Two years after providing millions of Canadians with financial support during the pandemic, the federal government is demanding some of its money back.
Over the last few months, the Canada Revenue Agency (CRA) has begun sending out letters to thousands of Canadians that received the Canada Emergency Response Benefit (CERB) erroneously.
If you or someone you know has received a letter from the CRA regarding a CERB overpayment, you may be responsible for paying some or all of it back to avoid legal and financial consequences.
Determining if you need to repay CERB
In order to distribute CERB as quickly as possible, the program was based on an attestation; applicants were responsible for determining if they were eligible based on the criteria.
To be considered eligible for the $2000 a month benefit, recipients must have met the following conditions:
- 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 at least $5,000 in the 12 months prior to applying for the benefit, whether through employment or provincial benefit payments related to maternity or parental leave
- You had to stop working or your work hours were reduced because of reasons related to COVID-19
According to the CRA, those being asked to pay back the benefit include:
- Those who returned to work earlier than expected
- Those who received retroactive pay from their employers
- Those who applied for CERB but later realized they were ineligible
- Those who applied for CERB through both Service Canada and the CRA for the same period
- Those who earned more than $1,000 in employment income while receiving benefits
How to repay CERB
As overwhelming as these debts may seem, it’s important to remember that ignoring them will not make them go away. Refusing to pay your debt may result in serious financial or legal consequences.
If you are unable to pay back the amount in full, you can make a minimum monthly payment or make arrangements with the CRA to pay back the amount over time without collecting interest.
If you don’t agree with your overpayment or wish to discuss payment arrangements, you can contact the CRA.
Items to review before contacting the CRA
In the event that you have to contact the CRA regarding a CERB overpayment, we highly recommend reviewing the following beforehand:
- 2020 T4E or T4A
- March 2020 to September 26, 2020, paystubs received during the time that you were provided CERB
When reviewing the above documents, double-check to make sure your T4E and T4A match the amount you received. Once you’ve confirmed that they match, compare this amount to wages earned during that time. Keep in mind that in order to qualify for CERB, you couldn’t make more than $1,000 for a period of at least 14 consecutive days within the initial 4-week period of your claim or $1,000 total for each subsequent claim.
It’s also a good idea to have the above documents on hand when contacting the CRA.
Repayments can affect your taxes
These benefits are taxable and must be reported on your personal income tax return. If you are required to repay CERB, the timing of when you repay them may affect your taxes.
If you repay CERB before January 1, 2023, you can decide when and how to claim the deduction on your tax return. You have the option to either claim your repayment as a deduction in the year you made the repayment or in the year you received the benefit. You can also decide to split the deduction between those two income tax returns, as long as the total deduction does not exceed the amount repaid.
However, if you repay a benefit amount after December 31, 2022, you can only claim a deduction in the year you make the repayment.
If you’ve made a CERB repayment and need help adjusting your taxes, we can help. At DiPaola, Di Pietro, & Little Professional Corporation we are fully committed to providing a high level of service–delivering reliable, timely and accurate results at an exceptional value–to all our clients. To get started, give us a call at (905) 680-8669 or request an appointment on our website.