2020 was hard on Manitobans’ bank accounts. Here’s how 2021 might look

2020 was a difficult year for many Manitobans. On top of lockdowns, illness, death and isolation, many people experienced financial uncertainty and hardships.

Both the federal and provincial governments provided some supports to those whose jobs or businesses were affected by the COVID-19 pandemic, and many of those supports are continuing in 2021.

However, there are a number of small ways Manitobans will see expenses increase in the new year, whether by utility rate changes, food price increases or tax deductions.

Utility rates

For one, hydro and natural gas rates are increasing.

At the beginning of December, Manitoba Hydro increased its rates by 2.9 per cent, with exceptions for remote diesel-fuelled communities.

Manitoba Hydro rates increased late in 2020, and those increases will translate to 2021 as well. Natural gas rates also went up in November, which will mean about $30 more for the average household this year. (John Woods/The Canadian Press)

For those without electric heat, that’s about a $2.78 increase in the monthly bill, whereas it’s a $5.31 increase in the monthly bill for those electric heat, the Crown corporation says. Per year, that’s about $33 or $64, respectively.

In addition, the Public Utilities Board approved Centra Gas Manitoba’s bid to increase natural gas rates effective November 1. For the upcoming year, that rate change will mean about a 5.6 per cent hike, or $31 for the average residential customer.

Food prices going up

Expect to pay more at the grocery store too.

The average Canadian family will pay up to an extra $695 for food in 2021, as the pandemic, wildfires and changing consumer habits drive up those bills to the highest increase ever predicted by an annual food price report.

Canada’s Food Price Report forecasts an overall food price increase of three to five per cent for 2021. The most significant increases are predicted for meat at 4.5 to 6.5 per cent, bakery at 3.5 to 5.5 per cent and vegetables at 4.5 to 6.5 per cent.

The most significant food price increases are predicted for meat at 4.5 to 6.5 per cent, bakery at 3.5 to 5.5 per cent and vegetables at 4.5 to 6.5 per cent. (TZIDO SUN/Shutterstock)

Filing 2020 taxes

As Manitobans look ahead to tax season, some deductions are increasing, but there are also a number of credits up for grabs. Pandemic-related government assistance will be a new element for taxes this year.

“One big thing that everyone has to remember, whether they own a corporation, they’re self-employed or if they’re just a regular employee, any government assistance that they receive due to COVID[-19] will be taxable on their 2020 tax return,” says Karen Hallson-Kundal, a chartered professional accountant at Compass Accounting in Winnipeg.

Assistance like the Canadian Emergency Response Benefit, now the Canada Recovery Benefit, is taxed in the same way as any income earned through a job.

Hallston-Kundal adds that business loans like the Canada Emergency Benefit Account are taxable, even after they’ve been repaid.

The $2,000 Canada Emergency Response Benefit (CERB), was a taxable, monthly federal payment was made to eligible workers who had lost their income due to COVID-19 pandemic. About 278,000 Manitobans received CERB, and will need to claim it when filing their taxes this year. (Chris Helgren/Reuters)

CPP and EI deductions

Some people across Canada might feel a hit in the pocketbook because of an increase on Canada Pension Plan deductions.

The maximum pensionable earnings under CPP for 2021 will be $61,600, up from $58,700 in 2020 — so people earning $61,600 or more will see a slight increase in deductions.

According to Canada Revenue Agency, that new ceiling was calculated according to a legislated formula that takes into account the growth in average weekly wages and salaries in Canada.

People who earn more than $61,600 in 2021 are not required or permitted to make additional contributions to the pension plan.

The federal government is increasing the maximum insurable earnings from $54,200 to $56,300, effective Jan. 1. The employment insurance premium rate will remain the same as 2020.

That means insured workers who earn at or above the cutoff point will pay a maximum annual EI premium in 2021 of $889.54 compared with $856.36 in 2020.

Very few, if any changes, are being made to provincial taxes this year, however, Todd MacKay, the Prairie Director of the Canadian Taxpayers Federation noted the government is holding off on a PST reduction in light of COVID-19.

“I think governments wisely kind of hit the pause button on a lot of big tax changes simply because we’re all in a crazy time,” he said.

Tax benefits coming as well

Although this season can be financially stressful for those who are already feeling the strain of the pandemic on their bank accounts, changes coming in the new year aren’t all deductions.

The basic personal amount is increasing this year. That’s a non-refundable tax credit that can be claimed by everyone.

In 2020, it’s increasing from $12,298 to $13,229 for individuals with a net income of $150,473 or less.

Those who worked from home for the bulk of the pandemic will be able to apply for a home office tax credit, which is worth up to $400, Hallson-Kundal says.

Tax season officially starts in February, traditionally the time when the Canada Revenue Agency starts accepting tax returns.

More supports needed

Geeta Tucker, president and CEO of Chartered Professional Accountants Manitoba, wants to see more supports in the form of forgivable loans or grants for businesses to run safely, especially when it comes to personal protective equipment. 

“This stuff is really expensive. So if you’re a daycare care or you’re running a business of that nature, you need support to have all of these supplies and be able to run a safe environment and a safe workplace,” she said.

MacKay is critical of any tax increases at this point in time when businesses are shuttering, as it’s difficult for new ones to open.

Our economic future depends on those new businesses, and “we need to do everything we can to help them,” he said.

“So when, for example, payroll taxes go up, that makes it a little bit harder for those people that we really need to step up and succeed. They’re the ones creating jobs for our neighbours. Those are the one building our community.”

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