2020 TAX CLINIC GUIDELINES - CPA Alberta
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TAX CLINIC GUIDELINES
2020
Sponsored by:Table of Contents What to Bring With You to the Clinic................................................................................... 1 Preparation for Clinics ............................................................................................................ 2 Income Limitations............................................................................................................................ 2 What Is New This Year? ................................................................................................................... 3 Senior Citizens ...................................................................................................................................4 Deceased Taxpayers ........................................................................................................................ 7 Disability Amount .............................................................................................................................8 Families with Children..................................................................................................................... 9 Other Personal Income Tax Reminders .................................................................................. 10 Other Clinics ..................................................................................................................................... 16 Other Financial Assistance ......................................................................................................... 16
Tax Clinic Guidelines
FEBRUARY 2020
What to Bring With You to the Clinic
You may be expected to supply the following at the tax clinics:
1. Computer, Intuit software, printer, and paper, if applicable
For 2019 returns, Intuit has agreed to provide our volunteers with a copy of
ProFile tax software for use at the Tax Clinics.
Software Tips
• There may be updates to the software throughout income tax season. However,
as most clinics may not have Internet, you are encouraged to update the soft-
ware before arriving.
• Review printing options in ProFile – Default is to print the short version.
Can print single or double sided.
• Use the ProFile Help Function.
• Bring the memory stick provided to allow transfer of information between
computers.
• Make use of ProFile’s online training session and webinars
(www.profiletraining.ca).
2. Tax forms
Probably the easiest way to ensure you have the necessary forms is to take an
adequate supply of the 2019 general tax guides and/or returns. They are avail-
able at all postal outlets as well as directly from the Canada Revenue Agency
(CRA). Canada Revenue Agency no longer mails out the general tax guides and
returns to taxpayers unless it is specifically requested. Return envelopes are not
included with the general tax guides/returns, but are available separately.
As many seniors are eligible for the Disability Tax Credit, you should bring
additional T2201, Disability Tax Credit Certificate forms. All tax forms are
available at www.canada.ca
3. Income Tax Act
The General Income Tax Guide 2019 will have answers to most of the
questions that may arise when preparing the return. It is cross-referenced
to the specific lines on the tax return.
Another reference source may be the 2020 edition of Wolters Kluwer “Preparing
your Income Tax Returns”.
4. Pencils, paper, calculator, stapler and staple remover, white-out, etc.
5. Canada Revenue Agency Guides:
• General Income Tax Guide 2019
• Newcomers to Canada (T4055)
• RRSPs and Other Registered Plans for Retirement (T4040)
• Capital Gains (T4037)
• Medical Expenses (RC4065)
2020 TAX CLINICS GUIDELINES 16. Canada Revenue Agency Forms:
• Disability Supports Deduction (T929)
• Canada Child Benefits Application (RC66)
• Child Care Expenses Deduction (T778)
7. Canada Revenue Agency Questions and Answers
• Are you an international student studying in Canada?
• Are you an emigrant? (Leaving Canada (emigrants))
Preparation for Clinics
Experience at the tax clinics has shown that most tax returns are not compli-
cated or difficult. Most of the tax clinics’ clients are senior citizens or recent
immigrants to Canada with relatively low incomes. Because these individ-
uals’ tax positions may not be representative of those usually encountered
in practice, this document outlines some of the non-routine issues you may
encounter at the clinics.
• Other tips: Have a “call a friend” number. For many clinics, you may be the only
accountant on site. If questions arise, being able to call someone to ask ques-
tions would be an asset. Make use of the available phone support or volunteer
tax reviewer, if available.
• Know how to complete a paper return. Internet is not always available, and
computer/software issues arise. Sometime paper returns are quicker for simple
returns.
• Confirm appointment with clinic. It is important to speak to the organizer be-
fore the clinic to confirm the time, location, number of returns to be prepared,
availability of paper, T1 packages and envelopes, access to printer, power and
internet.
• Be cognizant of client’s privacy. With privacy, do not retain any copies of returns
or taxpayer information. All tax returns need to be deleted from your computer
within 48 hours of the clinic. Destroy any documents that have personal infor-
mation left at the end of the session.
• Take care of personal items.
Income Limitations
CPA Alberta policies for Tax Clinics prevent preparation of tax returns
where gross incomes exceed the following amounts*:
Total income per household unit for taxpayer:
With no dependant: $30,000 or less
With dependants: $50,000 or less
*and individuals who have self-employed income, real estate holdings, and/or
large amounts of savings/investments.
2 2020 TAX CLINICS GUIDELINESWhat is New this Year?
Changes in Personal Amounts
The 2019 personal amounts are as follows:
Basic personal amount—federal....................................................$12,069
Basic personal amount—Alberta...................................................$19,369
Spouse/Eligible dependant—federal...........................................$12,069
(No income threshold before reduction of credit)
Spouse/Eligible dependant
(with mental or physical impairment)—federal.......................$14,299
Spouse/Eligible dependant—Alberta..........................................$19,369
Age amount (if born 1953 or earlier)—federal.........................$7,494
Age amount (if born 1953 or earlier)—Alberta........................$5,397
NEW CRA has renumbered all of the lines on the T1 Return effective for 2019 and
ongoing, changing the numbers from 3 or 4 digits to 5 digits. Schedule 1 has been
eliminated and the calculation of Federal non-refundable tax credits is integrated
into the T1 Return.
NEW Starting with the 2019 T1 Return, Alberta residents can apply for the Climate
Action Incentive Credit since Alberta became subject to the federal carbon tax on
January 1, 2020. The refundable credit is claimed on line 45110 under Step 7 of the
T1 Return and is not income dependent. The 2020 amounts (claimed on the 2019 T1
Return) are:
Single adult or first adult in a couple $444
Second adult in a couple or first child of a single parent $222
Each child under 18 year $111
Baseline amount for a family of four $888
There is no longer an Alberta Carbon Tax Rebate.
NEW Canada Training Credit Limit is a refundable tax credit to provide financial
assistance for tuition and other eligible training expenses, which can be claimed
starting on the 2020 T1 Return, but it starts to accumulate based on information
from the 2019 T1 Return. The amount that can be claimed will be equal to the
lesser of:
One half the tuition and other eligible expenses paid for the taxation
year; and
The balance of the Canada Training Credit Limit, which accumulates $250
per year to a maximum lifetime amount of $5,000.
The Credit Limit will be reported on the 2019 Notice of Assessment.
NEW The Medical Expense Tax Credit will now include certain cannabis products
purchased for medical purposes once those products become permitted for legal
sale under the Cannabis Act, for expenses incurred after October 16, 2018.
REPLACED Starting with the 2019 T1 Return, the Canada Workers Benefit (CWB)
replaces the Working Income Tax Benefit (WITB). The calculation of the benefit is
still done using Schedule 6.
CHANGED The Home Buyers’ Plan (HBP) maximum withdrawal amount from a
Registered Retirement Savings Plan (RRSP) has been increased from $25,000 to
$35,000 for withdrawals made after March 19, 2019.
2020 TAX CLINICS GUIDELINES 3Opening Questions and Processes
It’s helpful to ask the taxpayer some opening questions that help you in completing their
tax return. Discovering these things before starting a return will save time and avoid
potential frustration.
• Review prior year’s notice of assessment. Be mindful of potentially unresolved
issues that the taxpayer may not have understood or addressed.
• Ask questions about marital status, children, foreign-property (whether the
taxpayer owned foreign property costing more than CAN$100,000), investment
income or self-employment income, and residency etc.
• Scan T4 slips first to see if the taxpayer exceeds income thresholds for the clinic.
• Confirm address, SIN, DOB with identification.
• Go over the Elections Canada section as some taxpayers may not understand
why they are being asked.
• Explain to taxpayers they are ultimately responsible for the information on their
return so they should feel confident their return is accurate. Encourage them to
ask questions about the return as you are completing it and have them review the
return before signing.
Senior Citizens
Foreign Pension Income
There may be special deductions if a pension is received from a foreign
country. According to the 2019 guide, for item Line 11500 do the following:
a) Report the total amount of the pension income, in Canadian dollars; on line
11500 (attach a note to the return identifying the type of pension and the
source country).
b) If the pension is tax-free under a tax treaty, claim an offsetting deduction on line
25600 (per S.110(1)(f)). If not known, do not make a claim, but include a note with
the return asking CRA to give the deduction, if available.
c) If the amount received is U.S. Social Security, claim a deduction on line 25600
equal to 15% of the amount reported on line 115. There should not be U.S. tax
withheld. If the taxpayer has been a resident of Canada, and has received U.S.
Social Security benefits continuously from before January 1, 1996, the deduc-
tion on line 25600 is increased to 50% of the amount reported on line 11500.
Individuals receiving US Social Security payments are typically US Citizens
and are required to file a US Income Tax return. They may also be required to
file a Foreign Bank Account Report (FBAR), irrespective of their country of
residence. Those who do not file these returns may be subject to significant
penalties. Any US Citizens encountered during the tax clinic program should
be reminded of this requirement.
The average exchange rates for 2019 provided by CRA are:
Canada—U.S. $1 Cdn. = $.75364 U.S.;
$1 U.S. = $1.3269 Cdn.
Canada—U.K. $1 Cdn. = 0.59014 pounds;
1 pound =$1.6945 Cdn.
Canada—Europe $1 Cdn. = 0.67313 Euros;
1 Euro =$1.4856 Cdn.
4 2020 TAX CLINICS GUIDELINESOld Age Security
According to the Service Canada’s website, Old Age Security payments for 2019 were:
January–March $601.45/mo.;
April-June $601.45/mo.;
July–September $607.46/mo.;
October–December $613.53/mo.
(Maximum $7,271.67)
Net Federal Supplements
Net Federal Supplements (which include the Guaranteed Income Supplement (GIS)
and spousal allowance) are not taxable, but must be reported on line 14600 of the T1
Special or General, with an offsetting deduction on line 25000.
Canada Pension Plan (CPP) Contributions
Effective January 1, 2012, employees or self-employed taxpayers age 60 to 70 years,
who are receiving CPP or QPP retirement pension, must still contribute to CPP or
QPP, unless they are at least 65 years of age and they elect (or have elected) to stop
contributing. The election is done by completing Form CPT30, Election to Stop Con-
tributing to the Canada Pension Plan or Revocation of a Prior Election.
Deferring Old Age Security Pension (OAS)
Effective July 2013, OAS benefits may be deferred for up to 5 years after eligibility by
delaying the application for OAS. The monthly pension payment is increased by 0.6%
for every month it is delayed up to a maximum of 36% at age 70. The Guaranteed
Income Supplement and spousal allowance cannot be received for the period during
which the OAS is deferred.
If a recipient of OAS pension benefits wishes to, they may request cancellation of
the OAS pension to take advantage of the deferral of benefits, but only if they pro-
vide a written request to Service Canada within six months of receiving their first
payment. In this case, the full amount of OAS pension and related benefits must be
repaid.
Pension Income Splitting
Taxpayers reporting pension (not including CPP), annuity, or RRIF income may
jointly elect with a spouse (including common-law) to split the income, if both
were Canadian residents on December 31, and they were not separated. Form
T1032, Joint Election to Split Pension Income, must be completed for both spous-
es and is to be attached to their paper returns. The taxpayer receiving the pension
income reports the income according to the T4A or T4RIF slip, and then claims a
deduction on line 21000, Deduction for Elected Split-pension amount. The other
spouse reports the split-pension amount from line E of Form T1032, on line 11600
of the tax return. Both spouses may then claim the Pension Income amount on
line 31400 and on Alberta Schedule 428, according to the calculation in Step 4 on
Form T1032.
CPP can only be split at source. If a CPP recipient and spouse are interested in
sharing their CPP retirement benefits, they may apply to Service Canada by com-
pleting and submitting the application form (ISP-1002). The form can be obtained
from the Service Canada website, www.canada.ca, or by calling to request it at
1-800-277-9914. The applicants will need their Social Insurance Numbers and origi-
nal marriage certificate or proof of a common-law relationship.
2020 TAX CLINICS GUIDELINES 5Social Benefits Repayment
If net income exceeds $77,580 in 2019, some of the OAS will be “clawed back.”
However, none of the tax clinic patrons should be at this income level.
Age Amount
Taxpayers age 65 or older at December 31, 2019 may claim an age tax credit in
the amount of $7,494 for 2019. Any unused credit is eligible to be transferred to
a spouse. For 2019, the credit is reduced by 15% of income over $37,790 (for the
Alberta calculation, the age amount credit of $5,397 is reduced by 15% of income
over $40,179).
Pension Income Amount
Pension income may be received from a variety of sources, some of which may be el-
igible for the S.118(3) pension income amount. The maximum pension income amount
credit is $2,000 federal and $1,491 for Alberta. Please note:
a) payments received from the CPP, OAS pension, net federal supplements (box 21
on the T4A (OAS)), QPP payments, retiring allowances or death benefits are not
eligible for the credit.
b) if the taxpayer does not need all of the pension tax credit to reduce federal
income tax to zero, the unused amount can be transferred to the taxpayer’s
spouse. Alternatively, if the taxpayer’s spouse has an unused pension credit, it
may be transferable to the taxpayer.
c) only pension or annuity income reported on line 11500 or 12900
qualifies for the pension income amount.
Home Accessibility Expenses
Eligible expenses for a qualifying renovation of an eligible dwelling may be claimed
(started in 2016). To qualify, the taxpayer must be eligible for the disability tax
credit or be 65 years of age or older at the end of the year, or be a spouse of a
qualifying individual or able to claim an amount for an eligible dependant, caregiv-
er amount or amount for infirm dependants 18 or over for the individual. Eligible
expenses are those incurred during the year to make a qualifying renovation which
is one that allows the individual access and mobility within the dwelling or which
reduces the risk of harm while gaining access or living within the dwelling. The
expense is claimed on line 31285 of the T1 Return.
Medical Expenses and Refundable Medical Expense Supplement
Many seniors and their spouses incur significant medical expenses. We suggest
that you familiarize yourself with this area before beginning your tax clin-
ic. (The 2019 General Income Tax Guide is helpful.) If the combined total of
taxpayer’s and spouse’s net income, or a single taxpayer’s net income, is less
than $27,639 and they have incurred medical expenses in excess of the 3%
income threshold, or are claiming the Disability Supports Deduction, com-
plete the chart in the Federal Worksheet for line 45200, Refundable Medical
Expense Supplement, which is included in the 2019 Forms guide, to calculate
whether they are eligible.
Line 33099 is used only for reporting medical expenses for self, spouse or
common-law partner, and dependent children born in 2002 or later. Medical
expenses for other dependants are to be reported on line 33199, with a
reduction for each “other dependant,” of $2,352 or 3% of line 23600 per that
dependant’s tax return (whichever is less).
Additional medical expenses may be deducted for costs associated with real-time
6 2020 TAX CLINICS GUIDELINEScaptioning, note-taking services, and voice-recognition computer software that are
necessary because of a person’s speech, hearing, medical or physical impairment.
Note that the costs for services must be paid to someone in the business of provid-
ing such services. A medical practitioner’s written certification is required for the
deduction of note-taking services and voice-recognition computer software.
Medical expenses include amounts to purchase, operate and maintain certain med-
ically prescribed devices (auditory feedback, electrotherapy, standing and pressure
pulse therapy devices, blood coagulation monitors).
Also, medical expenses include the cost for the design of personalized therapy
plans for taxpayers eligible for the disability tax credit, and the cost for service
animals used to help manage severe diabetes.
The additional cost of acquiring gluten-free food as compared to the cost of similar
non- gluten-free food is deductible as a medical expense if a medical practitioner
provides written certification that the person requires the special diet for celiac
disease.
The cost of certain reproductive technologies is eligible, even in the absence of a
medical condition preventing conception.
The costs for an animal specially trained to perform tasks for individuals with se-
vere mental impairment are eligible.
Starting in 2019, the cost of certain cannabis products purchased after October 16,
2018 for medical purposes is eligible, once those products become permitted for
legal sale under the Cannabis Act.
Deceased Taxpayers
A final return is required to be filed for the period from January 1 of the year of
death to the date of death. This return is due by the later of April 30 of the year
following the year of death, or six months after the date of death, whichever is later.
Pension payments prior to death are included in the deceased taxpayer’s return.
Lump sum payments after death will normally be taxed in the hands of the re-
cipient who may be either a beneficiary (spouse or child) or the estate. The CPP
Death Benefit (usually $2,500) is not reported on the deceased taxpayer’s return;
instead it is reported by the beneficiary or the estate.
NOTE: Estates and final return issues can be very complex. Use your judgment
in recommending more in depth assistance from professionals who practice in
this area.
2020 TAX CLINICS GUIDELINES 7Disability Amount Some individuals (any age) may be eligible for the “disability” tax credit. Form T2201, Disability Tax Credit Certificate, is required to be completed and attached to the income tax return, the first year the claim is being made or if the certified period ended before 2019. If the taxpayer was allowed a disability amount in 2018, and the impairment was permanent, it is not necessary to file another Certificate unless the circumstances change or CRA advises otherwise. Part B of the Certificate needs to be completed and signed by a doctor, optome- trist, audiologist, occupational therapist, psychologist, speech-language pathol- ogist or nurse practitioner. Only forms with original signatures are accepted. It is recommended to have copies of the most recent form available to provide to taxpayers. An impaired individual may claim the Disability Supports Deduction at line 21500 if the expenses enable the individual to earn income or go to school. The Disabili- ty Supports Deduction includes attendant care expenses and other paid disability expenses such as sign language interpretation services. In this case, Form T929, Disability Supports Deduction, should be completed to support the Disability Supports Deduction from net income. No receipts are required to be filed but should be kept by the individual. One complex area with respect to medical expenses is claims for nursing home expenses and attendant care. The Disability Supports Deduction cannot be claimed on line 21500, if the taxpayer or someone else will be claiming the amount as a medical expense on line 33099 or 33199. Detailed explanation can be found in CRA Guide Medical Expenses (RC4065). The Disability Tax Credit cannot be claimed if the individual, or any other person, claims medical expenses for a full-time attendant or for care in a nursing home because of the individual’s mental or physical impairment (there is an exception for claiming the cost of full- or part-time attendant care limited to $10,000, or $20,000 in the year of death). Generally, you will require at least $8,235 in these types of expenses before you would claim them as medical expenses instead of the disability amount. To be eligible for this credit, the taxpayer must have a severe and prolonged (at least 12 months) mental or physical impairment, and must be markedly restricted in their ability to perform basic activities of daily living (seeing, walking, speaking, perceiving, thinking and remembering, hearing, feeding and dressing, and elimi- nating bodily waste) or must require life-sustaining therapy to support a vital func- tion (such as kidney dialysis) at least three times per week, requiring an average of at least 14 hours per week to receive. If the taxpayer has a completed Certificate, indicating that the disability began in a year prior to the tax year and no prior claim has been made, you may indicate in Section 3 of the Certificate that you wish CRA to adjust past returns. If pre- ferred, a T1 Adjustment Request may be filed, for each of the applicable years, to claim the credit. The completed Certificate must accompany the T1 Adjustment Request. 8 2020 TAX CLINICS GUIDELINES
Families with Children
Canada Child Benefit (CCB)
The Canada Child Benefit (CCB) replaced the Canada Child Tax Benefit (CCTB), the Na-
tional Child Benefit Supplement (NCBS), and the Universal Child Care Benefit (UCCB) as
of July 2016. The CCB is not taxable, and is income dependent, based on the prior year’s
adjusted family net income and the number and age of dependent children.
If a taxpayer wants information regarding application for the CCB, provide them with
form RC66, Canada Child Benefits Application if they are not already receiving the ben-
efit.
Amount for an Eligible Dependant
Single parents may be able to claim an Eligible Dependant Tax Credit for a child. The
maximum claim for 2019 is $12,069 and is reduced by the child’s net income. See
Guide item Line 30400. If the Spouse or Common-law Partner Amount was claimed
on line 30300, this credit may not be claimed.
Canada Caregiver Amount
A taxpayer who has a dependant 18 years of age or older with an impairment in phys-
ical or mental functions may be eligible to claim up to a maximum of $7,140 for each
dependant, as a Canada Caregiver Amount on line 30425. An amount can be claimed
only if the dependant’s net income is less than $23,906. Complete the applicable part
of Schedule 5 to calculate the claim and to provide details about the dependant(s).
The claim may be split with the other supporting spouse.
A similar claim may be made on line 30450 for other infirm dependants (parents,
siblings, etc.).
A Canada Caregiver Amount of $2,230 may be claimed on line 30500 for infirm chil-
dren under age 18, if the child is dependent because of a physical or mental impair-
ment and needs significantly more assistance in attending to his or her personal needs
and care compared to children of the same age.
Child Care Expenses
Parents may be eligible to claim child care expenses. Usually, the spouse with the
lower net income must claim the expenses. Child care expenses of up to $8,000 may
be claimed for each child who was under the age of 6 years at some time in 2019, up
to $5,000 if under the age of 16 years at some time in 2019, and up to $11,000 may be
deducted for a child who qualifies for the disability amount. Form T778, Child Care
Expenses Deduction must be completed to make the claim. See Guide item Line 21400
for more information.
Child Support
In separation or divorce, for agreements settled or re-negotiated after April 30, 1997,
child support payments are neither taxable to the recipient nor deductible by the payor.
Adoption Expenses
Certain expenses related to the adoption of any child under the age of 18 years may be
deducted at line 31300, up to a maximum of $16,255 per child. These expenses may be
split between two adoptive parents, and may be claimed in the tax year that includes
the end of the adoption period in respect of the child. See Guide item Line 31300 for
details.
2020 TAX CLINICS GUIDELINES 9Registered disability savings plan (RDSP)
Starting in 2008, taxpayers eligible for the Disability Tax Credit can also be
eligible to have contributions made by or for them to a Registered Disability
Savings Plan. Government matching grants are available, and direct government
contributions are available for low-income taxpayers. Parents may contribute to
a plan to provide for a disabled child; older disabled taxpayers and their families
may contribute to a plan for later years. Contributions are not deductible, but in-
come earned in the plan will be tax sheltered. You may wish to advise interested
eligible taxpayers to contact a participating financial institution.
Other Personal Income Tax Reminders
1. Employment Insurance (EI) receipts must be included in income. Further, some
EI benefits may be repayable (see instructions in the T1 Guide). If EI benefits were
repaid in 2019, that amount may be deducted in calculating net income.
Adult basic education tuition assistance to cover all or part of tuition paid for
primary or secondary school courses for adults must be included in income. The
amount is indicated in box 20 of the taxpayer’s T4E slip and is included in the
total benefits paid. A deduction may be claimed on line 25600 for the amount of
qualifying assistance shown in box 21 of the taxpayer’s T4E slip.
2. The individual may have been resident in another province at December 31, 2019.
In such situations, the Alberta tax schedule is not the appropriate form to com-
plete. Use the form for the province where the individual resided on December 31,
2019.
3. Moving expenses are deductible according to the rules set out in S.62(1).
Form T1-M must be completed and filed. Receipts need not be sent but should
be retained.
4. Starting in 2016, the sale of a principal residence must be reported along with
any principal residence designation, on Schedule 3. Form T2091 (IND) Des-
ignation of a Property as a Principal Residence by an Individual (Other Than
a Personal Trust) will also be required to be completed. Note that in the case
of a deceased taxpayer who owned a principal residence at the date of death,
the deemed sale of the principal residence must be reported on the terminal T1
Return in this same way.
5. Low income individuals may be eligible for the GST/HST credit (S.122.5).
Starting in 2014, individuals no longer have to apply for the credit; CRA will
determine eligibility when the income tax return is filed.
6. Although it is unlikely that any tax clinic patrons will have “alternative minimum
tax” liabilities, watch for tax-sheltered investments.
7. The maximum RRSP deduction for 2019 (other than amounts “rolled over”)
is determined by the individual’s 2019 contribution room. The increase in
contribution room from 2018 is generally the lesser of $26,500 and 18% of 2018
“earned income.” Individuals covered by another deferred income plan reduce
this figure by their 2018 “pension adjustment”. The individual’s 2018 Notice of
Assessment should state the available contribution room for 2019. You should
advise individuals with over-contributions of more than $2,000 to contact CRA
to have them determine if withdrawals should be made. An individual may have
withdrawn funds from their RRSP under the Home Buyers’ Plan. If they have
10 2020 TAX CLINICS GUIDELINESdone so before 2018, they must designate all or a portion of their RRSP contri-
bution for the year as the amount they are repaying to their RRSP on line 24600
of Schedule 7. CRA will have sent a statement showing equal amounts to repay,
but if a lesser amount is designated as a repayment (i.e. the RRSP contribu-
tion for the year is insufficient, or Schedule 7 is not completed), the difference
must be included in income on line 12900 of the return. For Home Buyers’ Plan
withdrawals made after March 19, 2019, the maximum amount allowed to be
withdrawn was increased to $35,000 from $25,000.
8. T3, T4PS and T5 slips differentiate eligible and ordinary dividends. Eligible
dividends are grossed up 38%; ordinary dividends are grossed up 15% (17% in
years prior to 2019). Report the taxable amounts on the Statement of Invest-
ment Income, Carrying Charges, and Interest Expenses.
9. Certain expenses paid to earn employment income may be claimed on line
22900 by filing Form T777, Statement of Employment Expenses along with
Form T2200, Conditions of Employment provided by the employer certifying
that the employee was required to pay these expenses. See Guide item Line
22900 and Guide T4044, Employment Expenses for details.
10. For long-haul truck drivers, during eligible travel periods in 2019, meal and
beverage expenses incurred are deductible at 80%. An eligible travel period
is a period during which you are away from your municipality or metropolitan
area for at least 24 hours for the purpose of driving a long-haul truck that
transports goods at least 160 kilometers from the employer’s establishment to
which you regularly report to work.
11. The Northern residents deduction is available to residents of
prescribed northern zones and is claimed on Form T2222, with the
calculated deduction claimed on line 25500.
12. All employees are eligible to claim the employment amount, which is the lesser
of $1,222 for 2019, and the total employment income reported on lines 10100 and
10400 of the return. The claim is made on line 31260. There is no equivalent provin-
cial claim.
14. Eligible expenses for a qualifying renovation of an eligible dwelling may be claimed
(started in 2016) as Home Accessibility Expenses on line 31285. To qualify, the
taxpayer must be eligible for the disability tax credit or be 65 years of age or older
at the end of the year, or be a spouse of a qualifying individual or able to claim an
amount for an eligible dependant, caregiver amount or amount for infirm depen-
dants 18 or over for the individual. Eligible expenses are those incurred during
the year to make a qualifying renovation to a dwelling which is one that allows
the individual access and mobility within the dwelling, or reduces the risk of harm
while gaining access or living within the dwelling.
15. Types of social assistance payments, which may be received, include:
a) Federal government (T4A (OAS) slip):
• Guaranteed Income Supplement
• spousal allowance
2020 TAX CLINICS GUIDELINES 11b) Alberta government (likely received T5007 slip):
• social assistance (welfare)
• widow’s pension
• workers’ compensation
• assured income for severely handicapped (AISH)
• assured income (low income seniors)
These amounts are required to be reported on lines 14400, 14500 and 14600
of the T1, with an offsetting deduction on line 25000.
Items which do not have to be included in income or be “added back” for re-
fundable tax credit purposes are:
• veteran’s disability and dependant’s pension
• war veteran’s allowance
• social assistance relating to being a foster parent
• social assistance relating to caring for a disabled adult living with you
16. Canada Savings Bonds interest
For regular and compound interest bonds, interest is reported annually as
shown on the T5 slip. No new Canada Savings Bonds will be issued as of No-
vember 1, 2017.
17. Line 23200 Other deductions may include:
• Old Age Security benefits that were paid back;
• EI benefits paid back and shown in box 30 of the T4E slip; or
• Legal fees paid for appealing an assessment, for collecting a retiring
allowance, for collecting late support payments, or suing for maintenance
payments in a Family Court.
18. On Line 23500 Social benefits repayment, report any amounts of EI or OAS
benefits received in 2019 that the taxpayer is required to pay back.
19. Under the Home Buyers’ Amount, $5,000 can be claimed for the purchase of
a qualifying home made in 2019. The taxpayer must be a first-time home buyer
(neither the taxpayer nor spouse or common-law partner can have owned and
lived in another home in the year of purchase or in any of the four preceding
years), unless eligible for the disability amount or acquiring the home for the
benefit of a related person who is eligible for the disability amount. The claim
may be split between spouses. The claim is made on line 31270. See Guide item
Line 31270 for more information.
20. Complete Schedule 11 to claim tuition paid for courses at the post-secondary
level or those that develop or improve skills in an occupation. The credit is en-
hanced to include tuition paid for courses taken at a post-secondary educational
institution in Canada that are not at the post-secondary level. The student must
be at least 16 years old at the end of the year. To be claimed, fees paid to each
educational institution must be more than $100 for the year. Also complete
Schedule AB(S11) to calculate the Alberta credit which includes an amount for
the number of months of full or part time attendance from Form T2202. The
Tuition amount claim is made on line 32300 and on Schedule 428 Alberta line
58560.
12 2020 TAX CLINICS GUIDELINESThe tuition credit can be transferred to a spouse or parent if it is not needed
to reduce federal income tax to zero. Likewise these amounts can be trans-
ferred from a child or spouse to the taxpayer’s return. See Guide item 32400
for details.
A student is eligible for the scholarship exemption, which is enhanced to include
scholarships or bursaries for programs that are not at a post-secondary level
(but are at a post-secondary educational institution in Canada) which provide or
improve skills for an occupation. If not so entitled, the $500 exemption is still
available. See Guide item Line 13010 for details.
21. Amounts transferred from a spouse may be claimed by completing Schedule
2 and reporting the amount on line 32600, and on line 58640 of Schedule
428 Alberta.
22. A volunteer firefighter or search and rescue volunteer completing at least
200 hours of eligible volunteer firefighting or search and rescue services in the
year can claim a credit of up to $3,000 on line 31220 or 31240 or an exemp-
tion of up to $1,000. Either the credit or the exemption may be claimed, not
both. The T4 slips issued will generally report in Box 14 only the taxable part
of the income received, which is the portion exceeding the $1,000 exemption.
The income exemption is shown in Box 87. Report the Box 14 amount on line
10100 and the Box 87 amount on line 10105. See Guide items 10100 and 31220
/ 31240 for details.
23. The charitable donation federal tax credit is 15% of the first $200 plus 29%
of total donations exceeding $200 for the year. A high rate federal donation
tax credit allows an increased tax credit of 33% on all or a portion of total
donations exceeding $200 if the taxable income is greater than $210,371. The
Alberta charitable donation tax credit is 10% of the first $200 plus 21% of total
donations exceeding $200 for the year. The claim for charitable donations is
limited to 75% of net income.
24. We suggest you consult the Capital Gains Guide when determining capital
gains and losses for individuals and determine if February 22, 1994 elections
have been made.
25. Donations of publicly listed securities and of ecologically sensitive land
are not subject to tax on the capital gain arising from the disposition.
Report the disposition on Form T1170 Capital Gains on Gifts of Certain
Capital Property.
26. The lifetime capital gains exemption has increased to $1,000,000 for
dispositions of qualified farm and fishing property occurring after April
20, 2015. The lifetime capital gains exemption for dispositions of qualified
small business corporation shares is now indexed annually (2019 $866,912).
27. The Eligible Educator School Supply Tax Credit is available for up to $1,000 for
eligible teaching supplies expenses. It can be claimed by a licensed teacher
employed at an elementary or secondary school or a licensed childhood educa-
tor at a regulated child care facility. The claim is made on line 46800 of the tax
return, with 15% of the total being refundable.
2020 TAX CLINICS GUIDELINES 1328. The Canada Workers Benefit (CWB) is for low-income individuals and families who
have earned income from employment or business. Use Schedule 6 to determine
if the taxpayer qualifies, and enter the benefit on line 45300. The credit is equal
to 21% of earned income exceeding $2,760, to a maximum credit of $1,453 for
taxpayers without dependants, and $2,175 for families. The credit is reduced by
12% of net family income exceeding $13,200 for single taxpayers and $17,950 for
families. Students with no dependent children will not be eligible for the CWB.
A CWTB Disability Supplement is available if the taxpayer qualifies for the dis-
ability amount. See Schedule 6 for the calculation of this credit.
29. Starting with the 2019 T1 Return, Alberta residents can apply for the Climate
Action Incentive Credit since Alberta became subject to the federal carbon tax
on January 1, 2020. The refundable credit is claimed on line 45110 under Step 7
of the T1 Return and is not income dependent. The 2020 amounts
(claimed on the 2019 T1 Return) are:
Single adult or first adult in a couple $444
Second adult in a couple or first child of a single parent $222
Each child under 18 year $111
Baseline amount for a family of four $888
There is no longer an Alberta Carbon Tax Rebate.
30. The Canada Training Credit Limit is a refundable tax credit to provide financial
assistance for tuition and other eligible training expenses, which can be claimed
starting on the 2020 T1 Return, but it starts to accumulate based on information
from the 2019 T1 Return. The amount that can be claimed will be equal to the
lesser of one half the tuition and other eligible expenses paid for the taxation
year and the balance of the Canada Training Credit Limit, which accumulates
$250 per year to a maximum lifetime amount of $5,000. The Credit Limit will
be reported on the 2019 Notice of Assessment.
31. Taxes may be paid by instalments if not enough income tax is withheld
at source. Starting in 2008, the instalment threshold was increased to
$3,000 from $2,000. The need to be concerned about instalments should
be rare for taxpayers attending the clinics. If instalments are required,
CRA will advise the taxpayer of the quarterly amount. If taxpayer has
paid, they should be able to provide a receipt for payment. Do not claim
instalments unless proof of payment can be provided.
32. Where a person is an immigrant to Canada, there are a number of special rules,
which could apply. CRA issued a Tax Guide for Newcomers to Canada (Immi-
grants) which should be obtained if you are participating in a clinic which could
include such individuals.
33. You are to prepare only the 2019 return.
34. The amendments to the Income Tax Act regarding same-sex relationships have
become law.
14 2020 TAX CLINICS GUIDELINES35. A Tax Free Savings Account (TFSA) is a registered savings account to allow
individuals to earn investment income tax free. For 2019, the contribution
limit was increased to $6,000. The cumulative total TFSA limit for 2019
was $63,500. Interested taxpayers may contact a financial institution.
Contributions are not deductible, withdrawals are not taxable and may be
re- contributed in a future year.
36. Alimony. A support payment is an amount payable or receivable as
an allowance on a periodic basis for the maintenance of the recipient.
Payments are considered to be a support payment if the six following
conditions are met:
1) the payment must be made under the terms of a written agreement
or court order;
2) the payor must be living separate and apart from the recipient at the
time the payment was made because of a relationship breakdown;
3) the payment is for the maintenance of the recipient;
4) the recipient has discretion as to the use of the amount;
5) the payments must be made directly to the recipient, however, un-
der certain circumstances, payments can be made to a third-party; and
6) the amount is not a “child support payment”.
37. Please indicate on the return that it has been prepared by a volunteer. In
previous years we’ve asked CPA Alberta volunteers not to indicate on the
return that it has been prepared on a volunteer basis, as this information
pertained to the CRA’s volunteer tax clinics. Starting in 2018, we are work-
ing with the CRA to gather statistical data on all volunteer work conducted
in Alberta.
Other Clinics
Certain Vocational Centre Clinics offer tax preparation for those enrolled in an
English as a Second Language (ESL) program, or who are in various technical
programs. Many of these taxpayers receive government assistance in various forms,
some of which is to be included in a calculation of income for tax purposes. For
instance, training allowances are to be included in taxable income. Social assistance,
reported on Form T5007, is included in income on line 14500 of the T1, with an off-
setting deduction on line 25000, so is not taxable.
Other Financial Assistance
Guaranteed Income Supplement (Taxpayers over 65 and receiving OAS benefits)
Single taxpayers with 2019 total income under $18,600 and married couples with
combined income under $24,576 may be eligible for the supplement for 2020. It
requires a separate application, but once a person is receiving the supplement, it will
be automatically adjusted each year after the income tax return is filed.
The application form can be obtained from the Service Canada website,
www.canada.ca or by calling to request it at 1-800-277-9914. If married or living with
a common-law partner, the applicants will need their marriage certificate or proof
of the common-law relationship. Benefits are renewed by filing an income tax return
each year.
2020 TAX CLINICS GUIDELINES 15CPA Alberta would like to thank and recognize the work of
W. Dale Somerville CPA, CA in preparing this tax clinic guideline.
Chartered Professional Accountants of Alberta
1900 TD Tower, 10088 – 102 Avenue Edmonton AB T5J 2Z
Tel: 780 424.7391
Fax: 780 425.8766
Toll Free: 1 800 232.9406 www.cpaalberta.caYou can also read
