How do COVID-19 federal programs impact your taxes? We’ve provided a summary to the most common questions:
INDIVIDUAL PROGRAMS
The Canada Emergency Response Benefit (CERB)
CERB is Taxable
- (CERB) was a taxable benefit that provided $2,000 a month ($500 a week) for 28 weeks to workers who lost their income due to COVID-19. It was available until September 26, 2020.
- The government will issue a T4A tax slip for the total amount of CERB you received in 2020.
- You must report the amount of CERB you received as income on your 2020 tax return and since no tax was deducted at source from the CERB payments, you may need to pay tax on the amounts you received. This will depend on your total income in 2020 and your marginal tax rate.
The Canada Recovery Benefit (CRB)
CRB is Taxable
- CRB is a taxable benefit for self-employed workers and other workers not eligible for EI, or who’ve had their employment/self-employment income reduced by at least 50% due to COVID-19. Those eligible for the CRB can receive $1,000 ($900 after taxes withheld) for a 2-week period up to a total of 13 eligible periods between September 27, 2020 and September 25, 2021.
- While 10% of taxes are withheld for the CRB, you may have to pay tax on the CRB depending on your total income in 2020 and marginal tax rate.
- And if your annual net income, excluding the CRB, is over $38,000, you will need to repay some or all of the benefit through your income tax return.
The Canada Recovery Sickness Benefit (CRSB)
CRSB is Taxable
- The CRSB provides $500 per week for up to two weeks, for workers who are sick or must self-isolate due to COVID-19 or have an underlying health condition that puts them at greater risk of getting COVID-19.
- If you’re eligible for the CRSB, you can receive $500 ($450 after taxes withheld) for a 1-week period. If your situation continues past 1 week, you will need to apply again. You may apply up to a total of 2 weeks between September 27, 2020 and September 25, 2021.
- While 10% of taxes are withheld for the CRSB, you may have to pay tax on the benefit depending on your total income in 2020 and marginal tax rate.
The Canada Recovery Caregiving Benefit (CRCB)
CRCB is Taxable
- The CRCB gives income support to employed and self-employed individuals who are unable to work because they must care for their child under 12 years old or a family member who needs supervised care.
- If you’re eligible for the CRCB, your household can receive $500 ($450 after taxes withheld) for each 1-week period. If your situation continues past 1 week, you will need to apply again. You may apply up to a total of 26 weeks between September 27, 2020 and September 25, 2021.
- While 10% of taxes are withheld for the CRSB, you may have to pay tax on the benefit depending on your total income and marginal tax rate.
BUSINESS PROGRAMS
The Canada Emergency Wage Subsidy (CEWS)
CEWS is Taxable
- CEWS is a taxable benefit available to employers who have experienced a drop in revenue due to COVID-19. It can be used to cover part of their employee wages retroactive to March 15, 2020.
- You must include the amount of CEWS you receive as taxable income on your annual return. If your business is not incorporated, you must include the CEWS you receive as income on your T2125 business statement.
Additional T4 Requirements
- Employers completing T4 slips and summaries for 2020 should be aware of new reporting requirements.
The Temporary Wage Subsidy (TWS)
The TWS is taxable
- The TWS reduced the amount of payroll deductions some employers were required to remit to the CRA for a 3-month period.
- The subsidy was equal to 10% of remuneration paid between March 18, 2020 and June 19, 2020, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. You must report the total subsidy amount as income on your tax return in the same year you reduced your remittances.
Additional Form PD27 is required: 10% Temporary Wage Subsidy Self- Identification Form for Employers
The Canada Emergency Business Account (CEBA)
The forgivable portion of the CEBA loan is taxable
- CEBA provided up to $60,000 in interest-free loans to small businesses if certain conditions were met. It is interest free until December 31st, 2022
- Up to $20,000 of the loan is forgivable if you repay it by December 31st, 2022. The forgivable portion of the loan is taxable, as income in 2020 (the year you received the CEBA loan).
The Canada Emergency Rent Subsidy (CERS)
The CERS is taxable
- CERS provides rent and mortgage support to qualifying businesses, charities and non-profits.
- The subsidy covers eligible fixed property expenses, including rent and is available on a sliding scale to business owners, with the amount your business receives proportional to your revenue loss.
The amount of CERS support you receive is taxable and must be included as taxable income on your tax return.
