On December 14, 2021, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, delivered the Federal Government’s Fall Economic and Fiscal Update.
No personal or corporate tax rate changes were announced; however, the Government announced several tax measures to continue supporting Canadians. Read below for a summary of the most relevant measures or click here to download the full Economic and Fiscal Update.
Personal Income Tax Measures
Enhanced Home Office Expense Deduction
To continue to support Canadians working from home due to the pandemic, the Government will extend the simplified rules for deducting home office expenses and increase the annual temporary flat rate to $500 (from $400). These rules will apply to the 2021 and 2022 tax years.
Enhanced Support for Teachers
The Government proposes to increase the rate of the refundable tax credit available to teachers and childhood educators on the purchase of eligible supplies up to $1,000, to 25 percent (from 15 percent).
The list of eligible supplies will be expanded to include certain electronic devices and there will no longer be a requirement that teaching supplies be used in a school or regulated childcare facility to be considered eligible. These enhancements will apply to 2021 and subsequent taxation years.
Business Income Tax Measures
Small Businesses Air Quality Improvement Tax Credit
The government proposes a refundable Small Businesses Air Quality Improvement Tax Credit to encourage small businesses to invest in better ventilation and air filtration systems. The 25% refundable tax credit would apply to qualifying expenses incurred between September 1, 2021, and December 31, 2022, up to a maximum of $10,000 per location and $50,000 in total.
Qualifying expenses would include the purchase or upgrade of mechanical heating, ventilation and air conditioning (HVAC) systems and the purchase of standalone devices designed to filter air using high efficiency particulate air (HEPA) filters.
The credit is available to unincorporated sole proprietors and Canadian-controlled private corporations with taxable capital employed in Canada for the associated group of less than $15 million in the immediately preceding taxation year.
Other Tax Measures
Extension of various benefits
- Legislation introduced to extend the Canada Recovery Caregiving Benefit and the Canada Recovery Sickness Benefit until May 7, 2022.
- The Government proposes to provide a one-time payment to guaranteed income supplement recipients who received Canada Emergency Response Benefit or the Canada Recovery Benefit in 2020.
