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What is the Canada Emergency Response Benefit?
Canada Emergency Response Benefit (CERB) was created in 2020 to provide a taxable benefit of $2,000 per month, for up to 28 weeks, to qualifying individuals; workers who lose their income as a result of the COVID-19 pandemic.
CERB was a combination of the previously announced Emergency Care Benefit and the Emergency Support Benefit.
Our Tax Experts are ready to answer your CERB questions when filing with TurboTax Live.
Who was covered?
CERB benefited many Canadians who;
- Lost their job, are sick, or quarantined, or taking care of someone who is sick with COVID-19
- Working parents who had to stay home, without pay, to care for their children
- Wage-earners, contract workers, and self-employed individuals who wouldn’t normally be eligible for employment insurance (EI)
- Those that are still employed, but not receiving any income due to disruptions in their working situation due to COVID-19
Those individuals that received EI benefits should NOT apply to the CERB at the same time; if their EI benefits ended during the CERB periods, then they could apply at the end of their EI benefits if they were unable to work due to COVID-19.
What is an “eligible worker” for this benefit?
- At least 15 years of age,
- Did not quit your job voluntarily
- Resident in Canada,
- Are not receiving EI benefits from Service Canada for the same application period
- And someone who for 2019 or the 12-months preceding the day they apply, has a total income of at least $5,000 from self-employment*, employment, certain EI benefits, or maternity/parental benefits
- The 1st application qualifiers
- You have stopped working because of COVID-19 related reasons (layoff, shortage of work, isolation, etc.
- You will not receive earnings for the 14 days in a row for the application period, from employment or self-employed income, or benefits related to maternity or paternity leave
- 2nd and subsequent application qualifiers
- Still not working because of COVID-19 related reasons
- You will not receive earnings for the 4 week application period, from employment or self-employed income, or benefits related to maternity or paternity leave
*Self-employment and rental income is net business or net rental income after business and rental deductions.
How to apply to the CERB?
Applications for CERB ended on September 27, 2020. You can still apply for retroactive payments if you think you were eligible for the benefits and missed the original application date. To apply for retroactive CERB, click on this link HERE to review all aspects of the program and follow the instructions to apply.
You can apply online or over the phone with an automated system. If the phone lines for the CRA are busy right now and have a CRA My Account set up, apply online to save yourself some time.
Make sure when you log into your CRA My Account that your direct deposit information is up to date because these payments are being made to you via direct deposit. The CRA will pay by cheque, if no banking information is on file, however, to avoid delays, it is recommended that you allow for direct deposit into your bank.
According to the notice from the Ministry of Finance, eligible applicants should begin receiving their CERB payments within 10 days of applying.
Benefit Repayment
If you find out that you have received a payment that you were not eligible for, you can repay it by either returning it through your “My Account”, or online banking to “Canada Emergency Benefit Repayment”, or by mailing a cheque to:
Revenue Processing – Repayment of CERB
Sudbury Tax Centre
1050 Notre Dame Avenue
Sudbury, ON, P3A 0C3
If you repay the benefits before Dec 31st, 2020, CRA will not issue an income slip and you will not have to report the benefit on your tax return. If you cannot meet the deadline and want to request a payment plan, call the CRA COVID center at 1833-966-2099.
Tax considerations
Very important to note is that this benefit is a taxable benefit and CRA did not withhold taxes at source, which means that you will be taxed on the full amount. Make sure to put some of this money aside to cover those taxes that will be owed back to the government when you file your 2020 tax return. You can also take advantage of RRSPs or other deductions and tax credits, coming this fiscal year; 2021 for your 2020 tax return.
You will receive a T4A tax slip reporting your CERB income in Box 197, if you applied for CERB through the CRA. Claim this amount on line 13000 of your income tax return. If you received CERB through Service Canada as you were on EI and it was converted to CERB, you will receive a T4E that includes both your CERB income and your EI income in Box 14.
If you were employed in 2020, the new T4 slip will break the employment income into periods that align with CERB payments periods. The purpose of the new T4 is to inform CRA of the CERB amount you have received while you were still working. Remember that you were eligible for CERB if your employment income during the same period was less than $1000.
Visit this TurboTax link on how to calculate your taxes.
For more details on income support and other benefits as part of the Federal Government’s Economic Response Plan for COVID-19, click here.
See also our COVID-19: Tax Info Centre, from our TurboTax Support team, answering many FAQs on this topic and more.