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Is CERB Considered Taxable Income?

Posted on Thursday, September 17th, 2020 - 1,672 Reads

If you have been receiving the CERB payment you’re going to have to pay taxes on it. CERB is considered a source of income.

CERBThe Government of Canada introduced CERB during the ongoing COVID-19 pandemic. CERB stands for Canada Emergency Response Benefit. This benefit allowed the majority of people that live in Canada obtain a certain amount of money every month. The benefit was meant to assist with financial hardships. The CERB also helped self-employed individuals that were affected. Eligible recipients received $2,000 per month for up to four months. This equated to receiving $500 every week.

Many people applied for the CERB, and are now wondering if it is considered to be income.

The CERB is fully taxable

The tax is not automatically deducted

The CERB benefit is fully taxable. It’s important to know this before you file your taxes for the 2020 tax year. Although the benefit is taxable, the income tax is not automatically deducted from the $2,000 you receive each month. This means that all of the money will be available to you during the pandemic. This is unlike standard employment income, where the tax is automatically deducted before you receive your payment. That is not the case when it comes to the CERB benefit.

How much CERB tax is deducted?

The amount of taxes that can be deducted from CERB is not the same for everyone. The tax that you owe depends on the total income you receive during the 2020 tax year. This corresponds with a set marginal tax rate. The five income brackets in Canada are set at 15 percent, 20.5 percent, 26 percent, 29 percent, and 33 percent. Example: If you earn less than $48,535 in 2020, your income tax rate will be set to 15 percent. Keep in mind that every province has its own set of tax brackets so choose the one corresponding to the province you live in.

CERB is considered to be income

CERB is considered to be income. This means that you should add the total amount of CERB you receive to the taxable income that you earned in 2020. If you earned $30,000 in 2020 and $8,000 in CERB payments, your taxable income will be $38,000. That will likely means that you will need to save 15% of what your CERB payments were to pay in income taxes. Unless there is a change to the filing due date, most Canadians will have to file and pay their taxes on April 30, 2021. The filing deadline for self employed people is June 15, 2021.

Set aside the extra money for your taxes

CERB payments are highly beneficial but the taxes will invariably be deducted. Prepare ahead of time. If you set aside the right amount of money from your CERB payments now, you will be able to make your tax payments once tax season arrives.

Read this FAQ before you filing your 2020 income taxes but if you are still confused, simply consult with a taxation specialist.

CERB Eligibility

To be eligible for CERB benefits, you must be a resident of Canada and at least 15 years old. If you quit your job voluntarily you will not be eligible. You must have earned at least $5,000 in 2019, and stopped working as a result of COVID-19.

If you already receive employment insurance, you can receive CERB. You are also eligible if you have used fishing benefits pertaining to your employment insurance for the period of December 29, 2019 to October 3, 2020.

You can read this document to find out if you still qualify for CERB. Note the benefit is supposed to end in September.


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Lana Leigh McDole is the owner of LLM Business Solutions. She studied accountancy at CGA Ontario in Ottawa Ontario and graduated in 2012. Her passion is her work and providing her customers with the best service possible, at the best prices.

Email: [email protected] | Phone: 226-802-0541

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