Tax Experts Say There's A Way To Avoid CERB Repayments If You're Self-Employed
Here's what you need to know.
With 2021 just around the corner, a significant number of Canadians have recently learned that they may owe thousands of dollars in
Back in November, the Canada Revenue Agency (CRA) revealed thatmay be asked to repay their Canada Emergency Response Benefits (CERB).
While some of these people may have receivedover the course of the claim period, others may have and believed they were eligible when they weren’t.
For some, this may simply be a one-off repayment, but others may owe the government a serious amount of money.
While officials said that they’re prepared to offer more time and flexibility when it comes to returning the CERB, they also made it clear that they have
However, some tax experts say there may be a simple solution.
Why do some people need to repay the CERB?
When the CERB was launched back in March, all applications wereto ensure that Canadians who needed support got it as soon as possible.
The government warned that eligibility would be checked at a later date and those found to be ineligible would be asked to return the money.
In November, the Canada Revenue Agency revealed that approximatelymay have to repay their benefit.
This includes those who incorrectly receivedfrom both the CRA and Service Canada, as well as self-employed people who misunderstood the of the application form.
When does it need to be paid back?
Despite calls from other politicians toaltogether, the federal government has made it clear that the benefits will need to be returned.
However, they’ve committed towhen it comes to paying back the money.
This means the agency won’t enforce repayments of a certain amount, or on a certain date.
That said, the CRA recommends repayingto avoid the benefit impacting your taxes next year.
In addition, the government promised that those who made honest mistakes during the application process willinterest or additional charges.
Is there a different option?
The original CERB eligibility criteria stated that self-employed individuals were eligible for the benefit if they earned over $5,000 in 2019 or in the 12 months before applying.
In this instance, “income” referred to net income, rather than gross income.
This means some applicants qualified for the benefit per their gross income, but not per their net income, and later found out that they owe the CRA money.
However, multiple tax experts told Global News that some self-employed people may not actually have to repay.
Toronto tax lawyer David Rotfleisch explained, “There is no obligation for a taxpayer to claim expenses.”
Self-employed applicants who have filed their 2019 taxes could update their return by filing a T1-ADJ form, where they can amend their expenses so that their net income rises above the $5,000 threshold.
“By potentially paying some tax … you will be able to claim and keep the whole CERB,” Rotfleisch added.
It's an idea backed-up by Gennaro De Luca, a certified financial planner. He told Global News that this is “an easy way” to adjust your net income and be eligible for the benefit.