CRA opened February 22 for e-filing the 2020 personal income tax returns.
We have received hundreds of taxes already and have filed several clients’ tax returns that are owing CRA for the first time.
Do you think you may be in the same situation? Do you think you may owe CRA instead of a refund for the first time (you normally receive refunds)?
The taxable COVID benefits this year are making a big difference for many taxpayers.
File On Time!
If you received taxable COVID benefits like CERB, CRB, or EI, you need to file on time; the due date is April 30 2021.
Filing by the due date even if you cannot pay the amount owing ensures there is no penalty on the amount owing. The penalty for filing after April 30 is 5% of the amount you owe plus 1% for each additional month you don’t file.
So if you think you may owe CRA this year because your income has changed (receiving CERB benefits for example), it is important to file on time even if you cannot pay to avoid the penalties
Interest Waived
Good news from CRA! If you received COVID benefits and you have an amount owing, they are waiving the interest to April 30 2022. So you have an extra 12 months to pay the amount owing without paying any interest. This is only available if your taxable income is less than $75,000.
This interest free 12 months is only for the amount owing for 2020 taxes and only if you received COVID 19 benefits. If you have an amount owing from a previous year, that amount will continue to accrue interest.
If you did not receive any COVID benefits and you owe, you do not get interest relief.
If you received CERB, CRB, EI, provincial COVID benefits; file on time! The interest relief is not a filing extension, just a payment extension.
Repaid CERB?
Did you receive CERB and repaid some or all of it? It should be reflected on your T4A. If not, CRA may have misdirected it as a 2020 installment payment. You may need to call CRA to have the payment transferred to the right place. We have called CRA about this once already. The T4A should be amended and an adjustment should be made once it is corrected.
If you repaid the CERB in 2021, it will only be a deduction for your 2021 taxes and not 2020.
CERB Fraud?
What if you received a T4A for CERB, but did not apply for CERB, could it have been fraud? You may need to call CRA or Service Canada about this. We haven’t had this situation yet, but we’ll report on it next month if we experience any.
Received CERB, but not Eligible?
What if you applied for CERB, but were not eligible and need to repay? At some point CRA will be auditing the CERB recipients and if you were not eligible, you will need to repay it. CRA has not announced yet how they will handle it, but I suspect they will be compassionate about the repayment over time.
Working from Home Deduction
Did you work from home due to COVID in 2020? Check out our article last month that explained it in detail. You can go to DawsonTrail.ca or SteAnneTaxService.ca to read it.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact us at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or Info@SAtaxes.ca