N5
それ
That
それは大変だ。
That's tough.
Explanation
「それ」 means 'that (one)': something close to the listener (in their hand, on their side). In conversation it often points to what the other person just said: 「それは大変ですね」 (That sounds hard). Like 「これ」 it cannot go straight before a noun; use 「その」.
Mixed up with
Use 「それ」 for something the other person told you and you did not know: they say 「明日テストがあるよ」 and you answer 「それ、知らなかった」.
Use 「あれ」 for something you both know: 「あれ、覚えてる?」