What's new

We list the service enhancements and major changes below, including announced income tax changes that were not law when this guide was published. If they become law as proposed, they will be effective for 2021 or as of the dates given.

Economic and Fiscal Update 2021

Air quality improvement tax credit

The government has introduced a temporary new refundable tax credit for qualifying expenditures incurred between September 1, 2021 and December 31, 2022. Under proposed legislation, the new air quality improvement tax credit is equal to 25% of qualifying expenditures up to a limit of $10,000 per qualifying location and $50,000 across all qualifying locations. Qualifying expenditures include the cost of purchasing, installing, upgrading or converting mechanical heating, ventilation and air conditioning (HVAC) systems, as well as the purchase of certain air filtration devices.

Under proposed legislation, this new measure will apply to fiscal periods that end after 2021.

Return of fuel charge proceeds to farmers tax credit

Beginning with the 2021-2022 fuel charge year, the government is proposing a new refundable tax credit as a means to return fuel charge proceeds under the federal carbon pollution pricing system directly to farming businesses in provinces that do not currently meet the federal stringency requirements (that is, Ontario, Manitoba, Saskatchewan and Alberta). Corporations, individuals and trusts with eligible farming expenses can claim this new refundable tax credit through their tax returns starting with their 2021 tax year. For more information on this new refundable tax credit, see Returning the proceeds from the price on pollution directly to farmers.

For a partner of a partnership that has farming activities in Ontario, Manitoba, Saskatchewan or Alberta, the partner's share of this proposed new refundable tax credit will need to be reported to the partner in box 237 of the partner's T5013 Statement of partnership income slip or, if the partnership does not have to file a partnership information return, the partnership will need to send a letter to each partner with a breakdown of their share of this credit by province. Under proposed legislation, this new credit applies to fiscal periods ending in 2021 or later.

If the partnership is required to file a partnership information return and is allocating this tax credit to its members, the partnership will need to file its partnership information return on paper. For more information, see Paper filing.

COVID-19 support programs

For information on support programs related to COVID-19, go to COVID-19: Financial support for people, businesses and organizations.

Government assistance received as a subsidy

Report the amount of Wage Subsidy the partnership received for the fiscal period on your T5013 SCH 1, Net Income (Loss) for Income Tax Purposes. For more information, see Reporting Wage Subsidy.

For a partner in a partnership that has to file a partnership information return, the Wage Subsidy amount included in the partnership's income will be entered on box 114 of your T5013, Statement of partnership income, slip.

If you are a partner in a partnership that does not have to file a T5013 return, include the Wage Subsidy amount on the appropriate line of the form that applies to you: T2125, T2042, or T2121.

Capital cost allowance (CCA)

CCA for clean energy equipment

To support investment in clean technologies, under proposed legislative changes:

• CCA classes 43.1 and 43.2 would be expanded for new types of property that are acquired and become available for use after April 18, 2021
• access to classes 43.1 and 43.2 would be restricted for certain fossil-fuelled and low efficiency waste-fuelled electrical generation equipment that become available for use after 2024

For more information see CCA for clean energy equipment (classes 43.1 and 43.2).

Yukon business carbon price rebate

Use the new T5013 SCH 444, Eligible Yukon UCC Worksheet for Partnerships to allocate under subsection 16(10) of the Yukon Income Tax Act your eligible Yukon undepreciated capital cost (UCC) to your qualifying members.