CERB Repayment: Your Guide to CERB Overpayment and CERB Taxes

COVID-19 caused financial problems for many in 2020. Nearly 9 million Canadians applied for the Canadian Emergency Response Benefit, or CERB, last year. In Ottawa, Ontario alone, nearly 85,000 Ontarians applied for the $2,000 a month relief benefit when it first became available.

CERB ended in December of 2020, but those who received the benefit still have questions about whether they were actually eligible to receive CERB, if they need to repay CERB, and how CERB repayment will affect their taxes.

Read our helpful guide to CERB’s impact on your finances and 2020 tax filing below, and see what your options are for paying back money you owe for receiving CERB.

CERB Repayment: What You Need to Know

Who was eligible for CERB?

To have been eligible for CERB, you must have:

  • Resided in Canada and been at least 15 years old;
  • Stopped working due to reasons related to COVID-19 or were eligible for Employment Insurance regular or sickness benefits or exhausted your Employment Insurance regular or fishing benefits between December 29, 2019 and October 3, 2020;
  • Had a minimum employment and/or self-employment income of $5,000 in 2019 or during the 12 months before the date of your application; and,
  • Not quit your job voluntarily.

Eligible CERB applicants were able to receive $500 per week for a maximum of 28 weeks.

Why did I receive CERB if I was ineligible?

There are a few ways you may have received CERB payments by mistake. This includes:

  • Your application for CERB was accepted, but later deemed ineligible because you do not meet the eligibility criteria;
  • You applied for CERB through both the Canada Revenue Agency (CRA) website and the Service Canada website;
  • A double payment or overpayment of CERB was issued from the government by mistake.

The maximum benefit amount for CERB was $500 per week for 28 weeks, or $14,000 total. No tax was removed from CERB payments issued by direct deposit or cheque. If you received payments for CERB above $14,000 in total, you may have received overpayment of CERB.

If you believe you received overpayment of CERB, contact the CRA at 1-833-966-2099.

Was I eligible for CERB if I am self-employed?

The government announced on February 9th, 2021 that self-employed workers who earned $5,000 in gross income in the 12 months before their CERB application are eligible for CERB.

This announcement was made in response to mixed messaging from the Canadian government in 2020 over whether the minimum for self-employed workers was based on net or gross income.

What if I received a letter last year saying I may be ineligible?

In late 2020, the government issued over 400,000 CERB repayment notice letters. These educational CERB letters told recipients they may need to repay CERB if their net self-employment income was under $5,000 during the 12 months before their CERB application was made.

However, as of February 9th, 2021, the government has changed its position, and has stated that self-employed workers who earned $5,000 in gross income in the 12-month period before their CERB application were eligible to receive CERB.

If you followed the educational letter’s instructions and voluntarily repaid CERB last year, you may be entitled to have that repayment returned to you. Read below to see if you qualify to have your CERB repayment returned to you.

Do you have to pay back CERB?

Canadians who were eligible for CERB and received CERB payments will not need to return those payments to the government.

Workers who received payments of CERB that they were not eligible for (e.g., CERB double payment, CERB overpayment) will need to repay those funds to the government.

*Note* Like Employment Insurance, CERB is a taxable benefit – jump ahead to see how CERB may affect your 2020 tax filing.

When do I have to repay CERB?

The government requested that all CERB double payments, CERB overpayments, and payments made to ineligible CERB recipients be returned by December 31st, 2020. If you have not yet repaid CERB payments you were not entitled to, you are still able to through the methods listed later in this guide.

*IMPORTANT* Scams requesting repayment of CERB have been reported – use the governments guide to recognizing scams for tips on preventing CERB repayment fraud.

Can I get my money back if I repaid CERB by mistake?

In February 2021, the government announced that self-employed workers who earned $5,000 in gross income in the 12 months before their CERB application were, in fact, eligible to have received CERB.

This announcement came after many of those same self-employed workers were asked in late 2020 to return their CERB payments if their self-employment income was below $5,000 in net income. The original deadline for repayment of ineligible CERB amounts was December 31st, 2020, but repayment continues to be possible after this date.

Self-employed workers who repaid CERB voluntarily but are eligible for CERB following the government’s February 2021 announcement will have their CERB repayments returned to them in the coming weeks.

How can I repay CERB?

Applications for CERB were either made through the CRA or Service Canada, and repayment should be made to the department you originally applied for CERB from.

To repay CERB to the CRA through online banking, sign on to your CRA My Account portal, or your online bank to arrange payment. If you prefer to pay by money order or with the original CERB cheque you still have, visit here for mailing instructions.

To repay CERB to Service Canada, either arrange direct deposit through your online bank, or mail the original cheque still in your possession to Service Canada. Visit this government website for mailing and direct deposit instructions.

*Tip* Can’t remember who you applied to CERB from? If the application for CERB was very short, it was likely CRA that you applied through. If you were asked questions similar to an Employment Insurance application (e.g., “What is the name of your former employer?”), it was likely Service Canada.

Contact the CRA at 1-833-966-2099 to confirm which department you applied for CERB through if you are still unsure.

What happens if I don’t repay CERB?

The government has acknowledged that many Canadians may have received CERB payments they are ineligible for, either through an honest mistake by individuals or government employees. It is requested that those individuals who received CERB payments they are not eligible for return those payments as soon as possible.

If you received CERB payments you are not eligible for and cannot repay them, you have options for how to repay CERB.

Payment arrangements with the CRA may be possible; call the CRA at 1-833-966-2099 to find out more.

If you cannot make payment arrangements, filing for bankruptcy or a consumer proposal may be the best option for your financial future. The Licensed Insolvency Trustees at Doyle Salewski specialize in helping Canadians create a personalized debt relief plan that protects your financial future.

Call our Ottawa offices at 613-237-5555 for a free consultation on what to do if you can’t afford to repay CERB.

How CERB Will Affect Your Taxes

Is CERB taxable?

Similar to other benefit programs like EI, payments for CERB were issued to Canadians as a pre-tax benefit. This means that the majority of Canadians who received CERB will owe taxes on the payments they received. When filing your 2020 income tax return, you will have to report the CERB amount that you received as part of your taxable 2020 income.

Here’s an example: Charlie, an Ottawa, Ontario resident, earned $10,000 until April 30th, 2020, when he was laid off from his job. He then applied for CERB, and received $14,000 in benefits, bringing his total 2020 income to $24,000.

With $10,000 of income, his tax bill would have been $0, as his income for the year would be below the $13,229 Basic Personal Amount of tax-free income in Ontario for 2020. But with a total of $24,000 of income, his tax bill would be around $2,283.

Try using this tax calculator from Ernst & Young to estimate what your return might look like.

Why did I receive a tax slip for CERB?

Starting January 2021, the CRA began issuing T4A slips to Canadians who received COVID-19 emergency or recovery benefits like CERB. Benefit amounts on your T4A slip must be reported as income on line 13000 of your 2020 tax filing. You should receive your T4A before March 10th, 2021.

Those who applied for CERB through Service Canada will receive a T4E slip instead of a T4A slip.

What if I received CERB but didn’t get a T4A or T4E slip?

If you don’t receive your T4A slip by March 10th and need one to complete your 2020 tax filing, visit your CRA My Account portal or contact the CRA directly.

Your T4E is accessible from your My Service Canada Account. Contact Employment and Social Development Canada if your T4E is not available on this portal by February 28th.

How will CERB repayment affect my taxes?

If you returned CERB payments before the original CERB repayment deadline of December 31st, 2020, the repaid amount will be subtracted from the benefit amount listed on your T4A slip that makes up part of your taxable 2020 income.

If you repaid CERB payments after December 31st, 2020, you still have to pay tax on the total amount of CERB you received in 2020. You will have the option to adjust this amount when you file your 2021 income taxes next year.

Are there penalties for not repaying CERB taxes?

The Canadian Emergency Response Benefit Act that led to the creation of CERB states that “no interest is payable on any amount owing” caused by “erroneous payment or overpayment.” This means that you will never be charged interest on CERB payments you were not eligible for.

However, any ineligible CERB payments you received and did not repay before the December 31st, 2020 repayment deadline are still taxable as part of your 2020 income tax filing.

Any tax balance owed to the CRA for 2020 income begins accruing interest as of May 1st, 2021. If you can’t afford to pay the CERB tax you owe on your 2020 income tax filing, it may still be worth filing your return in order to prevent the late-filing penalty that applies to tax returns filed after April 30th, 2021.

What if I can’t afford to pay taxes on CERB?

If you can’t afford to repay taxes you owe for your 2020 tax return because of income you received from CERB, you have options. As is the case for those who can’t repay CERB payments they were ineligible for, payment arrangements with the CRA are possible.

Alternately, filing for bankruptcy or a consumer proposal may be the best option for you when you are unable to pay back taxes owed from CERB. Contact Doyle Salewski, Ontario’s preferred Licensed Insolvency Trustee, and get a free consultation on what a solution for CERB taxes can look like for you.

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