Personal Income Tax Updates
The CRA has recently released income tax updates due to the ongoing pandemic. The CRA has further extended the payment due date for 2019 individual tax returns and 2019 or 2020 corporation, or trust returns, as well as for instalment payments, from September 1, 2020, to September 30, 2020. Late filing penalties may still apply if a return was not filed on time and the balance owing remains unpaid as of September 30th.
The CRA’s tax updates will also waive arrears interest on existing tax debts related to individual, corporation, and trust income tax returns. This only applies from April 1, 2020, to September 30, 2020, and from April 1, 2020, to June 30, 2020, for Goods and Services Tax/Harmonized Sales Tax (GST/HST) returns. This measure for existing tax debts doesn’t cancel penalties and interest already assessed on a taxpayer’s account prior to this period. However, it does ensure that a taxpayer’s existing tax debt will not grow through interest charges during this difficult time. Be advised, the CRA is resuming its collections activity this fall. Collections officers from the debt management call center will begin contacting individuals and businesses with a balance owing to discuss and re-evaluate their financial situation.
CRA Tax Updates for Meals Claims
It also comes as news that the CRA has increased the amount that employers can use to determine whether an overtime meal or allowance, or the meal portion of a travel allowance is taxable, from $17 to $23. The CRA has also increased the rate at which transport employees and other individuals can claim meal expenses, using the simplified method (a flat rate per person), from $17 to $23 per meal. These increases are effective immediately and retroactive to January 1, 2020.
When claiming meal expenses on a personal income tax return, the CRA allows transport employees, and individuals claiming moving expenses, medical expenses, or the northern resident’s deduction, to calculate their meal expenses claim using the simplified method. This method is the easiest way to calculate meal expenses since it’s based on a flat rate and individuals do not have to keep receipts for their meals. In addition, the CRA’s policies on taxable benefits and allowances allows an employer to exclude the value of an overtime meal or allowance, or certain travel allowances (including a meal portion), from an employee’s income as long as the value is reasonable (amongst other conditions).