The Canada Revenue Agency (CRA) has a couple of important announcements regarding both self-employed individuals who received CERB benefits as well as both employed and self-employed who might have a tax debt relating to your 2020 Personal Income Tax returns.
Self-Employed in 2019
Remember back last spring, anyone who had a self-employed income of $5,000 or more was eligible to receive the CERB benefits. However, later in 2020, CRA started sending out letters to some asking for repayment as the business's net income is less than $5,000. The good news is that after public pressure CRA has reversed this decision stating that self-employed who earned $5,000 or more in gross revenue from self-employment in 2019 was eligible. Are you confused yet! In a nutshell, if your 2019 self-employed net income was at least $5,000 in 2019, then any CERB benefits you received are yours to keep!. If you already repaid CERB benefits after receiving that CRA letter (note above), then Click here to book an appointment to discuss how we (as your excellent accountant) can apply to get those CERB benefits returned to you.
Received CERB Benefits in 2020
Suppose you received any CERB benefits, employed or self-employed, and your total taxable income in 2020 was less than $75,000. In that case, CRA is allowing an extra year (interest-free) to repay any taxes owing. So, while normally May 01, 2021, forward, CRA would be charging interest on taxes owing – if you meet the conditions – well, you have an extra year with no interest being charged as long as any personal taxes are paid by April 30, 2022. So what is the fine print? Here is the skinny on getting an extra year interest-free to pay your personal taxes owing to CRA:
- Your total 2020 taxable income was $75,000 or less
- You received at least one COVID-19 benefit in 2020:
- Canada Emergency Response Benefit (CERB)
- Canada Emergency Student Benefit (CESB)
- Canada Recovery Benefit (CRB)
- Canada Recovery Caregiving Benefit (CRCB)
- Canada Recovery Sickness Benefit (CRSB)
- Employment Insurance (EI) benefits
- Provincial or territorial emergency benefits
- You filed your 2020 Income Tax return – um if you are reading this and have not filed your taxes – Click here to book your tax appointment so we can get your interest-free starting!
Now, suppose you don't meet the above conditions. In that case, all is not lost as CRA does have special provision for special circumstances but note that each case is heard (by a special arms-length board) on a case by case – but alas, um, we know an awesome accounting firm who can help – Click here to book an appointment to discuss this.
