The CERB money you got at the beginning of the pandemic may be long gone, but there's still a chance that you'll have to repay it. The Government of Canada announced that certain people who received the Canada Emergency Response Benefit continue to owe the government money — and they're about to come asking for it.
A statement issued by the minister of employment, workforce development and disability inclusion on November 25 says Service Canada will be "reaching out directly" to these people. More specifically, those of you who owe funds will reportedly get a notice from Service Canada outlining how much you owe, the process to repay it and how you can appeal the decision.
If you receive #CERB through Service Canada, you were given an advance payment of $2,000 to get you money ASAP. \n\nTo cover this advance, there will be a 2nd period during your claim for which you will receive no payment or 2 reduced payments.pic.twitter.com/n3LsT0hVCD
In the statement, Employment Minister Carla Qualtrough explains that this applies to people who got CERB early in the pandemic through Service Canada rather than CRA. She says this was considered an "advance CERB payment" meant to "get support out to Canadians as quickly as possible."
Most people made up for this as they continued to receive CERB by getting no payments or reduced payments some months. But, if you went off CERB when you went back to work, you may not have had the opportunity to make up for the advance.
"Service Canada will now begin reaching out directly to those individuals who went off the CERB after returning to work and prior to that payment being reconciled," says Qualtrough's statement. "Over the next number of months, the Government of Canada will be working with Canadians who may be required to make a repayment."
Minister Qualtrough says the goal isn't to place Canadians in a financial hole just because they took advantage of the benefits the system offered at the time. She says the government is ready to "work with Canadians to establish flexible repayment schedules if needed, with an eye to pay."
At the same time, the statement says the government has "zero tolerance for fraud" and is continuing to look for cases of "misrepresentation, abuse or fraud related to the CERB." So you may also hear from the government if you weren't entitled to the benefit but you got it anyway.
This article’s cover image was used for illustrative purposes only.
We wouldn't blame you if you were confused when you applied for the Canada Emergency Response Benefit (CERB).
When it launched in 2020, Cabral told MTL Blog the Government of Canada website did not specify whether the conditions applied to gross or net income. We now know it's gross income (so your total pay before taxes and deductions).
Basically, as long as you were actually eligible, you don't need to pay it back. If you weren't eligible, you do need to repay it.
What were the eligibility requirements for the CERB?
It's important to remember that in 2020, Canadians had to re-apply for the CERB each month during the pandemic, in the event that they found jobs or self-employment income from one month to the next.
You should also keep in mind that there were two ways to apply for the benefit when it was launched: through Service Canada or the Canada Revenue Agency (CRA).
You did not apply for, nor receive, CERB or EI benefits from Service Canada for the same eligibility period
You did not quit your job voluntarily
You reside in Canada and are at least 15 years old
You earned a minimum of $5,000 (before taxes) in the 12 months prior to your application, or in 2019, from one or more sources within employment income, self-employment income or parental leave
Your employment income was $1,000 or less before taxes for at least 14 days in a row during the 4-week period you applied for
You stopped working, were unable to work, had work hours reduced or used up at least one week of employment insurance benefits paid since December 29, 2019 throughout the four-week period due to COVID-19
If you didn't fit one of the above criteria, you should have received a letter from the CRA notifying you of your ineligibility period and the amount due, Cabral said.
If you received a letter notifying you of your income ineligibility and had self-employment income from the gig economy that you did not declare, such as for Uber Eats drivers and OnlyFans workers, you should file an adjustment to your taxes to declare the missing self-employment income.
"You might as well make a correction to your income taxes instead of having to pay back [your benefit amount]," Cabral said.
What do I do if I have to repay my benefits?
If you did not repay your ineligible CERB amounts by December 31, 2020, you'll have to pay taxes on the full amount you received during the 2021 tax season.
But Cabral said that if you pay CERB reimbursements this year, you'll be able to deduct the amount from your income during the 2022 tax season.
If you received any government benefit issued in relation to COVID-19 — including the CERB, CESB and CRB — and make less than $75,000 during the 2020 tax year, Cabral said your 2020 taxes are still due April 30, 2021.
However, you will not be charged any interest on the CERB money you owe until the same date in 2022.
"The government is basically giving you one year of leeway to pay back your amount due, only if you received the benefit," Cabral said.
She advised us that even though you have more time to pay back your benefits free of interest, you should make yourself a budget to pay it off, because "it will creep up on you sooner or later."
If you don't have the money to pay it back, then like any other amount due to the government, you should call the CRA and make a payment arrangement, Cabral said.
"As long as you respect the payment arrangement that you agree on, it cuts your [tax] penalty and interest," she said.
"If not, after one month of non-payment, you have a 5% penalty and 1% interest per month for 12 consecutive months."
To pay back Canada's COVID-19 emergency response benefits, you can do one of the following:
If you applied through the CRA, you can make the repayment online through your CRA My Account, through online banking or by mail
If you applied through Service Canada (EI payments), you can return or repay the amount through online banking or by mail through cheque or money order
You can find more information on repaying the CERB on the Government of Canada's webpage.
It's February! Meaning that if you're a Quebec resident in Canada, tax season 2021 is right around the corner. Why not get a head start during the province's lockdown and curfew period? It's not like you have anything better to do.
MTL Blog spoke with H&R Block Senior Tax Specialist Josée Cabral to get the 411 on doing your taxes as a Quebecer. Remember that you're always doing taxes for the previous year so the taxes you do in 2021 will cover your 2020 — as much as we wish we could pretend 2020 never happened.
When is the tax deadline and has it been extended?
The deadline to file and pay your taxes in 2021 is April 30. No extension!
If you're self-employed, you have a bit more time to file your tax return — until June 15. But either way, all taxes owed must be paid by April 30, 2021.
Cabral suggests getting a head start by gathering your expense receipts and all the necessary forms as early as February.
"Get ahead of yourself. Be organized. Don't forget to claim the things that people usually forget to claim, [such as] medical receipts because there's a possibility of getting a tax credit on that," Cabral says.
The deadline to contribute to your RRSP (Registered retirement savings plan) is March 1, 2021.
Filing your taxes early allows you to estimate how much you can invest in your retirement based on how much you're getting as a tax refund or how much you have to pay the government.
Do taxes in Quebec work differently than in other Canadian provinces?
Yes. According to Cabral, filing taxes in Quebec is slightly more complicated because Quebec residents file separate provincial and federal tax returns to Revenu Québec and the Canada Revenue Agency, respectively.
Other provinces only file to one government.
How do newcomers to Quebec and Canada do their taxes? Where do they begin?
First and foremost, they need to get a social insurance number from Service Canada which they will use to file their taxes.
If new immigrants have income from their home countries, they'll have to declare it on their Canadian income tax.
Canada has several tax treaties with different countries around the world, so while new immigrants will not be taxed twice if their country of origin has a treaty with Canada, they still have to declare their income when filing their first tax return in Canada.
If the newcomers are also first-time homebuyers in Quebec, they are eligible for a $5,000 tax credit, which comes to about $620 on the federal side and $750 on the provincial side, according to Cabral.
Which tax benefits are available for working from home during COVID-19?
Cabral says there is a special tax deduction for workers who were forced to work from home due to COVID-19 in 2020.
If your office closed down, your occupation was deemed "non-essential" or you were sent to work from home for any reason, you are eligible for tax credits at both the federal and provincial levels.
There are two possible methods.
A flat rate: $2 per day for up to 200 days, for a total of $400 maximum (no additional deductions available);
The detail method: A T2200S form and TP-64.3.V form are filled out by your employer stating you were sent home to work — and that none of your at-home work expenses were paid by your employer.
The time period you were required to work from home should also be specified by your employer on the forms.
What expenses can I claim due to working from home?
For the "Detail Method," Cabral says you can claim almost anything that was necessary to complete your work at home — from office supplies, such as envelopes, folders and pens, to a portion of your rent.
But you can only claim these things if your employer didn't already pay you back for them.
All expenses claimed are time-based, so it's important to remember that you can only claim a portion of your rent, hydro bill, cell phone bill and Internet bill for the amount of time you spent working from home.
Cabral suggests being reasonable and conservative in your calculations for work expenses.
As an example, if you rent a four-room apartment and you use oneroomas anoffice, you can only claim 25% of your rent as an expense because one-fourth of your home is dedicated to work. And you can only claim it for the time you spend working from home.
How do I provide proof of my work-from-home related expenses?
Credit card statements are not valid when providing proof of expenses to the government — so make sure to keep those receipts! Photocopies of receipts are acceptable.
Cabral says it's important to keep all your receipts for work expenses, especially for one-time purchases like printer ink, pencils or other office supplies.*
Keeping your receipts allows you to easily calculate the work expenses you've accumulated while working from home, and keep track of the dates of your purchases.
The government can verify your taxes for up to six years after filing, Cabral says, so you'll want to keep receipts for six years or longer.
How do I incorporate the Canada Emergency Response Benefit?
The Canada Emergency Response Benefit has saved the butts of many Canadians who struggled financially throughout the pandemic. To date, over eight million Canadians have applied.
If you received the CERB, it counts as taxable income — so, yes, you do need to pay taxes on your CERB money.
Cabral recommends putting aside approximately 20% of what you received through CERB for tax payments.
How do I declare income from gig economy jobs, such as Uber and DoorDash?
If you've worked multiple gigs this year, you're not alone — according to H&R Block data, one-quarter of Canada’s gig economy workforce joined in 2020.*
No matter the company you work for, you should receive a tax slip from your employer.
Gig workers are considered "self-employed," which means you are able to declare work expenses, such as gas, new tires, parking fees and cell phone bills.
It's important to note that once you've made over $30,000 of income from gig work, you must register to pay GST and QST, which are federal and provincial goods and services taxes.
The $30,000 rule applies to most freelance gigs, but not to Uber drivers, whose contracts require them to be registered for GST and QST from day one, Cabral explains.
How do I declare income from OnlyFans?
If you've made a fortune selling images of your photogenic feet online, you still have to declare it as income, says Cabral.
However, keep in mind that OnlyFans is a company based in the U.S., so your funds are considered foreign income.
According to Cabral, if you work with OnlyFans, the U.S. withholds 30% of your income for tax purposes.
When filing your personal income tax in Canada, put OnlyFans in the "foreign income" section. You should also state the amount of your income that was withheld for taxes — the company should supply this information through a tax form.
Don't forget this step so you can avoid being taxed twice for the income that was withheld.
Cabral says additional taxes may be applicable for large sums.