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Principal Residence Exemption
If you are looking to convert your place of residence into a business property, you have the option to keep it as a principal residence for tax purposes. There are many reasons individuals may opt for this. One specifically being, to avoid reporting the possibility of a capital gain which is required when changing the type of the property to a business property.
However, you will still be required to report your business or rental income and you will not be able to deduct capital cost allowance (CCA) on the property.
This exemption is effective for up to four years after making the property a business property as long as you are still a resident of Canada, and you do not have any other properties considered as principal residences
Once these four years have passed, in order to keep maintain the exemption, you must meet more qualifications.
The following qualifications that must be met are:
1. You do not live at your principal residence because your employer or partner’s employer wants you to
2. You and your partner are not related to your employer
3. You return to your original home while you or your partner are still with the same employer, or before the end of the year following the year in which this employment ends, or you die during the term of employment.
Your original home is at least 40 kilometers farther than your temporary residence from your, or your partner's, new place of employment.
For more information about the principal residence exemption, please contact our office to discuss if using this exemption is right for you.
Changing all your principal residence to a rental or business property - Canada.ca
Here at Augimeri & Theva Professional Corporation we offer a wide assortment of services to our clients. This includes personal and corporate tax preparation, tax consulting, small business tax accounting, tax planning, tax audit help, bookkeeping, cloud accounting, startup accounting, real estate tax planning, advice in various COVID-19 grants, research and development help, self-employed tax returns, rental income tax return, contractor tax return, and much much more!
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Claiming Work-Related Expenses on Your 2020 Tax Return
With the 2020 tax return deadlines creeping upon us, there are many questions you as an employee may have regarding work-related expenses and how to claim these deductions on your tax return. With COVID-19 affecting everyone, more people have been required to work from home than ever which has resulted in an increase in employees using and paying for their own resources to complete their day-to-day work tasks. We are here to answer some concerns you may have regarding these expenses.
Claiming Home Office Expenses:Employees who are required to work from home and use their own resources including: supplies, home offices, cell phones, etc., for work, can qualify to claim expenses on their income tax return. In order to relieve employees of these costs during COVID-19, the Canadian government now offers new methods that employees can use to claim these deductions for the 2020 tax-year. One method is called the Temporary Flat Rate Method.
In order to be eligible, you must meet the following requirements:
1. You are required to work from home due to COVID-19
2. You have worked from home over 50% of the time for the last 4 weeks
3. You are using these expenses directly for working purposes
If qualified, you can claim up to $2 per day each day you worked from home during the eligible period. The maximum amount you can claim using this method is $400 which equals to 200 working days.
Multiple people in your home can claim these benefits if they qualify.
This method is easier to use than in past years as the government has alleviated the requirement of employees calculating the size of their workplace, and other various calculations. Also, there is no longer the need to have your employer fill out a T2200 form if using the temporary flat rate method.
Note that any days used as a vacation day, sick day, etc. can not be included in your calculation.
Claiming Motor Vehicle Expenses:
A common confusion that arises when employees claim deductions is what does and does not qualify as a motor vehicle expense. With COVID-19, many employees may be required to work from home but must travel to the office occasionally. So, the question is, can you claim these trips as travel expenses?
In normal circumstances, the answer would be no since as you are travelling from your home to your place of employment and this does not qualify for deductions on your income tax. However, with COVID-19 requiring employees to work from home at a much larger percent, this could mean that you are now travelling from one place of employment to another. In that case, you would qualify to receive deductions.
To find out whether you qualify, contact us
Here at Augimeri & Theva Professional Corporation we offer a wide assortment of services to our clients. This includes personal and corporate tax preparation, tax consulting, small business tax accounting, tax planning, tax audit help, bookkeeping, cloud accounting, startup accounting, real estate tax planning, advice in various COVID-19 grants, research and development help, self-employed tax returns, rental income tax return, contractor tax return, and much much more!
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Can you deduct Cannabis as medical expenses on your 2020 tax return?
The Government of Canada has announced some changes to the medical expense tax credit which will expand the eligibility for individuals who are faced with medicinal cannabis expenses. Medical cannabis is marihuana that has been prescribed by a physician or other various doctors for the use in treating a patient for varying medical conditions. With marihuana in the early stages if its acceptance and legitimacy in today’s society, many insurance companies deny any claims from individuals for the cost of marihuana for medical use. Thus, patients are often burdened with the expense. Fortunately, with the changes the Government of Canada has announced, individuals may be eligible to deduct these costs from their 2020 tax return. Those who are eligible will be able to claim the medical expense credit for any payments made in 2020 for; cannabis, cannabis oil, cannabis plant seeds, and other cannabis products.
In order to qualify, individuals must satisfy the following:1. Holder of a medical document as defined in the Cannabis Regulations
2. Registered as a client of the holder of a license for sale; and
3. Make their purchases from the holder of a licence for sale they are registered with
How much can you claim?
Individuals who qualify can claim up to the lesser of 3% of their net income and $2,352. Please keep in mind that these credits are non-refundable. This means that you can only offset any tax owing on your 2020 tax return with the medical expense credit for which you are eligible for. Any amount of the medical expense credit that is unused cannot be refunded to you. Some low-income individuals or families may qualify for the Refundable Medical Expense Supplement (RMES). This is specifically for those who have high medical expenses and low incomes. For more information: https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2020/tax-filing-season.html
If you have any questions or to see if you qualify, please contact our office.
Here at Augimeri & Theva Professional Corporation we offer a wide assortment of services to our clients. This includes personal and corporate tax preparation, tax consulting, small business tax accounting, tax planning, tax audit help, bookkeeping, cloud accounting, startup accounting, real estate tax planning, advice in various COVID-19 grants, research and development help, self-employed tax returns, rental income tax return, contractor tax return, and much much more!
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How it Benefits Those who Work from Home Due to COVID-19
This pandemic has brought many changes to businesses and individuals. One of these changes being the limitations of where employees should perform their work during this time. To handle this, a business may decide to reduce their staff at the office by doing rotational shifts, short days in office or have everyone work from home. Unfortunately, when employees work from home, some issues can occur. One issue being reimbursement for employees that spend money on work related costs. Unfortunately, the CRA has not released any employee expense deductions related to COVID-19 however, T2200 is a great option if you qualify! If you are an employee who has been forced to work from home due to COVID-19, you could qualify to receive tax deductions from your income, better known as T2200, for some costs you have faced for which have not been reimbursed by your employer. These costs include any equipment or supplies purchased for work, used at home.
How to Qualify:
1. It is important to keep the receipts for any payments you make that qualify.
2. Understand what costs are deductible, such as, work space, electricity, heating, maintenance, property taxes, and home insurance; sorry but your masks are not deductible.
3. With your 2020 , fill out form T777 in order to determine which expenses and how much you will be deducting, then fill out form T2200.
4. Your employer must fill out T2200 Declaration of Conditions of Employment, which can be found on the government website, in order to qualify.
5. Normally, you must prove that you are working from home and are incurring these expenses without choice. During the COVID-19 pandemic it may be mandatory for some individuals to work at home and therefore the T2200 benefit definitely applies during this time!
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