The past year has been anything but ordinary. You, like many Canadians, may have received benefits from CERB, so it's important to understand how it affects your income tax return.
Before You Get Started
Creating a CRA account is a great way for you to easily handle your tax and benefit affairs online. By creating an account, you'll have access to digital services that simplify your tax-filing experience, such as the œauto-fill my return tool, Express NOA and email notifications. You will also be able to use the auto-fill tool and Express NOA services in certified tax software.
Acronyms in This Article
- CRA = Canadian Revenue Agency
- CERB = Canada Emergency Response Benefit
- CESB = Canada Emergency Student Benefit
- CRB = Canada Recovery Benefit
- CRSB = Canada Recovery Sickness Benefit
- CRCB = Canada Recovery Caregiving Benefit
Filing for Those Who Received COVID-19 Benefits
Over the past year, the CRA and Service Canada processed over 27 million CERB applicants, which came out to over $81 billion in payments to Canadians all over Canada. In addition to the CERB applications, the CRA also processed more than two million CESB applicants. The payments from the CESB ended up totaling over $2 billion.
If you received any payments relating to CERB, CESB, CRB, CRSB or CRCB, you're going to need to include the total amounts you received on your tax return. Before you do anything, keep an eye out for the T4A slip (CRA issued benefits) and/or the T4E slip (Service Canada issues benefits) in your mailbox. Those slips contain the information you need for your return. As of February 8, 2021, you can also view your tax slips online by logging into your CRA Account. If you're a resident of Quebec, it's important to keep in mind that you will receive a T4A and RL-1 form the CRA, but your RL-1 will not be available via your CRA Account.
The CRA recognizes that receiving these slips might generate questions for Canadians. Individuals who believe they received a T4A or a RL-1 by mistake or believe there may be discrepancy with the information provided on these slips should contact the CRA.
For those who received payments related to the CERB and CESB, no tax was withheld at the time of payment issuance. A 10 per cent tax applies to those who received payments from the CRB, CRSB or CRCB. For Quebec residents who received the CRB, CRSB and CRCB, five per cent of the tax withheld will be reported on the T4A slip and the other five per cent will be reported on the RL-1 slip. Don't forget to enter these amounts on your tax return.
It's important to understand that all benefits are taxable, and you may owe no tax, owe tax or you be entitled to a refund when you file your return. It all depends on the amount of income you earned as well as the deductions and credits you can claim from 2020. There may be other impacts to filing your tax return that are specific to COVID-19 emergency benefit payments you received, or if you are a resident of Quebec.
If you have any questions or are unsure about next steps, visit the CRA site for more information or contact your advisor to discuss.
The information contained herein is for informational purposes only and does not constitute tax advice. Such information is based on laws and regulations in effect on the date hereof, all of which are subject to change. Each person's situation is different and you must consult with your individual tax advisor.