TurboTax wants to ensure accuracy with the information we have provided in this article, all content will be updated as we learn more from the Canada Revenue Agency and the Government of Canada.
When situations arise that force us to change our working behaviour, such as being in self-isolation or quarantine due to COVID-19, this may make us feel uncertain about what it all means in terms of our taxes and if it changes how we handle them. At the time this is being written, there are no specific tax regulations or changes related to being self-isolated or quarantined, with respect to this virus.
Whether you are an employed individual or a self-employed individual, it is understandable to have questions because of this situation, so we are answering a few of the most common ones we are hearing.
What happens if I have to stop working or I am working less?
The federal government introduced some new measures to assist those that have had to stop working or have been laid off.
Canada Emergency Response Benefit (CERB): CERB provided 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 or earn less than $1,000 in a 4 week period. CERB was discontinued on Sep 26th, 2020 to be replaced with CRB.
Canada Recovery Benefit (CRB): CRB was put into effect on Sep 27th, 2020 and has similar eligibility criteria as CERB. Although it is a taxable benefit, CRA deducts 10% taxes at source which you can claim as a refundable credit on your tax return.
When you have a decrease in your income, this means that your taxable income is going down. Your taxable income is what determines what rate of tax is used to calculate how much tax you owe. Less employment income will mean less taxable income, and that will be indicated on your T4 slip. If you apply for CERB or CRB, the benefit will be added to your income increasing your tax liability. The CERB and CRB income will be reported on a T4A slip. CRA will withhold 10% taxes from your CRB earnings and none from your CERB, but this does not cover the first federal and provincial tax bracket. It is recommended to save some money on the side in case you are required to pay taxes when you file your income tax return.
I am being required to work from home in self-isolation, but I will need supplies, can I write those off?
If your employer has made the decision to ask employees to work from home, your work environment has changed, and in some cases, what you need to do your job effectively has also changed. In most cases, employers are making sure employees are outfitted with all the necessary supplies they need for a quarantine period, but there is a possibility that you may have to get yourself some items while you are away from the office. If you are not provided with an allowance by your employer, or they are not directly reimbursing you for those expenses, you may be eligible to claim some of your employment expenses.
Your employer will need to provide you with a completed and signed T2200 – Declaration of Conditions of Employment form. Once you have that, then you are able to complete the T777, Statement of Employment Expenses form, outlining your costs. Make sure you have all of your receipts, and remember, these need to be reasonable expenses.
What if I get Employment Insurance benefits (EI), while I am laid off?
Employment Insurance Benefits (EI), is another type of income that is a part of your total taxable income. You will receive a T4E – Statement of Employment Insurance and Other Benefits that will indicate your EI earnings and all withholding amounts. Similar to CRB, CRA will withhold 10% taxes from your EI earnings. It is recommended to save some money on the side in case you are required to pay taxes when you file your income tax return.
What If I have received CERB or CRB instead of EI?
If you receive EI for your job loss, you should not apply for CERB, CRB, or other emergency benefits. If you have received an emergency benefit by mistake, please call the EI department and request a change in your benefits (1-800-206-7218).
If the mix-up has not been fixed by the time you file your tax return, you report your emergency benefit as indicated on your T4A slip or your T4E slip. Keep in mind that you will be required to pay taxes on the full CERB payments since no taxes have been withheld at the source.
Can I apply for multiple benefits if I am eligible for them?
No, you cannot combine emergency benefits. If you check the eligibility criteria for each emergency benefit, it will inform you of the other benefits you cannot apply for in the same period. For example; if you lost income due to COVID and are taking care of your sick mother who has COVID, you either apply for CRB or the Canada Recovery Caregiving Benefit (CRCB).
Are my taxes still due at the same time?
Individual tax returns and payments are due on April 30th, while self-employed returns are due on June 15th. In some extreme cases, the CRA might mandate an extension of the deadline; this will be announced by the CRA if/when they make the decision to do so, any given year. Until such time, ensure that you are still completing your taxes by the appropriate deadline, and paying any taxes owing by April 30th.
How will I get my taxes done if no one is working and I use a tax preparer?
The process of completing your income taxes remains the same for the most part. Concerns in health situations are that limiting contact with tax preparers, means you might have to find an alternative to how you used to get your income taxes completed. Many accountant and taxation offices are still completing returns utilizing drop boxes and digital file-sharing to get your documents with meetings taking place via phone or through an online meeting application. If you don’t wish to drop off in person anymore, there are several tax solutions available to you right now online.
I think I am missing some forms for my return, but my employer is now away, how do I get them?
Though it is still your employer’s responsibility to get you your employment tax forms, you do have another option. In your CRA My Account, you have access to all of the tax forms that have been completed and remitted on your behalf, including T4s, T4E, T4Ps, T5s, etc. Some RRSP contributions slips and T3s, may not be available until the end of March, so if you are expecting those, be mindful of when these forms will be available, as you don’t want to file an incomplete return.
I am self-employed and have to shut down for a few weeks so I am losing a lot of money, does that change the information I use to file?
Yes, for self-employed individuals, you file an additional form called a T2125 – Statement of Business or Professional Activities to report your business income and expenses, as well as your vehicle use, capital costs, and your business use of home expenses. As a business owner, you should be tracking your income and expenses in some type of bookkeeping format. This is very essential so that you can see how your business is doing over a period of time, and it makes tax time so much simpler for you. Any loss in your business income will reduce your tax liability. However, if you apply for CERB or CRB, the benefits income will be added to your total income and thus increase your tax liability.
The federal government introduced some new measures to assist those businesses that have employees:
Temporary Wage Subsidy (TWS): This is a 3-month subsidy on the payment of source remittances, equal to 10% of the remuneration paid, for income taxes withheld from employees and paid to the CRA. This subsidy is taxable income and will require accounting for it in your bookkeeping records.
Canada Emergency Wage Subsidy (CEWS): The Canada Emergency Wage Subsidy (CEWS), provides financial support to businesses that have seen a 30% loss in revenue, as compared to the same time last year, and aims to assist those businesses in retaining their employees or even re-hiring those they’ve laid off. This subsidy is taxable income and will require accounting for it in your bookkeeping records.
How do I report the benefits on my income tax return?
As mentioned above, you will be receiving a T4A or a T4E slip reporting the different types of benefits you have received. On your income tax and benefit return, report on Line 13000 – Other Income the following income from your T4A slip:
- Box 197 – Canada Emergency Response Benefit (CERB)
- Box 198 – Canada Emergency Student Benefit (CESB)
- Box 199 – Canada Emergency Student Benefit (CESB) for eligible students with disabilities or those with children or other dependents
- Box 200 – Provincial/Territorial COVID-19 financial assistance payments
- Box 202 – Canada Recovery Benefit (CRB)
- Box 203 – Canada Recovery Sickness Benefit (CRSB)
- Box 204 – Canada Recovery Caregiving Benefit (CRCB)
Or report on Line 11900 – Employment Insurance and Other benefits the amount In Box 14 from your T4E slip.
How do I repay the benefit?
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 CRB or 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 1-833-966-2099.
We’re Here to Support You
If the thought of these changes is overwhelming, we’re here to help. To make tax season as simple as possible, TurboTax has created solutions that work for all situations and preferences, including:
- TurboTax Online, a DIY solution;
- TurboTax Live Assist and Review, with expert assistance, and even
- TurboTax Live Full Service, a TurboTax expert fills out and submits your personal tax return on your behalf.
For more details on income support and other benefits as part of the Federal Government’s Economic Response Plan for COVID-19, visit this TurboTax link on all COVID-19 response measures.
See also our COVID-19: Tax Info Centre, from our TurboTax Support team, answering many FAQs on this topic and more.
Accounting educator, business strategist, and advisor.
Turbo Tax Canada blog editor and writer.
Susan has been an accounting professional for over 20 years, and has been working with businesses and individuals and their taxes for the past 12. Education is a passion for Susan, and when not writing or talking about tax for TurboTax Canada, she can be found speaking at events, teaching at Mohawk College, and working with many businesses and entrepreneurs through her own accounting advisory practice. Susan is known to be approachable but pulls no punches when it comes to the reality of business finance and taxes.