Written by Robin Taub
Wednesday, March 4th, 2020
These are some of the key changes to know about when filing your 2019 personal tax return. Also included are some helpful reminders and tips to make tax filing easier.
The Canada Revenue Agency (CRA) has totally redesigned the T1 Personal Income Tax return for 2019. Although the return (not including schedules) has gone from four pages to eight, the changes were meant to "enhance their services" by:
- Using plain language where possible
- Increasing font size and white space
- Updating worksheets to simplify certain calculations
- Eliminating Schedule 1 and the related Worksheet, which were used to calculate taxes owing. These calculations will now be found on pages 7 and 8 of the return
(Note: the line numbers that were previously 3 and 4 digits are now 5 digits)
CRA Processing Times
You can now go online to find out the standard processing times for tax returns and other tax-related requests sent to the CRA.
You can now pay any taxes owing using a credit card, PayPal, or Interac e-Transfer.
Enhanced Canada Pension Plan/Quebec Pension Plan Contributions
Starting in 2019, contributions to CPP/QPP are being gradually enhanced from 4.95% to 5.95% by 2023. In exchange, you'll receive improved benefits. You'll continue to claim base CPP/QPP contributions as a non-refundable tax credit, but the new enhanced portion will be treated as a tax deduction.
Canada Workers Benefit (CWB)
The CWB is a refundable tax credit intended to supplement the earnings of low income workers and replaces and enhances the working income tax benefit (WITB). The CRA will now calculate the benefit for those who qualify, making it more accessible.
Canada Training Credit
The Canada Training Credit (CTC) is a new tax credit that provides financial support to help cover up to half of eligible tuition and fees associated with post-secondary education or occupational-skills courses certified by the Minister of Employment and Social Development. Here's how it works:
- Beginning in 2019, $250/year will accumulate in an account tracked by the CRA.
- Although the annual accumulation begins in 2019, you can't claim the credit until the 2020 tax year. Your notice of assessment for 2019 (as well as your CRA My Account portal) will indicate your CTC limit for 2020.
Home Buyers' Plan
- The 2019 budget increased the Home Buyers' Plan (HBP) withdrawal limit to $35,000 (from $25,000). That means a couple can potentially withdraw up to $70,000 from their Retirement Savings Plan to purchase a first home.
- The new limit is for withdrawals made after March 19, 2019.
- The maximum dollar limit for 2019 for contributing to your RSP is $26,500. However, check your Notice of Assessment or log into the Canada Revenue Agency's (CRA) My Account to determine your personal available contribution room for 2019. Only contributions made by March 2, 2020 can be deducted in the 2019 tax year.
Indexing to Inflation
- Every year, non-refundable tax credits and federal income tax brackets are indexed to inflation. The 2019 indexation increases, which are based on the Canadian Consumer Price Index, were 2.2%. That means the basic personal amount, the amount you can earn without paying any federal income tax, has increased to $12,069 in 2019. At the other end of the spectrum, the top federal tax bracket of 33% kicks in at taxable income over $210,371.
- The Canada Child Benefit was indexed starting in July 2018 and now provides up to $6,639 per child under the age of 6, and up to $5,602 per child aged 6 to 17.
Less Work for You
- Get organized by using this checklist to help make filing your taxes as efficient and painless as possible.
- If you use certified tax software to prepare your return, it'll be updated with the latest tax changes. It'll also allow you to file online quickly, accurately, and at your convenience, and receive any refund you may be owed in a matter of days. CRA's NETFILE service reopened on Monday, February 24, 2020.
- Using Auto-fill my return allows the CRA to instantly transfer the most accurate and up-to-date tax information they hold, such as from T4 and RRSP/RSP slips, directly to the proper places in your tax return.