There is no denying that the Canada Emergency Response Benefit (CERB) helped many Canadians – over 8.5 million individuals to be specific.

To get the money into the hands of the Canadians who needed it, the government processed applications as swiftly as possible. To do this in record time, the government relied very heavily on an honour system.

This is why the benefit was handed out without further verifications at that time.

CERB ends – what next?

As of last week, CERB has officially ended. Though, individuals can still retroactively apply for CERB payments for any period before October 3 by December 3.

As the CERB recipients are now being transferred to an updated employment insurance (EI) system, we take a look at CERB and its associated CRA tax implications.

You will have to pay taxes on CERB as it is considered as income for this year. Here are a few things that can help you be more prepared for the next tax season.

Did you qualify for CERB?

As CERB was so new, many people weren’t sure if they qualified.

Some people even received it twice as they applied through both Service Canada and the CRA for the same eligibility period.

Here’s the eligibility criteria to help you ascertain if you were eligible:

• You did not leave your job voluntarily.
• You are over 15 years of age.
• You earned a minimum of $5,000 (before taxes) in the last 12 months or in 2019.
• You stopped working due to COVID-19, your work hours were reduced because of COVID-19, or you were unable to work as you were taking care of someone.

In addition to being able to meet the criteria shared above, you also need to ensure that you only received one payment per eligibility period.

Will the CRA impose penalties?

Many people applied for CERB because they were dealing with financial problems that made it hard to make ends meet. Some of these individuals may not have been eligible.

If you feel that you were not eligible or your eligibility changed over the period, it is prudent to seek tax advice and have financial strategies in place to deal with any action from the CRA.

As the benefit was distributed without prior checks, the CRA will assess cases when taxes are filed.

This is because, as CBC highlights, even a fraud rate of 1% could cost the federal government billions of dollars.

So, if you are reassessed you will not only have to pay back the money but also penalties and interest retroactively. If you already have accumulated debt, you may be looking at potential new debt in the coming tax season.

Tax debt and CRA collections are areas where we can help!

We offer a free consultation to explore what options are available to you.

As a debt and tax consultant, we can also look at your situation and give you an idea of whether you qualified for CERB, what the potential tax amount could look like, and what you can do to prevent collection action.

Contact us, for tax advice, by calling us on 1-888-890-0888 or visiting www.debtcare.ca.