I was hoping to write about something else for October, but the changes to the Federal support benefits prompt me to explain the new income benefits and what might happen in October for all the benefit programs like Canada Child Benefit, GST credit, and Guaranteed Income Supplement.
On September 24, the government released information about the new recovery benefits. There were a few minor changes from previously announced amounts.
CRB Canada Recovery Benefit will be $500 per week (was previously announced as $400) and is available to workers that are self-employed or those who do not qualify for EI (not enough hours) and still have not returned to work due to COVID-19, or whose income has decreased by at least 50%. You still must be available and looking for work.
CRSB Canada Recovery Sickness Benefit is $500 per week for up to two weeks for workers who are sick or who must self-isolate for reasons related to COVID-19. The CRSB is for employees who do not have a sick benefit available from their employer; and that is about 50% of workers. I have not seen any details about how often you can apply for these benefits over the next 12 months.
CRCB Canada Recovery Caregiving Benefit is also $500 per week for up to 26 weeks per household (parents/caregivers can share the 26 weeks). The CRCB is available if you cannot work because you must care for a child under age 12 or other family member because schools or daycare or other care facilities are closed due to COVID-19 or because the child or family member is sick or is required to quarantine.
All Three Benefits will be available for one year, commencing September 27, 2020, and will be administered by CRA. Applications will be required, and will be based on the applicant’s attestation that they qualify, subject to possible verification at a later date. The benefits will be paid in arrears, so the first relevant two week period will end on October 10, 2020 and you can apply after that. These benefits will have some tax withheld. Potential applicants are recommended to sign up at CRA My Account, if you have not already done so.
The EI Employment Insurance program changed too. The required insurable hours reduced to 120 hours from September 29 2019 (was 420 to 700 hours). The minimum weekly benefits have been increased to $400 (before it was 55% of average weekly earnings). And now the minimum weeks that EI will pay benefits is 26 weeks (it was as low as 14 weeks).
Employers & T4s We have found out how the CERB Canada Emergency Response Benefit will be verified to find out who received it that should not have. As employers, we will be required to add more information when we issue T4s: there will be boxes for income earned during the specific periods when CERB was paid. When you receive your T4 from your employer(s) next February 2021, be sure to review the income reported in the new boxes (57 to 60) and compare it to any periods you received the CERB income. If you received income from both for the same period, you may need to repay some or all of the CERB. We don’t know if this will be done via the income tax filing or direct payment. If you already know you need to repay some or all of the CERB you received, we recommend you repay it before December 31 so we can correctly deduct that payment from your taxable income for 2020. And keep the proof of payment in case CRA asks for it.
October Benefits
The October payments of CCB Canada Child Benefit, GST Credit, and GIS Guaranteed Income Supplement may be adjusted if you filed your 2019 taxes after June 1 2020. The payments you received in July, August and/or September may have been based on your 2018 income if you filed your 2019 taxes after June 1. I hope CRA and Service Canada provide clear explanation of any changes to your benefits. If you filed your 2019 taxes after September 20, the benefits you received July to September may need to be repaid and a new amount will be calculated after your 2019 taxes are assessed by CRA.
The Special Disability Payment for Canadians with disabilities was announced in June, but was only passed in the parliament at the end of September and needs to be passed by the Senate. We hope the payment will be made in October. This one-time tax-free payment of up to $600 will be paid to Canadians who qualify for the CRA Disability Tax Credit. The $600 will be reduced by the special payment issued to seniors in July ($300 to $500 per person).
The “tax season” finally ended on September 30 2020 after 7.5 months instead of the normal four months. It’s been a long season and we are very happy it is finally over. Not much time to get all the other work we normally do before the next tax season starts mid-February 2021.
Next tax season may be quite different because of all the new taxable benefits many of our clients will have received in 2020. We suspect there will be fewer and maybe lower tax refunds and more taxes owed once your tax return is “reconciled”: determining your taxes payable versus how much tax was deducted.
If your income situation was quite different in 2020 compared to 2019, we recommend you contact us in January or February to estimate your 2020 tax situation in case you want or need to buy RRSPs to reduce your taxable income.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or info@SAtaxes.ca