We asked Josée Cabral, a Quebec-based tax expert at H&R Block, to explain everything you need to know about repaying CERB.
How do I know if I have to pay back my benefits?
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).
In order to be eligible to receive emergency benefits, you had to have met the following conditions for each four-week period:
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.