At the beginning of the pandemic, the federal government stepped in quickly to establish several financial aid programs for citizens. Two of the most popular offers are the Canada Emergency Response Benefit (CERB) and the Canada Recovery Benefit (CRB). If you received either of these, they could have a major impact on your tax return. Here are 6 questions to help you get prepared.
According to Statistics Canada, the monthly layoff rate was more than 12% in April 2020. The CERB was then quickly offered to Canadian workers affected by the pandemic.
The CERB at a glance:
When the CERB ended after 28 weeks, the CRB took over as the program offering financial support to salaried employees and independent workers affected by COVID-19 and who are not eligible for Employment Insurance.
The CRB at a glance:
As at December 6, 2020, according to the federal government, nearly 1,300,000 Canadians had requested the CRB. As for the CERB, nearly 9,000,000 Canadians had requested the benefit as at October 4, 2020.
Criteria to be eligible for the CERB and CRB:
There are detailed rules, but in general, if your income was affected by COVID-19, there was a good chance that you would be eligible for the CERB. However, if you left your job voluntarily, you would not have been eligible.
Criteria are similar for the CRB. To receive this benefit, you must also be available to work and not receive Employment Insurance.
Yes, the CERB and CRB are taxable benefits.
That means that if you received amounts under the CERB and the CRB, you must declare this amount in your 2020 federal tax return (and your provincial tax return for Quebec residents), which, if nothing changes, should be submitted by April 30, 2021.
It varies for each person.
It all depends on your 2020 income, which will be added up. For example, if you earned $10,000 in total in 2020, you probably won’t pay any tax, or very little. However, the higher your taxable income, the higher the percentage of tax that you will have to pay. This is the principle of the progressive Canadian tax!
To estimate how much tax you’ll have to pay, there are many online calculators. But, for a more specific answer and to avoid as many errors as possible, speak to a tax specialist or accountant.
The good news about the CRB is that 10% has already been withheld for tax purposes. It’s a bit like a paycheque. Normally, if you look at your pay stub, you’ll see that a portion is set aside for your taxes. No tax was withheld on the CERB. So there is a good chance that you’ll have to pay taxes on this amount.
If you weren’t entitled to it, you must repay the amounts you received. Ideally, you should contact the Canada Revenue Agency or Service Canada to inform them of the error and agree on a repayment plan if you don’t have all the money readily available.
If you owe money or think you owe money, try to set some amounts aside as soon as possible. There are several strategies you can adopt. A few dollars here and there can make all the difference when it's time to repay the amounts owed.
Unfortunately, fraudsters took advantage of the health crisis to make profits at the expense of honest citizens. As at November 30, 2020, 6,526 cases of fraud involving the CERB were reported to the Canadian Anti-Fraud Centre, and that may only be the tip of the iceberg.
Remember that financial institutions or the government will never send you a text message or email asking you to disclose personal information. If you have to call the Bank, never click on the hyperlinks, call the number on the back of your bank card yourself.
Don’t hesitate to contact an expert to clarify your own situation. We’re here to answer your questions!
Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.
The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information belong to the National Bank of Canada or other persons. Any reproduction, redistribution, electronic communication, including indirectly via a hyperlink, in whole or in part, of these articles and information and any other use thereof that is not explicitly authorized is prohibited without the prior written consent of the copyright owner.
The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice. National Bank and its partners in contents will not be liable for any damages that you may incur from such use.
This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. The details of this service offering and the conditions herein are subject to change.
The hyperlinks in this article may redirect to external websites not administered by National Bank. The Bank cannot be held liable for the content of external websites or any damages caused by their use.
Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).