Personal income tax: What's new for 2021?

Overview

Tax changes and improvements to services are noted on this page. Also noted are changes to income tax rules, including those that were announced but not yet law when the Income tax package was published in November 2021. If these changes become law as proposed or announced, they will be effective for 2021 or as of the dates given. New items are flagged with NEW! throughout the Federal Income Tax and Benefit Guide.

Several changes have been made to the Income tax package, such as making the Federal Income Tax and Benefit Guide easier to read and moving the text for some income, deductions, and credits to the Federal Worksheet and schedules.

You can also find more information about the lines of the Income Tax and Benefit Return by going to canada.ca/line-xxxxx and replacing "xxxxx” with any 5-digit line number from the return. For example, go to canada.ca/line-10100 for information about line 10100. If you need information that is not provided in your income tax package, call 1-800-959-8281.

The CRA’s services

Electronic notices of assessment or reassessment for electronic filers

Sometime in 2022, the CRA will start the process of switching to electronic notices of assessment or reassessment when you file your income tax and benefit return. For more information, see Notice of assessment.

COVID-19 benefits and your taxes

Amounts received related to COVID-19

If you received federal, provincial, or territorial government COVID-19 benefit payments, such as the Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), or Canada Recovery Caregiving Benefit (CRCB), you will receive a T4A slip with instructions on how to report these amounts on your return. These slips are also available in My Account for individuals.

If you are self-employed and received federal, provincial, or territorial government COVID-19 assistance for your business, such as the Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS), Canada Recovery Hiring Program (CRHP) or Fish Harvester Benefit and Grant Program (FHBGP), you have to include these amounts in your business income or reduce your expenses by the amounts you received. If you received a government loan, the loan is not taxable but you have to include in your business income any portion of the loan that is forgivable.

If you received the CRB, you may have to repay all or part of the amount received if your net income after certain adjustments is more than $38,000. The repayment is calculated using the chart for line 23500 of the Federal Worksheet.

If your income was tax exempt

If your CRB, CRCB, or CRSB income is eligible for tax exemption under section 87 of the Indian Act, complete Form T90, Income Exempt from Tax under the Indian Act, and file your 2021 Income Tax and Benefit Return or simplified return to claim the tax withheld on your CRB, CRCB, and CRSB payments. For more information, see Taxes and benefits for Indigenous peoples.

Federal COVID-19 benefits repayment

If you repaid federal COVID-19 benefits (CERB, CESB, CRB, CRCB, or CRSB) in 2021 that you received in 2020, the amount repaid will be reported in box 201 of your T4A slip or on your T4E slip along with other employment insurance (EI) amounts repaid. You can choose to claim a deduction on your return for the repayment in the year that the benefit was received or in the year that the benefit was repaid. You may also choose to split the deduction between these two returns as long as the total deduction is not more than the amount repaid. For more information, see line 23210 or COVID-19 benefits and your taxes.

Individuals and families

Canada workers benefit

The Canada workers benefit (CWB) rates and income thresholds have changed for 2021. A new “secondary earner exemption” has also been introduced.

For more information, see Schedule 6, Canada Workers Benefit, for your province or territory.

Zero-emission vehicles

The definition of zero-emission vehicle has changed for vehicles acquired after March 1, 2020. A vehicle may still qualify as a zero-emission vehicle if the vehicle was subject to a prior capital cost allowance (CCA) or terminal loss claim provided that the vehicle was not acquired by the taxpayer on a tax-deferred “rollover” basis or previously owned or acquired by the taxpayer or a non-arm’s length person or partnership.

For more information, see Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income, if you are self-employed, or Guide T4044, Employment Expenses, if you are claiming employment expenses.

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