The COVID-19 pandemic’s impact on individuals and businesses across the country led to the introduction of government-funded programs to support Canadians while ensuring their safety. Crowe MacKay’s tax advisors review how these programs may impact your 2020 taxes.
Capital gains exemption
For 2020, the capital gains exemption for qualified small business corporation shares has risen from $866,912 to $883,384. This exemption will be indexed for inflation in subsequent years. The capital gains exemption for qualified farm or fishing property remains at $1,000,000.
Relief Payments related to COVID-19
Individuals that received COVID-19 relief payments from the Government will be required to report these taxable benefits on their 2020 income tax return. These payments include the Canada Emergency Response Benefit, Canada Recovery Benefit, Canada Recovery Sickness Benefit, and Canada Recovery Caregiving Benefit. All individuals receiving benefits from the relief programs noted above should expect to receive a tax slip issued by the Government for 2020.
Registered Retirement Income Fund (RRIF) Minimum Withdrawals
Effective May 13, 2020, the minimum required withdrawal amount for RRIFs has been reduced by 25% for 2020 due to volatile market conditions from COVID-19. Those who have already withdrawn more than the reduced 2020 minimum amount will not be able to re-contribute the excess amount back into their RRIFs. Tax will only be withheld on withdrawals that exceed the unreduced minimum amount.