These tax changes in the latest fiscal update affect employees, seniors, students and more

National Post


There were very few broad-based tax changes in the federal government’s fall economic statement released on Tuesday, but there were a number of personal tax measures that may be of interest to various readers. Here’s a quick look at some of them.

For employees

Many of us will continue working from home for the foreseeable future, with an early 2022 return to the office now on hold for many Canadian workers in light of the escalating threat of the Omicron variant of COVID-19. The government this week confirmed that employees who are working from home can continue to use the temporary flat rate method, introduced for the 2020 tax year, to calculate home office expense deductions.

As a reminder, there are two methods for claiming home office expenses as a result of COVID-19: the temporary flat rate method and the detailed method.

The temporary flat rate method allows an employee to simply claim $2 for each day they worked from home due to the pandemic. The government announced it would be increasing the maximum claim to $500 (from $400), and these rules will apply for the 2021 and 2022 tax years. Multiple people working from the same home can each make a claim. All days worked from home, either full time or part time, count. Vacation days, sick days and days on a leave of absence do not.

Under the detailed method, an employee must calculate all eligible expenses and can only claim expenses for the part of the year they worked from home, prorating the expenses based on the portion of the home used for work. Many eligible expenses qualify under this method, such as the cost of utilities, rent, maintenance, minor repair costs and internet access fees. Mortgage interest, property taxes, home insurance, capital expenses and depreciation (capital cost allowance) do not generally qualify.

For seniors

Many low-income seniors who receive Guaranteed Income Supplement (GIS) or Allowance benefits but who also received the Canada Emergency Response Benefit (CERB) or its successor, the Canada Recovery Benefit (CRB) in 2020, have seen a dramatic decline in their benefit amounts for the current 2021-2022 benefit year, with some facing a total loss of this support. That’s because the GIS for the current benefit year (2021) is based on your net income for the prior year (2020), which includes any CERB or CRB received.

The government has proposed to provide up to $742.4 million for one-time payments to alleviate the financial hardship of GIS and Allowance recipients who received CERB or CRB in 2020 by restoring the amounts they lost. In a virtual stakeholders’ technical briefing immediately following the release of the economic statement, a government official stated it’s hoped these payments could be made by May 2022.

For students

Relief is also on the way for some students who applied for, and received, the CERB despite not being eligible and who currently find themselves facing potentially significant repayment obligations. The government has proposed to provide debt relief to students who received, but were ineligible for, the CERB but were eligible for the Canada Emergency Student Benefit (CESB) by allowing their CERB-related debt to be offset by the amount they would have received from CESB during the same benefit period. The fiscal impact of this measure was estimated to be $67.9 million.

For teachers

Under current tax rules, teachers and early childhood educators can claim a 15-per-cent refundable “Eligible educator school supply tax credit” on up to $1,000 of expenses incurred for “eligible supplies.”

Eligible supplies must be purchased for use in a school or in a regulated child-care facility for the purpose of teaching or facilitating students’ learning, and include books, games and puzzles, containers (such as plastic boxes or banker boxes), and educational support software. They also include consumable goods, such as construction paper for activities, flashcards or activity centres.

Teachers and early childhood educators can claim a 15-per-cent refundable “Eligible educator school supply tax credit” on up to $1,000 of expenses incurred for “eligible supplies.” PHOTO BY JULIE OLIVER/POSTMEDIA FILES

The economic statement proposed to make the tax credit more generous by increasing the rate of the refundable tax credit to 25 per cent. In addition, new rules would broaden the locations where teaching supplies are permitted to be used by removing the requirement that teaching supplies must be used in a school or regulated child-care facility to be eligible.

The government also expanded the list of eligible durable goods to include certain electronic devices, such as calculators, webcams, microphones and headphones, speakers, multimedia projectors, printers, and laptop, desktop and tablet computers.

Luxury tax

The spring 2021 federal budget proposed to introduce a luxury tax on the sale of cars and personal aircraft with a retail price of more than $100,000, and boats costing over $250,000. The tax would be calculated at the lesser of 20 per cent of the value above those thresholds or 10 per cent of the full value of the luxury car, boat, or personal aircraft.

Consultations recently concluded on the design of this measure and the government announced it is working to incorporate the results into proposed draft legislation, which is expected to be released in early 2022.

Underused Housing Tax

The government in the 2021 federal budget announced its intention to implement a national, annual one-per-cent tax on the value of non-resident, non-Canadian-owned residential real estate in Canada that is considered to be “vacant” or “underused.” Consultations were held over the summer, and the feedback received will be integrated into the final design of the tax rules.

Additional exemptions were added, including an exemption for vacation/recreational properties, which would apply if the property is located in an area of Canada that is not an urban area within either a census metropolitan area or a census agglomeration having 30,000 or more residents, and is personally used by the owner (or the owner’s spouse or common-law partner) for at least four weeks in the calendar year.

This tax would be effective for the 2022 calendar year and initial Underused Housing Tax returns for the 2022 calendar year would be required to be filed with the Canada Revenue Agency on or before April 30, 2023.