Pembroke Tax Tips: Preparing for the 2020 tax season

On Wednesday, March 24th, Stephanie Pantaleo, CPA, MTax, Director of Family Office Services  at Pembroke Management and Salomon Gamache, GDIP Tax,  F.PL, CIM, FCSI, Director of financial planning at Pembroke Private Wealth led a discussion on preparing for the 2020 tax season.

Key Takeaways

1. A Canadian resident has the ability to shelter all or part of the capital gain that arises on their principal residence so long that the property qualifies for the principal residence exemption. A taxpayer may recognize a capital gain on account of a deemed disposition resulting from changing the full use or partial use of their principal residence. However, with respect to a full change in use of a property, elections are available to defer the realization of the capital gain; for partial change in use of one’s principal residence, there are three primary tests that taxpayer’s rely on to not have this deemed disposition rule apply.;

2. Bitcoin transactions shall be tracked for income tax purposes, and the manner in which it is taxed (business income versus capital gains) is a question of fact. Bitcoin, along with other cryptocurrencies, may qualify as ‘specified foreign property’ if situated, deposited or held outside of Canada for the purpose of filing form T1135 Foreign Income Verification Statement.;

3. For individuals who received the Canada Emergency Response Benefit (“CERB”), every dollar will be taxable in 2020 as no income taxes were withheld at source. Old Age Security (“OAS”) recipients that received the tax-free one-time payment in 2020 for COVID-19 relief, will not have to report the receipt in income. Individuals may be eligible to claim home office expenses as a result of working from home due to the pandemic. Details relating to the temporary flat rate method versus the detailed method can be found on the CRA’s website here.

To learn more, please view the recording here: