Canadians who were employed or self-employed and directly impacted by COVID-19 but were not eligible for Employment Insurance (EI) benefits received financial assistance through the Canada Recovery Benefit (CRB).
The money received from the CRB is taxable, as it needs to be reported as income on tax returns filed by beneficiaries. You may owe more tax than the 10% tax deducted at source. Depending on how much money you made throughout the year, you could have to pay more (or less) when you file your income tax return. When you submit your income tax return, you must include the CRB payments you receive as income. When it comes time to file your taxes, the CRA will provide you with a T4A tax information sheet for the amount you were given in COVID-19 benefits managed by the CRA.
If you’re one of the several Canadians who rely on the Canada Recovery Benefit (CRB) between 2020 and 2021, you might be concerned about what will happen when tax season rolls around. Between September 2020 and October 2021, CRB gave financial assistance totaling more than $28 billion to persons who were unable to file for employment insurance but who still lost at least 50% of their salaries as a result of COVID. Contrary to the Canada Emergency Response Benefit (CERB), CRB’s predecessor, the federal government chose to withhold 10% of tax upfront. While many people won’t have to worry about paying a tax debt this spring as a result of this, others could still receive an unpleasant surprise when they file their taxes. That’s because the government will be taking part of that money back from Canadians who made more than $38,000 in 2021 due to the government’s income limit.
You may owe some money back if you did have additional income.
When it comes to filing your taxes, the Canada Revenue Agency (CRA) will once again send you a T4A if you earned CRB benefits in 2020. Once tax season arrives, you should get your form in your CRA My Account if you only started claiming CRB in 2021.
Remember that the CRA will work with you to establish a reasonable payment plan if you are still left with a sizable liability after those deductions. It advises performing some preliminary number crunching before contacting the agency. With your monthly income and costs in hand, you can use the payment calculator to see how much you can afford to pay each month.
The Canada Revenue Agency (CRA) might be a little complex to understand, but once you have understood how they work, you can quickly adjust to it. CBR has helped many Canadians after the COVID-19 outbreak. CRA has helped those Canadians in 2020 and 2021 who are unable to file for employment insurance. Moreover, you do need to pay tax on CBR if you avail yourself of this program.