COVID-19 Benefits Are Taxable & 1 Bank Is Urging Canadians To Prepare For Tax Time
If you’ve ever wondered “are COVID-19 benefits taxable?” the answer is yes!
While tax time is still months away, a CIBC financial expert is urging anybody who claimed federal COVID-19 benefits to plan ahead for tax implications.
This includes anyone who received the Canada Emergency Response Benefit (CERB), the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiving Benefit (CRCB).
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I urge all Canadians [...] impacted by the pandemic, not to wait until April to start looking at their finances from a tax planning perspective.
Jamie Golombek, CIBC
As part of a new report, CIBC’s Managing Director of Tax and Estate Planning Jamie Golombek advised Canadians to "make use of the time available to plan ahead to help avoid any surprises at tax time."
When it comes to the CERB, the government will issue a T4A tax reporting slip, explains Golombek.
“This must be reported as income on 2020 returns, and since no tax was deducted at source from CERB payments, taxes may need to be paid on these amounts,” he added.
When it comes to benefits like the CRB, CRSB and the CRCB, things are a little different.
While 10% was already deducted up front, this may not actually be enough to cover tax liability (depending on an individual’s total income.)
Those claiming the CRB also must be aware that if they earned more than $38,000 in 2020, they may be required to repay $0.50 of the benefit for every dollar of net income earned above that.
So, if you're not sure what you could owe come April, it could be worth investigating ahead of time!