#FinancialFridays: Covid-19 and Tax Filing in Ontario

The Covid-19 pandemic brought financial hardship to millions of Canadian residents and they sought the support of government benefits. People who received COVID-19 emergency or recovery benefit payments in 2021 ask these 5 questions during this tax season;

1. Will the COVID-19 benefit payments affect my 2021 taxes? YES. If you received the CRB, CRSB, CRCB or CWLB for the tax year 2021, the Government of Canada withheld 10% tax on each payment. You may need to pay more (or less) depending on your personal tax situation.

2. Is it considered a taxable income? YES. If you received COVID-19 benefits in 2021, these are considered taxable income. Therefore, you will need to enter the total amount you received on your 2021 income tax and benefit return.

3. Will I receive a T4A for Covid-19 related benefits? YES. If you received the benefits, Canada Revenue Agency will provide a T4A Statement of Pension, Retirement, Annuity, and Other Income tax information slip.You should have received your T4A tax slip by mail at the end of February 2022. If you have an online account set up with CRA, all your T4A slips will also be available in CRA My Account. To have full access to My Account, you need to enter the CRA security code issued to you after completing the first step of the registration process.

4. What if I received more than one benefit? You must report ALL payments you received as income when you file your personal income tax return.

5. I received Covid-19 benefits that I am not eligible for. What are my repayment options? In certain situations, individuals may have received COVID-19 benefits in error. If you are required to repay a COVID-19 benefit you received, there is a proposed change to the current rule that will allow individuals who repay the COVID-19 benefits. Click to open links below to have a better understanding of the following temporary COVID-19 income support benefits and their applicable repayment rules.

Helpful CRA Links:

• Canada Emergency Response Benefit (CERB): Repayments: https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra/return-payment.html#h4
• Canada Recovery Benefit (CRB): Repayments: https://www.canada.ca/en/revenue-agency/services/benefits/recovery-benefit/crb-return-payment.html#h-2
• Canada Recovery Caregiving Benefit (CRCB): Repayments: https://www.canada.ca/en/revenue-agency/services/benefits/recovery-caregiving-benefit/crcb-return-payment.html#h-2
• Canada Recovery Sickness Benefit (CRSB): Repayments: https://www.canada.ca/en/revenue-agency/services/benefits/recovery-sickness-benefit/crsb-return-payment.html#h-2
• Canada Emergency Student Benefit (CESB): Repayments: https://www.canada.ca/en/revenue-agency/services/benefits/recovery-sickness-benefit/crsb-return-payment.html#h-2
• Canada Worker Lockdown Benefit (CWLB): https://www.canada.ca/en/revenue-agency/services/benefits/worker-lockdown-benefit.html

The CRA provides the latest information on the proposed changes on Canada.ca. Tax-payers should check online regularly for updated forms, policies, guidelines, questions and answers, and guidance.

For more details, read Tax Treatment of COVID-19 Benefit Amounts on the government website below.https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/budget-2021-recovery-plan-for-jobs-growth-resilience/tax-treatment-of-covid-19-benefit-amounts.html

Remember, every taxpayer’s situation is unique. It is best to ask a tax professional to avoid unintended tax consequences for some taxpayers. Even if you have repayments or no income to declare, it is always to your best interest to file your income tax return (T1) on time.

The tax-filing deadline for most individuals is April 30, 2022. Since April 30, 2022, falls on a Saturday, your clients’ return will be considered filed on time in either of the following situations: we receive it on or before May 2, 2022. it is postmarked on or before May 2, 2022.