Sign in
EN - Money

The CRA Has Explained Exactly How COVID-19 Benefits Will Affect Your Taxes In 2021

Here's everything you need to know.👇💰

Ahead of tax time, the Canada Revenue Agency (CRA) is reminding Canadians that all of the government’s COVID-19 benefits are taxable.

This includes the Canada Emergency Response Benefit (CERB), as well as benefits that had tax withheld at source, like the Canada Recovery Benefit (CRB).

With the 2021 tax season expected to be “incredibly complicated” and “unlike any other,” the federal agency has explained exactly what impact the financial support you received may have on your taxes.

Here’s everything you need to know:

Editor's Choice: The Canada Revenue Agency Is Ramping Up Its Services Ahead Of Tax Time 2021

How will COVID-19 benefits affect my taxes?

According to the CRA, all of the federal government’s COVID-19 benefits are taxable because they are effectively considered income.

This means the total amount you received must be included on your tax return.

Before tax time, the agency will get in touch via mail with a T4A form (or a T4E form if your benefit was administered by Service Canada).

Residents of Quebec should receive both a T4A and RL-1 slip.

This document will include all of the information and details you’ll need to include on your return.

You may end up owing tax when filing your return, depending on your individual circumstances and the kind of benefit you claimed.

Which benefits are taxable?

The first COVID-19 benefits introduced by the federal government were the Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB).

Both programs did not withhold tax at source, which means many Canadians will be required to return a portion of the benefit to cover the associated tax.

The three new Recovery Benefits that were introduced to replace the CERB are also taxable.

This refers to the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiving Benefit (CRCB.)

While a 10% tax was deducted upfront for these benefits, claimants may still be required to pay more depending on their income in 2020.

How can tax be owed if it was deducted upfront?

Whether or not more tax is owed will depend on an individual's personal circumstances, including income in 2020 and the specific benefit claimed.

Some people may actually have to pay less tax if their income was below a certain threshold during the same period.

Tax experts and banks previously urged anyone claiming COVID-19 benefits to start preparing for April as soon as possible, as you could end up owing money without even realizing it.

Fortunately, free tax help is available to eligible Canadians to help them work out exactly what they may or may not owe.

The CRA also acknowledges that repayments could present “significant financial hardship” for some people. As a result, payment arrangement plans are available for those who need support.

The Government of Canada is ending its India flight ban next week, which has been in place since April 2021.

"Canada continues to take a risk-based and measured approach to re-opening the border while prioritizing the health and safety of everyone in Canada," federal officials said in a news release on Tuesday, September 21.

Keep Reading Show less

Premier Jason Kenney has just announced that the province will be taking measures to plan for a "worst-case" scenario as Alberta's COVID-19 cases continue to rise.

During a COVID-19 update on Tuesday, September 21, the premier said that he'd been in touch with different agencies to plan what the response would be in dire circumstances.

Keep Reading Show less

Ontario's ​Vaccine Passport Can Be Saved On Your Phone & Here's How I Did It In 5 Minutes

A new tool lets you store your vaccine certificate as an image, a PDF file, or as a card in your Apple Wallet.

Starting Wednesday, September 22, Ontarians are expected to show their proof of vaxx to enter certain non-essential businesses and settings. However, because enhanced vaccine certificates with QR codes won't come into effect in the province until October 22, a team of volunteer software engineers and medical professionals created a tool that lets you store your proof of vaccination on your phone with a QR code.

"No personal data is sent to the internet. [The] QR code is for verification only, with no personal info," the team behind the tool told CTV News.

Keep Reading Show less

As of September 22, Ontario vaccine certificates will officially come into effect across the province. This means that residents will need to show proof of vaccination to get into multiple establishments including restaurants and gyms.

We asked you on Instagram what you wanted to know about the new certificates and have answered all your questions below.

Keep Reading Show less