38 weeks, or if you’re applying for the CRB for the first time after July 17, 2021, you’ll only receive $300 per week (instead of the current rate of $500 per week).
• You can now receive the Canada Recovery Caregiving Benefit (CRCB) for up to 42 weeks (the previous limit was 38 weeks), at $500 per week.

Extended wage and rent subsidies for businesses.

The federal government has extended the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) programs until at least September 25, 2021.

Between July 4 and September 25, 2021, only businesses who lose more than 10% of their revenue will be eligible for these subsidies. The amount you’ll receive for these subsidies will also gradually be lowered.

Public corporations might also need to repay part of the CEWS they received if their executives (for example, their CEO and CFO), were paid more in 2020 than they were paid in 2019.

To learn more about the CEWS and the CERS, check out this blog on COVID-19 relief measures for businesses.

Claiming your repaid COVID-19 emergency benefits.

If you repay COVID-19 emergency benefits (for example, CERB or CRB) before 2023, you can now choose to deduct the amount on your return the year you repaid it or the year you originally received the benefit. This means you have more options to lower the taxes you owe, depending on your income for the year. Check out this blog to learn more about repaying your COVID-19 emergency benefits.

Changes to Employment Insurance (EI) benefits.

Beginning in the summer of 2022, you’ll be able to receive EI sickness benefits for up to 26 weeks (the previous limit is 15 weeks). More details about these changes are coming soon.

You can now electronically sign these federal forms.

To make filing your federal return more convenient, from now on, the CRA will accept electronic signatures for the following forms (no more paper copies needed):

• Information return for electronic filing of an individual’s income tax and benefit return (T183);
• Information return for corporations filing electronically (T183CORP);
• Declaration of conditions of employment (T2200);
• Statement of discounting transaction (RC71); and
• Notice of the actual amount of the refund of tax (RC72).

Other electronic filing changes.

Other administrative changes for electronic filing have also been announced which will come into effect after 2021:

Electronic notices of assessment (NOAs).

If you file your return electronically, the CRA will always send your notice of assessment (NOA) electronically, too. Likewise, if you file a paper return by mail, you’ll receive a paper NOA by mail.

My Business Account messages.

By default, businesses that use the CRA’s My Business Account will receive messages online, but they can still choose to receive their correspondence by mail.

T4A and T5 slips can be issued electronically.

T4A and T5 slips can be issued electronically without needing to provide a paper copy (no authorization needed).

New limit for the number of paper returns prepared at once.

Taxpayers must file online when preparing more than 5 returns at a time (the previous limit was 10 returns).

New limit to the number of information slips included with a paper return.

If you file more than 5 information slips with your paper return, you could be charged a penalty – you’ll need to file electronically instead (the previous limit for paper returns was 50 information slips).

Corporate and GST/HST returns.

All corporate returns and all GST/HST returns must be filed electronically.

Electronic payments to the CRA.

If you owe the CRA more than $10,000 in taxes, late-filing penalties, and/or interest, your payment will need to be made online. If you owe less than $10,000, you can still pay this amount in person. Visit the CRA website to learn about your payment options.

More Old Age Security (OAS) payments.

If you’re 75 or older, you’ll receive more Old Age Security (OAS) payments:

• A one-time payment of $500 in August 2021; and
• Starting July 2022, your regular OAS payments will be increased by 10%.

Changes to the disability tax credit.

The eligibility requirements for the disability tax credit are being changed to make it easier for more people to claim it, such as individuals who have a mental impairment and individuals who need life-sustaining therapy for diabetes.

For example, the definition of life-sustaining therapy has been changed to include:

• Time spent to figure out your daily diet and exercise to adjust the dosage of medication that needs to be taken every day; and
• If the therapy includes eating a medical food or formula every day, the time spent on activities that relate to figuring out the amount of medication that can safely be eaten.

You’ll also be able to claim more of the time you spend at medical appointments, including:

• Appointments to receive therapy or figure out the daily dosage of your medication; and
• Medically necessary time to recuperate.

To find out what other changes have been made to this credit, visit the CRA website. To learn more about disability tax credits for Canadians, check out this blog.

Changes to the Northern residents travel deduction.

If you live in the Northern regions of Canada, as of 2021, the amount you can claim for travel outside your prescribed zone will now be the lowest of the following amounts:

• The travel benefit you received from your employer for the trip or the amount you’ve allocated to that trip, up to$1,200 for the combined total of all the trips you take during the year (a new limit);
• The total travel expenses paid for that trip; or
• The lowest cost of a return flight to the nearest city.

To learn more about deductions for Northern residents, and to find out if you live in a prescribed zone, visit the H&R Block Online Help Centre.

More Canadians can claim the Canada workers benefit (CWB).

As of 2021, more Canadians will be able to claim the Canada workers benefit (CWB). This includes:

• Raising the maximum income you can earn to qualify for the CWB to $22,944 for single individuals who don’t have dependants (previously $13,194);
• Raising the maximum income you can earn to qualify for the CWB to $26,177 for families (previously $17,522); and
• Your spouse or common-law partner can exclude up to $14,000 of their income to help your household qualify for the benefit.

The new Canada recovery hiring program (CRHP).

The Canada recovery hiring program (CRHP) is a new subsidy to create job growth for Canadians. The program will cover 50% of eligible employees’ salaries paid between June 6 and November 20, 2021.

Employers who are eligible for this program will generally be the same employers who are eligible for the CEWS. However, you’ll only be able to apply for either the CRHP or the CEWS to help pay your employees.

Immediate expensing for Canadian-Controlled Private Corporations (CCPCs).

As of April 19, 2021, some types of capital property owned by CCPCs can be expensed immediately, allowing you to claim up to $1.5 million for your assets. The property must be available for use before January 1, 2024. To learn more about these changes, visit the CRA website or find an H&R Block office near you to speak to a corporate tax specialist.

Limiting excessive interest deductions.

As of 2023, some businesses will only be able to deduct 40% of their interest costs during the first year of this measure, and 30% every year afterwards. More details about this change are expected over the summer, including relief for small businesses.

A new tax on some luxury goods.

As of January 1, 2022, a new luxury tax will be charged on the sale of new luxury cars and personal aircraft which cost more than $100,000, and boats which cost more than $250,000. This applies to imported vehicles, aircraft, and boats as well as goods bought in Canada.

A new tax on vacant homes in Canada owned by non-residents of Canada.

As of January 1, 2022, vacant or under-used properties in Canada owned by non-residents will be charged an additional tax of 1% of the property’s value. This means non-residents will need to begin declaring what their properties are used for.

A new tax on digital services.

As of January 1, 2022, a new tax of 3% will be added to digital services provided by large businesses that rely on data and content provided by Canadians (for example, Netflix and Spotify). This new tax will be charged to the company providing the service – not the consumer. This is in addition to the GST/HST that non-Canadian companies providing digital services to Canadians now need to charge.

Interest-free loans for retrofits.

Beginning in the summer of 2021, the Canada Mortgage and Housing Corporation (CMHC) is providing interest-free loans of up to $40,000 to help homeowners afford deep home retrofits. To qualify, the retrofits your home needs must be identified through an authorized EnerGuide assessment. This is in addition to the $5,000 grant offered to homeowners in the fall to complete energy efficient home improvements. More information about this program is coming soon.

Federal tax rates.

2018	2019	2020	2021
15% of taxable income up to $46,605	15% of taxable income up to $47,630	15% of taxable income up to $48,535	15% of taxable income up to $49,020
20.5% of taxable income between $46,605 and $93,208	20.5% of taxable income between $47,630 and $95,259	20.5% of taxable income between $48,535 and $97,069	20.5% of taxable income between $49,020 and $98,040
26% of taxable income between $93,208 and $144,489	26% of taxable income between $95,259 and $147,667	26% of taxable income between $97,069 and $150,473	26% of taxable income between $98,040 and $151,978
29% of taxable income between $144,489 and $205,842	29% of taxable income between $147,667 and $210,371	29% of taxable income between $150,473 and $214,368	29% of taxable income between $151,978 and $216,511
33% of taxable income over $205,842	33% of taxable income over $210,371	33% of taxable income over $214,368	33% of taxable income over $216,511

Federal personal amounts.

Personal amount	2018	2019	2020	2021
Basic personal amount	$11,809	$12,069	$13,229* (net income <$150,473) $12,298* (net income >$214,368)	$13,808** (net income <$151,978) $12,421** (net income >$216,511)
Age amount	$7,333	$7,494	$7,637	$7,713
Threshold at which age amount begins to be phased out	$36,976	$37,790	$38,508	$38,893
Threshold at which age amount is fully phased out	$85,863	$87,750	$89,421	$90,313
Spouse or common-law partner / Amount for eligible dependant	$11,809	$12,069	$13,229* (net income <$150,473) $12,298* (net income >$214,368)	$13,808** (net income <$151,978) $12,421** (net income >$216,511)
Spouse or common-law partner / amount for eligible dependant if eligible for family/Canada caregiver amount	$13,991	$14,299	$15,502* (net income <$150,473) $14,571* (net income >$214,368)	$16,103** (net income <$151,978) $14,716** (net income >$216,511)
Family/Canada caregiver amount (CCA) for children under 18	$2,182	$2,230	$2,273	$2,295
Canada caregiver amount (CCA) for other infirm dependants age 18 or older	$6,986	$7,140	$7,276	$7,348
Threshold for CCA for other infirm dependants age 18 or older	$16,405	$16,766	$17,085	$17,256
Volunteer firefighters’ amount	$3,000	$3,000	$3,000	$3,000
Search and rescue volunteers	$3,000	$3,000	$3,000	$3,000
Canada employment amount	$1,195	$1,222	$1,245	$1,257
Home accessibility expenses (maximum claim)	$10,000	$10,000	$10,000	$10,000
Adoption expenses (maximum claim)	$15,905	$16,255	$16,563	$16,729
Digital news subscription expenses (maximum claim)	N/A	N/A	$500	$500
Pension income amount (maximum claim)	$2,000	$2,000	$2,000	$2,000
Disability amount	$8,235	$8,416	$8,576	$8,662
Disability supplement	$4,804	$4,909	$5,003	$5,053
Childcare expense threshold for disability supplement	$2,814	$2,875	$2,930	$2,959
Medical Expenses - 3% net income threshold for medical expenses	$2,302	$2,352	$2,397	$2,421

* If net income >$150,473 but <$214,368, the top-up amount of $931 is phased out.

** If net income >$151,978 but <$216,511, the top-up amount of $1,387 is phased out.

Questions about how the federal budget impacts you? Find an H&R Block office near you and talk to one of our reliable Tax Experts about your tax situation.