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Did you receive the Canada Emergency Response Benefit (CERB) during the beginning of the pandemic? If so, you should soon receive your tax slip from the Canada Revenue Agency (CRA) for CERB and any other recovery benefits you may have received in 2020. One thing some people did not seem to realize t is that CERB, unlike other federal benefits, is a taxable benefit and it must be accounted for when filing your taxes. 


Overall, the amount of income tax you will be required to pay depends on your total annual income and which deferral tax bracket you fall into for 2020. Here are two different examples of how much you could possibly be required to pay:


  • Anyone who received CERB for the full 28 weeks and no other income in 2020 would have received $14,000 in total. This would place them just slightly over the “basic personal amount” and translate to them owing a minimal amount since you are able to earn $13,229 per year without having to remit any income tax. 
  • For incomes under $48,536 but above the basic personal amount will get taxed at 15%. So what this means is if you received the total CERB benefit of $14,000 you would owe about $2,100 in income tax for CERB. Please note that the  15% tax rate t is the federal portion. The provincial portion is additional, with the rates varying per province.  


It should also be noted that the newer recovery benefits programs like the Canada Recovery Benefit (CRB) are taxed at the source, so taxes are taken out from the payments before they are even sent.


On the other end of things, those who were deemed ineligible for CERB but still received the benefit must report how much they received as taxable income. The CRA has mailed out more than 440,000 letters to Canadians last year to let them know of their ineligibility for the benefit. In order to get the benefit out quickly, the government only checked for availability after CERB was provided. 


The letters asked recipients to try and repay back CERB by December 31, 2020 in order to avoid any impact on their taxes. If they were unable to repay before that date, they would not be penalized, nor have to pay any interest on it at this point. The CRA has indicated they would be working with individual taxpayers and they may have those overpayments adjusted next year when filing the 2021 returns. It is a good idea to make sure you have filed your 2019 and 2020 returns, so the CRA will be able to see your income over these years to create a payment plan and cancel or adjust any extra payments that might have been made.


If you need further assistance figuring out CERB and your 2020 tax return, Keenans Accounting Service is here for you. Just give us a call at 705-526-7628 to arrange a consultation by phone or via Zoom meeting. We are practicing social distancing while working remotely, and with reduced staff so please leave us a message, and we will get back to you as soon as possible.