The Covid-19 pandemic caused a lot of people to lose their job and millions of people went broke because of the crisis. Lockdown left most physical businesses without customers as they were advised to stay at home.
Canadian government considered such people and took the issue seriously. The Canadian government provided its citizens with the Canada Emergency Response Benefits also known as CERB. Through this program, the affected community of Canada will be provided with financial assistance to help them in this time of crisis.
Middle-class people who had jobs before the pandemic or were self-employed were eligible for this scheme and were provided with $2,000 in a 4-week period to support their living.
You might be wondering what is CERB and what is a CERB repayment, it is necessary to repay the amount or not. Are there any taxes involved?
Here are the answers to all of your questions
Do You Have To Pay Back Your CERB?
Yes, depending on the eligibility conditions, you may be required to repay some or all of the CERB. Some residents are required to pay a fixed sum, while others must pay the entire amount if they return to their work or self-employed business before the conclusion of their service.
It is the responsibility of the Canada Revenue Agency to determine who is eligible for repayments and how much must be repaid. If a CERB was paid to someone who did not meet the eligibility requirements, the CRA is compelled to reimburse the money.
Also needed to begin repayments are citizens who applied erroneously and have been paid multiple times while being ineligible. The Canadian government has provided a short questionnaire answering to which you will assess if you are required to repay your CERB or not.
Eligibility For CERB
To be eligible for CERB, you must meet the following requirements:
- You must be living in Canada and must be over 15 years of age.
- You lost your job or self-employed business due to COVID-19.
- You are not eligible if it was lost due to other reasons.
- You must have earned at least five thousand dollars in a year before submitting the application.
- You are expected to have no earnings or any kind of income in near future.
If one meets all of the above requirements, he or she is eligible for the CERB.
How To Avoid Tax on the CERB Payments?
The CRA is expanding tax incentives as a result of covid, but it is also taxing the CERB. As a citizen, you must know how to apply for tax credits and where to do so.
The BPA, commonly known as the basic personal amount, is a tax benefit offered by the Canada Revenue Agency. This basic personal amount is exempt from federal income tax. For 2021, the basic personal amount before the boost is $12,421; for 2022, it is $12,719 due to indexation.
The rise in BPA resulted in a higher federal tax bill. However, if you make use of it, the BPA deduction will significantly reduce your tax bill. You can make your CERB tax-free by combining it with a few other tax credits.
There are alternative ways to avoid CERB tax, but you should be aware of the potential pitfalls before pursuing one. It is better to seek financial advice in this circumstance because rules and regulations are always changing due to changing pandemic situations.
How Much Money Will I Get From the CRB in 2021?
In 2021, eligible citizens were paid $500 per week for a period of 9 months. This makes a total of $2000 per month. Eligible workers were also paid a sum-up amount of $19000 as a cumulative benefit.
As the pandemic conditions are getting better and people have started working again like they were used to before the pandemic, the citizens who no longer fall into the eligibility criteria must start repaying their CERB payments as soon as possible.
If you obtained CERB, this year’s tax season will be similar to past years. You’ll get a tax slip, and you’ll have to include the benefit in your 2020 tax return as taxable income. Any outstanding balance is due on April 30, 2021.