It came as a shock this holiday season. Canadians who thought they qualified for CERB, are now getting letters in the mail informing them they didn’t qualify and are being told to pay back CERB before December 31st. The problem is, most people honestly thought they qualified. They have now spent the money and have no idea how the Canada Revenue Agency will collect this money from them.
If you received a collection letter concerning CERB repayment, and told you may have not qualified for the payments you received, you’re probably wondering what your options are right now?
The first step is to identify if you were indeed eligible or not.
- You may have earned more income than expected during the time you received a CERB Payment.
- You applied for and got the CERB from both Employment Insurance/SErvice Canada and from the CRA for the same eligibility period (you got double paid).
- You applied for CERB but later realized you’re not eligible
You may need to talk to a qualified Chartered Accountant or a Tax lawyer to determine your eligibility. There was a significant amount of confusion during the roll-out of CERB and a Chartered Accountant may be able to look at your taxes and help you with this. Especially if you operate a home based business, a small business, a solo entrepreneur business or if you freelance.
To be eligible for CERB, you must have earned employment or self-employment income of at least $5000 in 2019 or in the 12 months before applying. There is much confusion if the CRA meant $5000 in gross income vs. net income. And the CRA does look at your 2019 tax return and any T4 or other incomes slips to determine this.
If you didn’t file your 2019, we recommend you file, however, do take the advice of a Chartered Accountant to make sure this is done correctly and that it doesn’t undermine your eligibility. For example, there may be cheques you consider income that doesn’t qualify as income. Such as Investment Income, student loans, business loans, pension income etc. If you have to spend a little on a professional to save you on CERB repayments, it may be a wise investment to make.
You can’t pay it back, it’s impossible, what now?
We are getting many calls from Canadians in this position. You may have to consider a bankruptcy proposal, or a consumer proposal. Call us. We are a Licensed Insolvency Trustee and we can review your specific situation to determine if a bankruptcy or a consumer proposal is the best option for you. We are conducting free no obligation consultations via phone and Zoom. We can assess your situation and give you the best advice.
CERB REPAYMENT OPTIONS
You may have other options. Call the CRA at 1-833-966-2099 and be transparent about your situation. Request a repayment plan. See if you can negotiate something that is possible for you to do.
“In cases where the CRA can’t come to such an arrangement with a taxpayer, it would turn to collections measures. Those measures remain on hold during the pandemic but they could include taking away future tax credits and refunds or garnishing wages, a spokesperson said.” – Catherine Cullen · CBC News · Posted: Nov 23, 2020 3:52 PM ET | Last Updated: November 23
If you can pay it back, pay it back asap.
If you did receive CERB money incorrectly, then you must repay the CRA. You can return the CERB money through your MY PAYMENT account online, or mail a cheque.
If you return a CERB payment before December 31st 2020, and pay it in full, there is NO impact on your 2020 taxes. AFTER December 31st, 2020, you will need to pay tax on the full CERB amount you received in 2020.