CRA addresses CERB repayments for self-employed individuals and announces interest relief on 2020 income tax debt due to COVID-19 related income support
Since the beginning of the COVID-19 pandemic, the Government of Canada has provided urgently-needed income support to millions of Canadians, which has helped them put food on the table and keep a roof over their heads during this crisis. The federal government is committed to continuing to support Canadians throughout this crisis.
Today, the Government of Canada announced that self-employed individuals who applied for the Canada Emergency Response Benefit (CERB) and would have qualified based on their gross income will not be required to repay the benefit, provided they also met all other eligibility requirements. The same approach will apply whether the individual applied through the Canada Revenue Agency or Service Canada.
This means that, self-employed individuals whose net self-employment income was less than $5,000 and who applied for the CERB will not be required to repay the CERB, as long as their gross self-employment income was at least $5,000 and they met all other eligibility criteria.
Some self-employed individuals whose net self-employment income was less than $5,000 may have already voluntarily repaid the CERB. The CRA and Service Canada will return any repaid amounts to these individuals. Additional details will be available in the coming weeks.
In addition, today, the Honourable Diane Lebouthillier, Minister of National Revenue, announced that the Government of Canada will provide targeted interest relief to Canadians who received COVID-related income support benefits. Once individuals have filed their 2020 income tax and benefit return, they will not be required to pay interest on any outstanding income tax debt for the 2020 tax year until April 30, 2022. This will give Canadians more time and flexibility to pay if they have an amount owing.
To qualify for targeted interest relief, individuals must have had a total taxable income of $75,000 or less in 2020 and have received income support in 2020 through one or more of the following COVID-19 measures:
the Canada Emergency Response Benefit (CERB);
the Canada Emergency Student Benefit (CESB);
the Canada Recovery Benefit (CRB);
the Canada Recovery Caregiving Benefit (CRCB);
the Canada Recovery Sickness Benefit (CRSB);
Employment Insurance benefits; or
similar provincial emergency benefits.
The Canada Revenue Agency (CRA) will automatically apply the interest relief measure for individuals who meet these criteria.
Additionally, any CRA-administered credits and benefits normally paid monthly or quarterly, such as the Canada Child Benefit and the goods and services tax/harmonized sales tax credit will not be applied to reduce individuals’ tax debt owing for the 2020 tax year. Canadians are strongly encouraged to file their tax returns by the filing deadline to ensure that their benefit payments continue without interruption.
The Government of Canada recognizes that many Canadians continue to face serious financial impacts as a result of the ongoing pandemic. The interest relief measure announced today will provide an estimated 4.5 million low- and middle-income Canadians with the flexibility required to feel confident about accessing the COVID-19 income support without facing additional stress at tax time.
Quick facts
All individuals are encouraged to file their income tax returns.
Any amounts owing are determined based on an individual's personal circumstances and the credits and benefits they may receive.
Like Employment Insurance (EI) benefits, the COVID-19 emergency and recovery benefits, including similar provincial benefits, are taxable. Although 10% of the benefit amount for the three Canada Recovery Benefits (CRB, CRCB, and CRSB) is withheld at source, many other emergency benefits, including the CERB and the CESB did not withhold tax at source. Today's announcement will give those Canadians who owe any taxes as a result of accessing these benefits more time and flexibility to pay those amounts.
The CRA has not extended the tax filing deadline. Canadians should complete and submit their tax returns by April 30, 2021, the filing due date for most individuals. Canadians are strongly encouraged to file their tax returns to ensure that their benefit payments continue uninterrupted.
To learn more about how this could affect you try scheduling a free consultation with us.