The Canada Emergency Response Benefit (CERB) has ridden off into the sunset, but that doesn’t mean it won’t impact Canadians’ lives for months to come — namely when it comes to tax time.
The $2,000 benefit is taxable, and whether you received a couple of CERB payments while out of work for a few weeks, or you were eligible for the full 28 weeks of benefits, you will feel the impact at tax time.
While taxes aren’t due until April, there are a few things you should keep in mind if you were a CERB recipient, including what to do if you need to apply retroactively for the benefit, if you accidentally received a double payment or a payment when you weren’t qualified.
Here’s what you need to know.
What upcoming dates should I be aware of?
There are two big ones.
The Canada Revenue Agency will accept and process retroactive applications for the CERB until Dec. 2, 2020. That means if you qualified to receive the CERB during its eligible period before Oct. 3 but didn’t get the money, you can still apply through your CRA MyAccount or call the automated toll-free phone line at 1-800-959-2019 or 1-800-959-2041.
You can apply for periods 1 to 4 by speaking to one of the CRA agents at 1-800-232-1966. Note that you may be required to provide additional documentation prior to your application being approved.
The other big date that should be on your radar is Dec. 31, 2020. That’s the last day you can return CERB money you received but shouldn’t have, whether you’ve since become ineligible or you made a mistake in applying.
The CRA has an online tool for you to determine whether or not you need to return any CERB money without facing repercussions.
How much tax will you owe if you got the CERB?
One of the big reasons the CRA is pushing to ensure people repay accidental extra CERB payments before the new year is to ensure they don’t issue extra T4s you don’t need at tax time.
Whether you’re an accidental double payee or not, it’s important to know that CERB will impact your taxes.
“My first piece of advice is people should be aware these are taxable benefits,” said Fred O’Riordan, national tax policy leader at Ernst & Young told the Canadian Press back in July “Ultimately they are going to be responsible for having received them and for declaring them.”
How the CERB impacts your tax return will depend on your income, but you can use an online tax calculator now to get an idea of what you will owe.
Again, it’s important to remember that tax is not taken off your CERB payment, which means you will have to pay in April. So it’s a good idea to get a sense of how much you’ll owe and start saving the money now.
What about the Canada Recovery Benefit (CRB)?
CERB’s little sibling may seem similar on paper — $1,000 every two weeks is basically the same thing as $2,000 every four. But there is one key difference because the CRA takes tax off this one up front.
While you may apply for the $1,000 benefit, you’ll actually only get $900 after a 10 per cent tax is removed. And the CRA warns that, depending on your income, you may still have to pay more tax.
If you make over $38,000 in a calendar year in net income (that doesn’t include the CRB), you will have to reimburse $0.50 of the CRB for every dollar of net income you earned above $38,000 on your income tax return. The government says this is to ensure the CRB money goes to those who need it most.
And a good reminder — the CERB does count as part of that net income, so if you got both benefits you’ll have to be prepared for that.