Expect Smaller Income Tax Refunds
There are a few changes to the 2021 tax returns that will impact almost everyone. Expect your 2021 personal income tax return refund to be smaller. Or if you normally owe Canada Revenue Agency CRA each April 30, expect to owe a bit more.
Climate Action Incentive
First, the federal government announced that the Climate Action Incentive CAI (sometimes referred to as the carbon tax rebate) will no longer be paid as a refundable tax credit (refund). Up until last tax season, the CAI was added to your tax refund, or reduced the amount of tax you had to pay. The amount varied from $360 for an individual taxpayer to $540 for a couple and added another $90 per child under 18. And those of us in the rural received an extra 10%.
This annual CAI refundable tax credit has been around since the 2018 income tax return was filed during the Spring of 2019.
This coming tax season, when you file your 2021 tax return, this rebate will not be part of your tax refund. Your usual tax refund will be a few or several hundreds of dollars less.
The Government of Canada announced the “changing of delivery of CAI payments from a refundable credit claimed annually on personal income tax returns to quarterly payments made through the benefit system. This will deliver Canadians’ CAI payments on a more regular basis.”
If you already receive GST credits, you are familiar with getting benefits on a quarterly basis. The CAI will be similar.
The CAI payments will be paid at the beginning of each quarter (April-June, July-September, etc). Since CRA needs to develop the new system, the April to June payment will be added to the July to September payment so taxpayers will receive two quarters early July 2022.
The Climate Action Incentive, much like the GST credit, will be paid to the spouse whose tax return is assessed first by CRA.
If you have not been receiving the GST credit and normally do not get refunds will want to make sure CRA has your banking information so the quarterly CAI payments can be made by direct deposit instead of by cheque.
CRA My Account
If you do not already check your CRA account online on a regular basis, we recommend you sign up and have access. When you have online access, you can view the banking info that CRA has on file and can add or change it if you need to.
MB Education Property Tax Credit
The change in the property tax credit will also reduce your refund.
Those taxpayers who rent, will notice a change on their income taxes. The normal $700 refundable credit based on rent paid has decreased to $525. So, your tax refund will be smaller by $175; or you may owe more than you normally do.
Those of us with owned property noticed this when we received our property tax bills during the summer or fall of 2021: the credit was reduced from $700 to $525. But we did receive the Education Property Tax Rebate cheque for 25% of the school tax portion of our property tax bill. So overall our net costs for our property taxes are lower than they were in previous years.
Those living in Paradise Village and other similar mobile home parks did not receive the 25% rebate cheque since they do not own the land. The landowner did receive the rebate and did attend the municipal office to ensure all mobile homeowners did receive their share of the rebate. Those individual homeowners received a credit worth 25% of the school tax portion of the tax bill. You may only see this when you pay next years’ 2022 property taxes.
There are other personal income tax credits that result from the Manitoba property tax bills including the Seniors School Tax Rebate and the School Tax Credit for Homeowners (55+ and family income under 23,800). At this point we do not have access to the new MB479 tax form so cannot determine how these credits may be impacted by the changes.
End of Mailing Paper NOA?
CRA is considering no longer sending by mail your annual Notice of Assessment. You may need to retrieve it from accessing your CRA My Account. Another reason to make sure you have access to CRA My Account so you can access the CRA information and review your NOA (and save or print if you need to). As of this writing, CRA has not formally announced if they will no longer mail the NOA effective this tax filing season, but it may be possible.
Tax services like Ste Anne Tax Service can always access your NOA if you have authorized us to view your CRA account. Like other tax services, we do charge an extra fee to print or send a PDF of your Notice of Assessment since you do receive it (or should be receiving it) from CRA.
For your safety and health, and for ours too, all our staff are fully vaccinated.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or email@example.com