At the Passover seder, perhaps the most well-known song that has been chanted by millions of Jews for over a thousand years is the Dayenu, which means “it would have been enough.” The song consists of 15 verses, each one representing something to be thankful for, and, at the conclusion of each verse, the word “dayenu” is sung repeatedly.
This song occurred to me this week as I prepared a draft of my 2020 tax return and reviewed the list of the myriad “boutique” tax credits that I could potentially claim. The Canada employment amount? I’ll take it. The new digital news credit? Sign me up. The basic personal amount? It would have been enough!
Indeed, a quick scan of the 2020 federal return shows more than 30 separate federal credit amounts, most of which are non-refundable, each valued at 15 per cent of the amounts claimed (other than the donation credit, which can be worth 29 per cent or more, depending on how much you gave and how high your income was in 2020.) Some of the credits also have a provincial or territorial equivalent.
In preparation for filing your 2020 return, here’s a review of some popular, as well as some lesser-known tax credits, with some practical tips on how to claim them and what they’re worth (federally).
Enhanced basic personal amount (Line 30000) — Value: up to $1,984
New for the 2020 return is the enhanced basic personal amount (BPA), which is the mechanism used to ensure that no tax is paid on a certain amount of basic income. For 2020, the enhanced federal BPA is $13,229, but the increase in the BPA doesn’t apply to everyone as it’s reduced, on a straight-line basis, for taxpayers with net incomes above $150,473 until it has been fully phased out once a taxpayer’s income is over $214,368.
Digital news subscription expenses (Line 31350) — Value: up to $75
If you consume your news from a paid digital newspaper app or website, then you may be able to claim the brand new digital news subscription credit worth 15 per cent on up to $500 for amounts you paid in 2020 for qualifying subscription expenses. You must have paid the amounts to a qualified Canadian journalism organization for a digital news subscription with content that is primarily original news.
If your subscription includes both print copies of the paper as well as online digital access, only the cost of a stand-alone digital subscription (or a comparable one) is an eligible expense. If there’s no stand-alone or comparable subscription, then you can only claim 50 per cent of the cost as an eligible expense.
Canada employment amount (Line 31260) — Value: up to $187
If you’re an employee, you can claim a 15 per cent non-refundable federal credit on the lesser of $1,245 and your total employment income for 2020. The purpose of this credit is to give employees a break on what it costs to work, recognizing expenses for things such as home computers, uniforms and supplies that are not reimbursed by their employers. Note that this is in addition to your ability claim home office expenses if you’ve been working from home due to COVID.
Home buyers’ amount (Line 31270) — Value: $750
Bought your first home in 2020? Well, the $5,000 home buyers’ amount may be for you. It’s a 15 per cent non-refundable federal credit on the base amount of $5,000 if you or your spouse or partner were considered a “first time home buyer,” meaning you didn’t live in another home owned by you (or your spouse or partner) in the year or in any of the four preceding calendar years.
Home accessibility expenses (Line 31285) — Value: up to $1,500
This non-refundable credit on up to $10,000 of eligible renovation expenses is available if you’re over 65 or qualify for the disability tax credit, and you made renovations to your home last year to help you live more independently. It may also be claimed by a supporting relative on your behalf.
Adoption expenses (Line 31300) — Value: up to $2,484
This 15 per cent non-refundable credit is available on up to $16,563 of eligible adoption expenses for each adopted child who is under 18 years of age at the time the adoption order is issued or recognized by a government in Canada. Eligible adoption expenses include: fees paid to an adoption agency licensed by a provincial or territorial government, court costs and legal and administrative expenses related to an adoption order for the child, reasonable and necessary travel and living expenses of the child and the adoptive parents, among other fees.
Pension income (Line 31400) — Value: up to $300
The 15 per cent federal non-refundable credit for up to $2,000 of eligible pension income has never been indexed to inflation and has remained at this level since 2007. For individuals under age 65, eligible pension income typically includes only lifetime annuity payments under an registered pension plan (RPP). For those who are 65 years and over, eligible pension income also includes lifetime annuity payments under a registered retirement savings plan (RRSP), RPP or a deferred profit-sharing plan, and any payments out of a registered retirement income fund (RRIF).
Interest on student loans (Line 31900) — Value: variable
You can claim a 15 per cent non-refundable credit for interest that you (or a person related to you) paid on your student loan in 2020 or the preceding five years. To qualify, the loan must have been received under the Canada Student Loans Act, the Canada Student Financial Assistance Act, the Apprentice Loans Act or provincial or territorial government laws similar to the acts above.
Medical expense tax credit (Line 33200) — Value: variable
For the 2020 tax year, valid medical expenses for you, your spouse or common-law partner, and your dependent children who were under 18 in 2020 qualify for a 15 per cent federal credit, to the extent that they exceed the lesser of three per cent of your net income or $2,397. Group health insurance premiums you pay for your workplace medical or dental plan that are not covered by your employer also qualify for this credit.
Eligible educator school supply tax credit (Line 46900) — Value: up to $150
Teachers who pay for unreimbursed school supplies out of their own pocket can claim a 15 per cent refundable credit for up to $1,000 of eligible teaching supplies expenses. Teaching supplies include: consumable supplies (paper, glue, art supplies) as well as “prescribed durable goods” such as books, games, and puzzles, plastic containers, or educational support software.
Wishing readers a Happy Passover, a Joyous Easter — and many happy returns.