COVID-19, CRA & Revenu Québec, Self-Employed, Tax News

CERB Repayment Announcement

In the third quarter of 2020, thousands of Self-Employed Canadians received a letter from the Canadian government, telling them that they did not qualify for the benefits that were received starting in March because these taxpayers did not earn the “required” $5,000 in 2019/2020 “after” taxes. This is where the confusion began!

GROSS versus NET

The CRA considers SE income to be “net” income; meaning what you earned AFTER you deduct all your expenses. Since this was not made clear upon release of the news back in March, people thought it meant $5,000 gross. All you SE Canadians out there, remember this when dealing with the CRA regarding income claimed for future reference. It’s always after you have claimed all your allowable business deductions.

As a result of the growing concern for many Canadians, the Liberal government decide to repeal their decision and push the interest owing to April 2022 instead. Also noted that those who made their payment to the CRA will be refunded.

Chuck the letter out!!

For most Canadians, the past year has been difficult enough without having to worry about repaying all that money the government gave you to help you get through these unprecedented times.

As of early February 2021, the government announced those that received the early CERB payments as a Self-Employed Canadian will not have to worry about repayment, as long as your eligibility is confirmed.

To qualify:

40% of the Canadian work force, roughly 8 million people received at least one of the emergency benefit support through CERB, CESB, CRB, CRCB,CRSB, EI or any provincial emergency benefits! Provincial programs to support their citizens during this pandemic will be listed below. This applies to those that requested assistance through the Canada Revenue Agency or through Service Canada.

Your income has to be $75,000 or less in 2020 or the previous 12 months prior to the date of applying for these benefits.

More good news:

Any credits that the CRA provides Canadians with such as CCB, GST/HST credits will not be applied to reduce taxes owing for 2020; make sure you file your tax return on or before April 30th for individuals and June 15 for SE.

These measures will affect an estimated 4.5 million low to middle income individuals with a sense of relief at tax time. Remember that 3 of the Benefits have 10% of the amount withheld at source (CRB,CRCB,CRSB). Those that received CERB and CESB did not withhold tax, therefore, if any money is owing, you will have until April 30th 2022, before it starts to accumulate interest.

Let’s be clear on one factor, this is the amount owing for 2020 only, if you owed the government in prior years, those amounts are still expected to be paid.

CRA:  Interest relief if you received COVID-19 benefits

Exclusion to this extension on amounts owing in 2020

If you were part of the lucky ones where COVID had no financial impact on you, your taxes owing must be paid on time, by April 30th, 2021. Maybe this will be the year where you actually don’t mind paying your taxes owing, as there are so many other Canadians that have been impacted on so many levels.

Provincial COVID Support Programs:

(If your province is not listed, it’s because there are no provincial COVID measures taken)