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CERB CLARITY: A COMPREHENSIVE GUIDE TO ELIGIBILITY AND REPAYMENT

A person wearing a traditional Canadian red and white plaid shirt, surrounded by stacks of paper and envelopes from the Canada Revenue Agency. They look terrified and overwhelmed as they try to figure out how to repay the money they owe. The scene is set against a gray, ominous background with looming shadows representing the fear and stress the person is feeling. The person's facial expression and body language should convey a sense of desperation and hopelessness.

Overview of the Canada Emergency Response Benefit

In the unprecedented times of the pandemic, one of Canada’s COVID-19 Economic Response Plan by PM Justin Trudeau and the Federal Government was the rolling out of the Canada Emergency Response Benefit (CERB) to provide financial aid to those affected by the COVID-19 pandemic. However, the eligibility requirements and repayment process have left many Canadians confused and frustrated.

In this Brandon’s Blog, we will dive deep into the intricacies of CERB eligibility and repayment, providing you with a comprehensive guide to navigate through the confusion. Let’s unravel the mysteries surrounding this together!

Explanation of what CERB was

The CERB has been a source of confusion for many Canadians, particularly when it comes to eligibility and repayment. Despite efforts to clarify the rules, there is still a lack of understanding among the public.

The first step towards clarity is understanding whether you were eligible for this benefit program. The program was designed to support individuals who lost their jobs or experienced a significant reduction in income due to the pandemic. However, the program was rolled out so fast that even those charged with administering the program did not fully understand the eligibility requirements.

With so many government civil servants not understanding the program, no wonder that ordinary Canadians were and are still uncertain about their eligibility status. In this section, we will break down the eligibility criteria, providing you with a clear understanding of who qualified for it and who did not.

Understanding Eligibility Requirements for CERB

Many Canadians are still facing uncertainty and confusion regarding their eligibility for the CERB application process. The ever-changing criteria and requirements had left individuals unsure about whether they qualified for this crucial financial assistance. Let’s delve into the key points causing confusion among applicants. The eligibility requirements were:

  1. Employment Status: To be eligible for CERB, you must have stopped working or experienced a significant reduction in your employment or self-employment income due to COVID-19. This includes individuals who have been laid off, furloughed, or had their business operations suspended.
  2. Income Threshold: The income requirement was that it must have been at least $5,000 in the previous 12 months or 2019. This income can come from employment, self-employment, or certain benefits related to maternity or parental leave.
  3. Residency Requirement: You must be a resident of Canada and have a valid Social Insurance Number (SIN) to qualify. Non-residents, temporary workers, and international students were not eligible.
  4. Exhaustion of Other Benefits: If you were already receiving other benefits, such as Employment Insurance (EI), you were not eligible for CERB. However, if you had exhausted your EI benefits, you could have been eligible.

Purpose of providing financial assistance during the COVID-19 crisis

The benefit was rolled out quickly by PM Justin Trudeau and his Federal Government and there was a lot of confusion about who was eligible for it. It was created to help those in Canada who the COVID-19 pandemic directly impacted. The program provided financial assistance to employees and self-employed workers. The benefit was worth a maximum of $2,000. Eligibility periods were every 4 weeks for up to four months.

The issue that troubles me is that the benefit was mostly paid to people who otherwise would not have been able to afford rent or food during their eligibility periods. The CERB benefit money was spent immediately and a long time ago. So if Canada Revenue Agency (CRA) and Service Canada have now determined that some people should not have gotten that benefit, what are those people supposed to do if CRA demands the money back?

A person wearing a traditional Canadian red and white plaid shirt, surrounded by stacks of paper and envelopes from the Canada Revenue Agency. They look terrified and overwhelmed as they try to figure out how to repay the money they owe. The scene is set against a gray, ominous background with looming shadows representing the fear and stress the person is feeling. The person's facial expression and body language should convey a sense of desperation and hopelessness.

Criteria for Eligibility Not Clearly Communicated

The criteria for qualifying for CERB have been subject to changes and updates by the Federal Government since the program’s inception until it closed. While the intention behind those adjustments may have been to accommodate a broader range of individuals in need, the frequent modifications have created additional confusion. Applicants struggled to keep up with the evolving requirements, making it challenging for them to determine if they were eligible for the benefit.

Moreover, the language used to communicate the eligibility criteria was complex and difficult for the average person to comprehend. The technical jargon and legal terms used in official documents and announcements further exacerbated the confusion, leaving many applicants feeling overwhelmed and uncertain about their eligibility status.

The shifting landscape of eligibility requirements added another layer of complexity for Canadians seeking financial support. As the government responded to changing economic conditions and societal needs, the criteria for qualifying were adjusted to reflect these shifts. While these changes were intended to ensure that those most affected by the pandemic received assistance, they also resulted in confusion among applicants.

For instance, updates to the eligibility criteria regarding income thresholds and employment status left many individuals questioning whether they still qualified for CERB. The evolving nature of these requirements meant that what may have been true one week could be outdated the next, creating challenges for applicants trying to navigate the system.

The confusion surrounding eligibility continues to be a significant issue impacting many Canadians who needed financial assistance during those uncertain times. The reason it continues is because CRA is now demanding repayment from many Canadians alleging that they never qualified for it in the first place.

Clear and transparent communication of the criteria, consistent updates on changes, and accessible language are essential to help individuals understand their eligibility status and navigate the application process effectively.

Understanding CERB Repayment and its Real-Life Challenges

While CERB provided much-needed financial relief to millions of Canadians, it is crucial to understand that the money received through the program was not a grant but a taxable benefit. This means that it needed to be included in each recipient’s income tax return for the taxation year it was received. Failure to do so results in serious consequences. Let’s delve into the repayment process as that was also not properly communicated.

  1. Repayment Deadline: The original deadline for repaying CERB was December 31, 2022. It was essential to plan your finances accordingly to meet this deadline and avoid any penalties or interest charges. As mentioned above, the problem was that everyone used the funds for rent and food. They did not have the money to repay.
  2. Repayment Options: The CRA provides various repayment options to make the process easier for Canadians. You can repay the amount in full, in installments, or through your income tax return. It is crucial to choose the option that best suits your financial situation. However, at this stage, if not repaid immediately upon CRA advising of ineligibility, penalty and interest will be added to the amount paid. This is causing much hardship to many Canadians today.
  3. Avoiding Misunderstandings: Many Canadians have found themselves in a situation where they received the benefit without realizing they were ineligible. CRA is now demanding repayment to rectify the situation.A person wearing a traditional Canadian red and white plaid shirt, surrounded by stacks of paper and envelopes from the Canada Revenue Agency. They look terrified and overwhelmed as they try to figure out how to repay the money they owe. The scene is set against a gray, ominous background with looming shadows representing the fear and stress the person is feeling. The person's facial expression and body language should convey a sense of desperation and hopelessness.

Answers to the CERB Repayment FAQs

Q: What are some common issues people are facing when it comes to repaying the CERB?

A: Some common issues people face when repaying the CERB include confusion about eligibility criteria, difficulties navigating the repayment process, challenges in understanding tax implications, and concerns about financial strain due to the repayment amount. Additionally, delays in receiving communication from the government regarding repayment arrangements and lack of clarity on repayment deadlines are causing stress and uncertainty among recipients.

Q: How is the government addressing the repayment problems faced by Canadians who received the CERB?

A: The Canadian government has implemented various measures to address the repayment issues faced by Canadians who received the CERB. This includes allowing individuals to set up payment plans, extending the deadline for repayment, and providing flexibility in terms of repayment options. Additionally, the government has introduced measures to waive interest charges on outstanding balances for a certain period and has simplified the process for individuals who may have difficulty repaying the benefit. These efforts aim to alleviate the financial burden faced by Canadians and ensure a smoother repayment process.

Q: Can I appeal a decision regarding the CERB Repayment?

A: Yes, you can appeal a decision regarding the Canada Emergency Response Benefit Repayment by contacting the Canada Revenue Agency and providing any relevant documentation or information to support your appeal. It is recommended to review the specific reasons for the repayment request and provide a clear explanation or evidence to support your case during the appeal process. You will need documents to prove your position and may require professional advice from a tax accountant or tax lawyer.

Q: Are there any options available for individuals who are struggling to repay the CERB due to financial difficulties?

A: Individuals who are struggling to repay the benefit due to financial difficulties can contact the CRA to discuss repayment options. The CRA may be able to work out a payment plan or provide assistance based on individual circumstances. It is important to communicate with the CRA as soon as possible to avoid any penalties or further financial burden.

Q: What are the consequences for individuals who are unable to repay the CERB on time?

A: Individuals who are unable to repay the CERB on time may face consequences such as having to pay penalties or interest on the overdue amount, having their tax refunds withheld by the government, or being subject to legal action to recover the debt. It is important to communicate with the Canada Revenue Agency if you are unable to make payments on time to explore potential options for repayment.

Q: What are the acceptable methods for repaying the Canada Emergency Response Benefit?

A: As of now, the CRA has not announced specific repayment methods. However, individuals who have received the benefit but are not eligible or have received more than they were entitled to will be required to repay it. The CRA may provide further guidance on repayment methods in the future, but for now, individuals can contact the CRA to discuss repayment options.

It is just like paying any other amount to CRA. You can do so online, at your bank or by mailing a cheque to CRA. Make sure you include the payment advice stub with your payment and write your social insurance number and how the payment should be directed on the back of your cheque or in the appropriate boxes if paying online.

Q: Can I access financial counselling services for assistance with CERB repayment?

A: Yes, you can access professional advice in the form of financial counselling services for assistance with repayment. Many non-profit organizations and financial institutions offer free counselling services to help individuals navigate their finances and manage any debt repayment, including assistance with repaying CERB funds. It is recommended to reach out to these organizations for personalized guidance on your specific situation.

Q: Can I file either a consumer proposal or bankruptcy to eliminate the CERB repayment debt demanded by the CRA?

A: You can include the CERB repayment debt in a consumer proposal or bankruptcy, but it is advisable to seek professional advice from a licensed insolvency trustee in Canada to understand the specific implications and requirements of each option to your unique financial situation. Each individual’s financial situation is unique, so it’s crucial to receive personalized guidance on the best course of action to address the this repayment debt, your other debts and the effect on your assets.

We have helped several individuals eliminate their CERB repayment debt through both successful consumer proposals and bankruptcy.

CERB Conclusion

The Federal Government has taken steps to address confusion surrounding this program by updating guidelines, improving communication, and providing resources for repayment assistance. However, the CERB part of PM Justin Trudeau’s Canada’s COVID-19 Economic Response Plan seems to be extending the confusion and angst that existed during the COVID-19 crisis itself.

Navigating the complexities of eligibility and repayment is overwhelming, but with the right information, you can ensure a smooth process. By understanding the eligibility criteria and repayment options, you can avoid confusion and potential financial hardships in the future. Remember, it is always better to be proactive and seek clarification if you have any doubts regarding your CERB eligibility or repayment status. Together, we can navigate the confusion and emerge stronger on the other side. Stay informed, stay compliant, and stay financially secure.

Individuals and business owners must take proactive measures to address financial difficulties, consumer debt and company debt and promptly seek assistance when necessary. It is crucial to recognize that financial stress is a prevalent concern and seeking help is a demonstration of fortitude, rather than vulnerability. Should you encounter challenges in managing your finances and find yourself burdened by stress, do not delay in pursuing aid.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses with debt problems that are in financial distress. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns and more associated with your company debt are obviously on your mind.

The Ira Smith Team understands these financial health concerns. More significantly, we know the requirements of the business owner or the individual who has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own and it does not mean that you are a bad person. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore.

The Ira Smith Team uses innovative and cutting-edge methodologies, to adeptly navigate you through the intricacies of your financial challenges, ensuring a resolution to your debt-related predicaments without resorting to the rigours of the bankruptcy process. We can get you debt relief now! We have helped many entrepreneurs and their insolvent companies who thought that consulting with a Trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, to begin your debt-free life, Starting Over, Starting Now.

A person wearing a traditional Canadian red and white plaid shirt, surrounded by stacks of paper and envelopes from the Canada Revenue Agency. They look terrified and overwhelmed as they try to figure out how to repay the money they owe. The scene is set against a gray, ominous background with looming shadows representing the fear and stress the person is feeling. The person's facial expression and body language should convey a sense of desperation and hopelessness.

 

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CANADA RECOVERY BENEFIT ACT: EVERYTHING YOU NEED TO KNOW IF CRA IS IN BATTLE WITH YOU FOR REPAYMENT

canada recovery benefit act

A new phase for the Canada Recovery Benefit

The Canada Recovery Benefit (CRB) was part of the Canadian government’s overall economic recovery programs to help Canadian individuals and businesses during the COVID-19 period. It was a taxable benefit of $500 per week that lasted for up to 26 weeks. It was given to employed and self-employed workers directly affected by COVID-19. The Canada Recovery Benefit gave financial support to eligible workers who could not work and tried to provide some measure of recovery in response to the COVID-19 pandemic. This includes self-employed workers, contract workers, and part-time workers.

The benefit was paid out for a maximum of 26 weeks in respect of any application under this program and was available to workers who lost their job, were sick or quarantined, were taking care of someone who was sick with COVID-19, or was caring for children who are not in school because of COVID-19.

We’re in a new phase with the Canada Recovery Benefit now. It was phased out some time ago. Since the money was given out so quickly, there wasn’t any checking to see whether the person applying for this benefit actually qualified. Now the Canada Revenue Agency (CRA), which is in charge of the program, is checking all of the applications.

The CRA is currently investigating all applications for the program to ensure that everyone who received funding met the eligibility criteria. They’re sending out letters asking for proof of eligibility, and if people can’t provide that, they’re asking for the money back. We have done the bankruptcy of several individuals who did not have the money to repay, as they spent it on things like food and shelter.

In this Brandon’s Blog, I explain in more detail what the Canada Recovery Benefit was and describe a recent court decision about someone who CRA demanded the money back from and the kind of proof that CRA is demanding to see if a person met the eligibility criteria.

Canada Recovery Benefit – Closed: How the Canada Recovery Benefit used to work

The Canada Recovery Benefit plan stopped accepting retroactive applications as of December 23, 2021.

The Canada Recovery Benefit was created to help those who have been directly affected by COVID-19 and are not eligible for Employment Insurance. The Canada Revenue Agency is responsible for administering this benefit.

Depending on when you applied for the Canada Recovery Benefit, you may have received either $1,000 ($900 after taxes withheld) or $600 ($540 after taxes withheld) for 2 week periods, for no more than 13 two-week periods. The Canada Recovery Benefit was available between September 27, 2020, and October 23, 2021.canada recovery benefit act

Who was eligible for and what were the requirements for Canada recovery benefit?

The Canada Recovery Benefit was established under federal legislation, the Canada Recovery Benefits Act (S.C. 2020, c. 12, s. 2) To be eligible for the CRB for a 2-week period, you must have met the following conditions:

  • A resident of Canada and present in the country during the two-week period being applied for.
  • Be at least 15 years old on the first day of the two-week period.
  • Have a valid Social Insurance Number.
  • Due to the pandemic, either your work has stopped and you are available for work, or you continue to work but have had a 50 percent reduction in your employment/self-employment income in the two-week period as compared to an average two-week period in the previous year.
  • Must have had employment and/or self-employment annual income of at least $5,000 in either 2019 or 2020 or in the 12 months preceding a CRB application. Keep in mind if you are self-employed that income losses from self-employment will make you ineligible. Although it was never properly defined, CRA looks at net income, not gross income.
  • You have not received EI, the Canada Recovery Sickness Benefit (CRSB) or the Canada Recovery Caregiving Benefit (CRCB).
  • During the two-week period being the periods in respect of what was being applied for, the applicant must have looked for work and not placed any undue restrictions on their ability to work.
  • Not having quit their job on or after September 27, 2020, or if they did, it must have been for a reasonable reason.
  • You must have returned to work when recalled, or not have declined a reasonable offer to work, during the two-week period or the four two-week periods immediately prior (back to September 27, 2020).
  • You filed a tax return for the 2019 or 2020 tax year (with certain limited exceptions).
  • If your annual net income exceeds $38,000, you will be required to repay a portion of the Canada Recovery Benefit at a rate of 50 cents for every $1 over the limit.

Do you know if the Canadian government is giving out any extra money in 2022?

The federal government announced some changes to the Employment Insurance (EI) program to supplement regular benefits under that program and introduced three new benefits to help people who are transitioning from CRB and other ending benefits.

The federal government realized that Canadians would still need support while they looked for work. The government attempted to transition people who had been receiving the Canada Recovery Benefit to a more flexible EI program for those who qualify, which will provide them with additional features.

The federal government also disclosed 3 new programs for Canadians who don’t qualify for EI. These are all taxable and will be run by the CRA.

All COVID-19 benefits are now finished. The new emergency programs were:

  1. Canada Worker Lockdown Benefit (CWLB). If you’re a Canadian and could not work because of a lockdown in designated regions, you could have applied for the CWLB starting December 30, 2021. The CWLB was only obtainable when a coronavirus lockdown was announced for your area. If you were eligible, you could have gotten a weekly income of $300 ($270 after tax was deducted at source) for each and every one-week period. The CWLB eligibility period ran from October 24, 2021, to May 7, 2022. The final day to submit the application was May 18, 2022.
  2. The CRCB was a program that gave workers a weekly income of $500 (taxable, tax deducted at source) for up to 42 weeks in respect of a situation where people couldn’t work for at least 50% of the week because they had to care for a child under 12 or a family member.The need for this benefit arose from the closure of schools, daycares, or care facilities due to COVID-19, or from the child or family member being sick and/or self-isolating or at high risk of serious health complications due to a health condition that made you more susceptible to a significant reaction to COVID-19. This benefit was paid in one-week periods and was available for the period from September 27, 2020, until May 7, 2022. The deadline to file CRCB applications was July 6, 2022.
  3. The Canada Recovery Sickness Benefit (CRSB). It was a government-funded program that supplied monetary support to workers who were not able to work at least fifty percent of the week due to being ill with the coronavirus, self-isolation, or underlying conditions that placed them in danger of contracting the virus. The benefit paid a maximum weekly income of $500 for a max of 6 weeks. The benefit was paid out in 1-week periods of weekly income and was available from September 27th, 2020 until May 7th, 2022. However, the ability to file for the benefit closed off on July 6th, 2022.canada recovery benefit act

The Canada Recovery Benefit is now closed and we have entered a new phase

Now that the Canada Recovery Benefit program is closed, we are entering a new phase. CRA is reviewing all benefit payments made by each individual and assessing those that CRA feels were not entitled to it, either because of error or outright fraudulent claims. They are demanding that such people provide proof of eligibility and if they can’t, they need to repay the money.

As mentioned before, to be eligible for the Canada Recovery Benefit, you must have had an income level through employment and/or self-employment income of at least $5,000 in either 2019 or 2020 or in the 12 months preceding a CRB application. The case from British Columbia showed what the right evidence is.

Other than confirming what evidence CRA can request, the case was not remarkable. The taxpayer did not help himself by refusing to give CRA additional information other than his T4 slips.

CRA stated that T4 slips are insufficient proof of income for Canada Recovery Benefit eligibility: The judge agreed with this assessment

You would think that if a taxpayer filed their 2019 and 2020 income tax returns showing all employment and self-employment income earned, that is good enough. Unfortunately, it is not. The Canadian income tax act is not the governing legislation; the Canada Recovery Benefits Act (S.C. 2020, c. 12, s. 2) (Act) is.

The legislation in question imposes a duty to disclose information. The extent of this duty is significant; the Act requires that applicants provide the Minister with any information that may be requested in relation to their application. The only arbiter of what is sufficient proof is CRA!

Proof of employment income includes verification through pay slips, employment verification letters, records of employment, bank statements with the employee’s name, address and payroll deposit, and other documentation.

Evidence of self-employment income includes invoices that include the date of service, client name, cost of service, and type of payment received.canada recovery benefit act

Will I have to repay the Canada Recovery Benefit?

I hope you found this Canada Recovery Benefit Brandon’s Blog informative. Is CRA taking collection action against you, including seizing bank accounts?

If you were in receipt of benefits under the Canada Recovery Benefit program and either did not meet the eligibility requirements or cannot prove that you did, then the short answer is YES. We are currently handling the insolvency filings of several individuals who were unable to prove their eligibility to the CRA’s satisfaction.

I know it’s not your fault. You were trying to make ends meet during this COVID-19 period, but you couldn’t do it all on your own. I get why you don’t have the money now.

If you’re an entrepreneur, it’s not uncommon to use unremitted employee source deductions and unremitted HST to finance Canadian businesses of corporate taxpayers during tough economic times. However, falling behind on your CRA payments can create large tax debt that can be difficult to recover from. Although unpaid income tax is not a Director’s liability, unremitted source deductions and GST/HST become a personal liability for tax of the Directors of the company. It is generally too late to protect yourself or try to restructure your financial affairs, once CRA is hounding you with the collection remedies available to them.

As people’s take-home pay fails to keep pace with inflation and mounting financial debt, many people are having a hard time keeping their heads above water. Are you now worried about just how you or your business are going to survive? Are your creditors taking collection efforts and you cannot afford to pay your or your company’s debts? Those concerns are obviously on your mind. Coming out of the pandemic, we are now worried about its economic effects of inflation and a potential recession.

The Ira Smith Team understands these concerns. More significantly, we know the requirements of the business owner or the individual that has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore. The Ira Smith Team makes use of new contemporary ways to get you out of your debt problems while avoiding bankruptcy. We can get you debt relief now while explaining our recommendations.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you. Whatever process we recommend for you, we will do so in order to minimize any cons you may experience.

We understand that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your financial life, Starting Over, Starting Now.canada recovery benefit act

 

 

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CERB CANADA: THE ENORMOUS DEBT PROBLEM NOW FACING CANADIANS

The Canada Emergency Response Benefit (CERB Canada) has been closed but is not over

The government is ramping up its efforts to verify CERB Canada eligibility for payments made under the Canada pandemic support program. Many Canadians have been told to return some or all of the funds received in the past. The Canada Revenue Agency (CRA) and Employment and Social Development Canada are working together to ensure that those who received COVID-19 pandemic individual benefits were eligible for them. CRA also announced that they are sending out Notices of Redetermination to Canadians who were ineligible for some or all of the CERB Canada benefits they received.

The CERB Canada benefit was rolled out quickly and there was a lot of confusion about who was eligible for it. It was created to help those in Canada who the COVID-19 pandemic directly impacted. The program provided financial assistance to employees and self-employed workers. The benefit was worth a maximum of $2,000 every 4-week period for up to four months.

The issue that troubles me is that the benefit was mostly paid to people who otherwise would not have been able to afford rent or food. The CERB Canada benefit money was spent immediately and a long time ago. So if CRA and Service Canada have now determined that some people should not have gotten that benefit, what are those people supposed to do if CRA demands the money back?

In this Brandon’s Blog, I discuss what the options may be for people who receive a demand for repayment of the CERB Canada benefit.

Who was eligible for CERB Canada?

To qualify for the CERB payment from the government support program, you must have met certain conditions during the period you applied. The Government of Canada stipulated the following eligibility criteria:

  • You did not look for or receive, CERB Canada or Employment Insurance benefits from Service Canada for the same qualification period.
  • You did not stop your work willingly on your own. You were forced to stop your work by someone else.
  • You are a Canadian resident who is at least 15 years old.
  • You must have earned at least $5,000 (before taxes) in the preceding 12 months, or in 2019, from one or more of the following:
    • job income
    • self-employment income earnings
    • benefits relating to pregnancy or parental leave from the province

The program was designed to help Canadian employees and self-employed Canadians who lost their jobs or saw a significant decrease in income due to the COVID-19 pandemic and the COVID-19 lockdown order resulting in business shutdowns. The program came to an end on December 2, 2020.cerb canada

Sending your CERB Canada payment back

If you have received a letter from Service Canada asking you to repay an overpayment, the CRA says you need to follow the instructions on the letter to return the payment.

You will have the opportunity to provide more evidence to support your claim that you were entitled to the CRA’s full CERB benefit payment. Based on your responses, you may need to repay the full amount you received.

If you received any CERB Canada payments and they now say you didn’t fit into the group of eligible workers, you have the option to pay back what you owe in full right now or over time. They expect you to repay it in full either way.

Now consider this. The federal government paid nearly $12 million in CERB Canada payments to more than 1,600 people with foreign addresses during the first seven months of the pandemic! How did that happen if one of the criteria of this program was you had to be a resident of Canada?

The way the CERB Canada benefit is taxed is by taking it out of your paycheque – wasn’t that enough?

The CERB Canada benefit was not a grant or any other kind of freebie. Anyone who received it had to include it in their taxable income. That is fair because the benefit was meant to replace lost income.

In April 2020, Prime Minister Trudeau announced that the Government of Canada would be taking extensive and decisive action to support Canadians and businesses who were struggling due to the COVID-19 global pandemic through an expansion of this program.

The Prime Minister went on to say that no Canadian should have to choose between protecting their health, putting food on the table, paying for their medication or caring for a family member. He said this is why the government introduced the CERB Canada Benefit, a taxable benefit.

There have even been CRA, Employment and Social Development Canada and court decisions confirming that the CERB Canada payments are taxable and that it was definitely not a free ride. The demand for repayment of benefits from Canadians who CRA and Service Canada now feel were not eligible workers seems totally anti-social. The program was rolled out hastily and under unclear, confusing circumstances, and Canadians have been paying income tax on the benefits they received. Surely our federal government has better places to spend its time clawing back wasteful spending.cerb canada

Mom was shocked when her maternity leave benefits were cut in half due to the CERB Canada benefit

A mother was shocked to see that her most recent parental benefits instalment had been cut in half. She said that maternity and parental benefits are paid to parents so they can take time off from paid work to do another kind of work: care work.

She was receiving half of her parental leave benefits for three weeks, which were already about half of her regular earnings. The reason for the reduction was because it was determined that the CERB Canada benefit she received for every four-week period, increased her income to the point where the reduction was warranted.

Then she received a demand for repayment. She hadn’t expected to have to repay the benefit. Shortly after the COVID-19 outbreak hit in March 2020, she was let go from her work because there wasn’t enough work to go around. She thought she qualified under the eligibility requirements for the CERB Canada benefit.

She couldn’t repay the full amount in one shot so she tried to arrange a repayment plan with CRA. She said that she had to fax about a dozen documents and field several questions from federal government employees to prove she is experiencing “financial hardship” in order to qualify for a payment plan. I don’t understand why payment plans have to be approved rather than just being automatically set up. These are not rich people that they are demanding repayment from, so why make them jump through hoops?

The British Columbia court has ruled that the CERB Canada payment must be deducted from the damage award for wrongful dismissal

Here is another example that the CERB Canada benefit is not a tax-free payment or a non-taxable grant. In Reotech Construction Ltd. v Snider, 2022 BCSC 317 the trial judge awarded the employee damages for a 4.5-month reasonable notice period and declined to deduct his CERB Canada payments.

After reviewing the case, the Supreme Court of British Columbia decided that the original trial judge was incorrect in choosing not to reduce the damage award by the $9,000 in benefits received. The court decided that these payments should be deducted from the award.

There was no indication that the employee would have to repay the CERB Canada benefit to the government. If the CERB payments are not deducted, then the employee would be in a better position than if there had been no breach of the employment contract. The employee would not have received the benefit if he had not been dismissed, making the benefit an indemnity for the wage loss caused by the dismissal.cerb canada

How to repay the CERB Canada benefit

If you received the CERB Canada and now find out that you did not meet the eligibility requirements, as shown above, you must repay the money. There are a few different ways that you can repay the amount demanded.

The easiest way to repay the CERB Canada amount is through your online service CRA My Account. You can log into your account and select “Repay CERB” under the “My Account” tab. If you do not have a CRA online account, you can repay the amount you owe either by sending a cheque through Canada Post to the CRA mailing address you can find online. You can also pay it at your financial institution using the government-issued remittance form.

But what if you are just one of the many hard-working Canadian workers living paycheque to paycheque? What if you do not have the money to repay what they say you owe, either all at once or by taking an amount out of each of your future paycheques that CRA will agree to?

What if you cannot repay because the government stepped up its efforts to verify CERB Canada payments and made demands on you?

As stated above, if you cannot afford to repay the full amount being demanded of you all at once, you can hopefully convince CRA that you deserve a payment plan over time due to “financial hardship”. This assumes that the government is right that you were not originally entitled to the amount that you received for the CERB Canada benefit. But what if you cannot afford to repay it at all, no matter what sort of payment plan you can enter into?

The outcome will depend on if you are insolvent. Being insolvent doesn’t necessarily mean bankruptcy. Insolvency (aka financial failure) is a financial condition that occurs when a person or company doesn’t have enough assets to pay off all debts if they were to be liquidated. It also means that the person or company has stopped paying their bills on time in the normal course.

If the person is NOT insolvent, they are expected to sell assets or use cash on hand to pay their bills.

If you’re insolvent, you can take advantage of Canadian insolvency legislation, the Bankruptcy and Insolvency Act (Canada) (BIA). The debt to repay the CERB Canada benefit is an ordinary unsecured claim that will be eliminated through a successful financial restructuring under either a consumer proposal or a Division I proposal. As a last resort, you could also file for bankruptcy.

I would rather refer you back to some of my earlier Brandon’s Blogs that go over the requirements for each insolvency option, rather than go through all of them individually here. They are:

  1. Consumer proposal –CONSUMER PROPOSAL TORONTO: THE COMPLETE #1 WAY TO ELIMINATE DEBT IN ONTARIO
  2. Division I Proposal –THE EASIEST WAY TO ACTUALLY LIKE WHAT IS A DIVISION i PROPOSAL ONTARIO
  3. Personal bankruptcy – BEYOND BANKRUPTCY SERVICES: OUR BEST PERSONAL INSOLVENCY FAQ 2 JUMPSTART YOUR FINANCIAL LIFE

CERB Canada: Canadian workers now under fire

In summary, CRA now says it’s “time to pay up” for Canadians who were paid the CERB Canada benefit during the pandemic. Although CRA has a right to claw back the amount if it is correct that the person was not eligible, what CRA’s insistence means for many Canadian workers is they now have to choose between paying back their CERB or paying for food, rent or medicine.

This is so ironic because the benefit payments were designed to help those people in making those payments when their incomes dried up. The amounts were taxed so the government earned income that way. Now they are causing unneeded stress and worry to the people they aimed to help.

I hope this Brandon’s Blog was helpful to you in understanding more about this problem now facing many Canadians. If you or your company has too heavy a debt load, we understand how you feel. You’re stressed out and anxious because you can’t fix your or your company’s financial situation on your own. But don’t worry. As a government-licensed insolvency professional firm, we can help you get your personal or corporate finances back on track.

If you’re struggling with money problems, call the Ira Smith Team today. We’ll work with you to develop a personalized plan to get you back on track and stress-free, all while avoiding the bankruptcy process if at all possible.

Call us today and get back on the path to a healthy stress-free life.cerb canada

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IS CERB TAXABLE? EXCLUSIVE REPORT AS TO WHAT HAPPENS WHEN YOU DON’T HAVE THE MONEY TO PAY OFF YOUR TAX RETURN

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Is CERB taxable? CERB is a taxable payment

Last weekend we set our clocks ahead 1-hour. This time of year always gets me thinking of doing my income tax return. So with taxes on my mind, I believed it would certainly be appropriate to discuss CERB, which is the short-hand for the Canada Emergency Response Benefit.

So, is CERB taxable? That is what I want to discuss with you today.

Since March 2020, I have written several blogs about different issues facing Canadians with Canada’s COVID-19 Economic Response Plan, including the Canada Emergency Response Benefit (CERB). My 3 previous blogs on CERB were:

Now I look at is CERB taxable?

Is CERB taxable? What is the CERB?

Simply to freshen your memory, I think a summary of the CERB eligibility requirements will nicely establish the stage.

To be eligible for the $2,000 CERB payment by applying through the Canada Revenue Agency (CRA), you needed to have met specific CERB requirements for each of the CERB time periods you were making an application for. The Government of Canada specified the eligibility requirements to be:

  • You didn’t obtain CERB or Employment Insurance (EI) from Service Canada for the CERB dates now being requested.
  • You did not voluntarily give up your work.
  • You live in Canada and are not younger than 15 years of age.

You earned at least $5,000 (before taxes) in the preceding 12 months, or in 2019, from 1 or even more of:

  • job income;
  • self-employment income;
  • provincial benefits for maternity or parental leave;
  • your job hours have been lowered as a result of COVID-19;
  • you have actually quit or will give up work as a result of COVID-19;
  • you are not able to work as a result of COVID-19, for example, because you are looking after an individual;
  • you have been paid EI benefits for at least one week of qualifying after December 29, 2019, and your entitlement to such benefits have ended;
  • this is your first application because:
    • you have quit or will stop working, or you are working decreased hours, as a result of the coronavirus;
    • you don’t expect to earn over $1,000 in gross work or self-employment earnings for at least 14 days right during the 4-week duration.
      If you are getting a subsequent period: You are still not utilized or self-employed, or you are doing decreased hrs due to COVID-19. You do not prepare for transforming $1,000 in gross income; and
    • you expect this to continue throughout the whole 4-week period you are applying for.

      is cerb taxable
      is CERB taxable

The CERB emergency benefit: Our federal government started to attack the self-employed

The Canadian CERB program is completed. The CRA approved and paid retroactive applications until December 2, 2020. Currently, they are doing audits to see if individuals who received CERB did not really qualify.

As you may recall, this revealed a one-of-a-kind issue to the self-employed individual. CRA was inconsistent in their descriptions and definitions of the threshold to get CERB. The concern that was uncovered for self-employed people was in the computation of income. The qualification guidelines and eligibility standards concerning self-employed earnings had been misunderstood by both the public and CRA employees alike!

Self-employed Canadians have said that when they reviewed the federal government’s CERB site, they understood that their business had to have earned (before taxes) a minimum of $5,000. CRA stated that the $5,000 was net income, your business earnings after deducting all your expenses. Numerous people understood it to be gross earnings as meeting the income test requirement for obtaining CERB. The federal government originally stated that those that misunderstood this regulation would need to pay all the CERB back. Luckily for them, the government has withdrawn from that position and will just rely upon the income tax system to determine what those people will have to pay in income tax.

Now for is CERB taxable?

Is CERB taxable? Report T4E amounts on your tax return

Along with any other income you might have earned in 2020, if you got the CERB or other emergency benefits from Service Canada or any kind of EI payments, you will certainly be sent out a T4E tax slip showing the amount paid. So is CERB taxable? Sadly, yes.

These benefits are taxable. Any of this kind of payment you received prior to December 31, 2020, will certainly need to be reported on your 2020 tax return. You will receive a T4E slip at tax time or you may also get your T4E info from your My Service Canada Account.

is cerb taxable
is CERB taxable

Maximize your tax planning for CERB before our debt-ridden government comes looking for more

When I think of tax planning, I think of ways to avoid (but not evade) income tax. In the case of CERB and other such benefits, the planning is really making sure you actually have the money to pay your 2020 income tax liability. The reason for this was that, unlike employment income, no income tax was deducted at source for the CERB payments. The federal government wanted to get the money out as quickly as possible without extra bookkeeping.

How much tax will I have to pay on CERB is a question people ask. Given the duration that the benefits lasted for, the maximum CERB that Canadians might have obtained is $12,000 of revenue. Nevertheless, the amount of income tax obligation that you will owe cannot be calculated on this number alone. It will be calculated based on the full amount you made throughout the year.

Because the sum total of CERB paid to you is taxable income, it will be reported on line 11900 of the 2020 income tax return. That amount, in addition to any other sources of income, works through your income tax return to end up with your total taxable income and your total deductions. After that, you determine your income tax obligation, what taxes at source were subtracted or tax paid by you in instalments. The net amount is either tax payable or a tax refund. So the income tax payable on the CERB payments you obtained relies on what your marginal tax rate is.

Contributing to an RRSP may have been the only other way to reduce your total taxable income and therefore your total income tax. However, in a year where you had to rely on CERB, you may not have had surplus funds to contribute to an RRSP in 2020 or the first 60 days of 2021.

Is CERB taxable? When do I have to pay CERB taxes?

Unlike our 2019 income tax returns, there are no extensions being offered this year. The filing deadline for your 2020 income tax return is April 30, 2021, for most people. A self-employed person has until June 15, 2021, to file their income tax return. However, anyone who has a tax balance owing to CRA must pay it by April 30.

What if I didn’t set aside taxes for CERB? What happens when you can’t pay the tax on your CERB tax debt?

If you really did not reserve the right amount, or anything, to pay your taxes for CERB, and you find that you owe a substantial amount (possibly not hideous if CERB was your only earnings in 2020) then you’ll still have to figure out how to pay your taxes.

This situation resembles the majority of self-employed people whose taxes are not subtracted at source and need to be really attentive at reserving cash from their income to pay their income tax obligations. If they don’t have the funds readily available, they need to clamber to find the money for the CRA.

After your tax return is prepared, if you recognize you don’t have the cash to pay the tax owing, talk with your tax advisor. Perhaps they can establish a realistic timetable to offer CRA to pay your tax bill over some months using a current dated cheque and a few post-dated cheques to cover off the balance. This will give you the breathing room and financial help that you need.

However, the COVID-19 pandemic has left many Canadians in dire straits. They have barely enough money to pay for food and rent or mortgage payments, let alone income tax. If you find yourself in a situation where post-dated cheques are not even a possibility, contact a licensed insolvency trustee. We will provide you with a free consultation where we will go over your financial situation with you and make recommendations.

If you are working again and have a steady income, perhaps a consumer proposal is right for you. If you are not back at work or do not have full hours as you did before the pandemic, perhaps bankruptcy is your answer. Either way, contact a licensed insolvency trustee and find out what all your viable options are to settle your debts and eliminate that stress from your life.

is cerb taxable
is CERB taxable

Is CERB taxable summary

I hope you have enjoyed this is CERB taxable Brandon’s Blog. Do you or your company have too much debt? Are you or your company in need of financial restructuring? The financial restructuring process is complex. The Ira Smith Team understands how to do a complex restructuring. However, more importantly, we understand the needs of the entrepreneur or the person who has too much personal debt.

You are worried because you are facing significant financial challenges. It is not your fault that you are in this situation. You have been only shown the old ways that do not work anymore. The Ira Smith Team uses new modern ways to get you out of your debt troubles while avoiding bankruptcy. We can get you debt relief freedom.

The stress placed upon you is huge. We understand your pain points. We look at your entire situation and devise a strategy that is as unique as you and your problems; financial and emotional. The way we take the load off of your shoulders and devise a debt settlement plan, we know that we can help you.

We know that people facing financial problems need a realistic lifeline. There is no “one solution fits all” approach with the Ira Smith Team That is why we can develop a restructuring process as unique as the financial problems and pain you are facing. If any of this sounds familiar to you and you are serious about finding a solution, contact the Ira Smith Trustee & Receiver Inc. team today.

Call us now for a free consultation.

We will get you or your company back on the road to healthy stress-free operations and recover from the pain points in your life, Starting Over, Starting Now.

We hope that you and your family are safe, healthy and secure during this coronavirus pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

is cerb taxable
is CERB taxable
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