Is the COVID-19 government assistance I received taxable?

Before we outline the key taxable COVID-19 benefits, it’s worth noting the Tax-Free Benefits.

The following measures were non-taxable and therefore not reportable on your T1 Personal Income Tax and Benefit return:

• One-time OAS payment for seniors
• One-time GIS payment for seniors
• One-time payment for Disability Tax Credit Certificate holders
• Extra Canada Child Benefit payments
• One-time special GST/HST credit payment

Taxable Benefit Payments

T4A slips for 2020 tax year

For most programs administered by the Canada Revenue Agency (CRA), they will be issuing a T4A Statement of Pension, Retirement, Annuity, and Other Income Slip to those who received any of the COVID-19 emergency or recovery benefits before December 31, 2020.  Residents of Quebec will receive both a T4A and a RL-1: Employment and Other Income slip.

The five key benefit programs:

Canada Emergency Response Benefit (CERB)

This program provided a taxable benefit of $2,000 per four-week period for those who lost their income as a result of COVID-19. The CERB was paid every four weeks and was available for up to 28 weeks between the period of March 15, 2020 until September 27, 2020. 

• Payments were received without taxes withheld at source. 
  
• Recipients will receive a T4A slip from the Canada Revenue Agency.  If CERB was received via Service Canada, those individuals should anticipate receiving a T4E Statement of Employment Insurance and Other Benefits slip and not a T4 Slip.
• Slips should be received prior to March 10, 2021.
• Benefits will be reported in box 197 of the T4A slip and are reportable on line 13000 of your 2020 T1 Personal Income Tax and Benefit Return.  Benefits received from Service Canada would be reported on box 14 of the T4E slip.

Payments were received without income tax deductions withheld at source.  As such, recipients of CERB are the most likely to experience taxes payable for their 2020 tax year. 

Canada Recovery Benefit (CRB)

This program provides a taxable benefit of $1,000 per two-week period for workers who are either self-employed or are employed but not eligible for EI.  Benefit is to help those who are under-employed or have not returned to work due to COVID-19.  The CRB is paid in two-week period increments, subject to continued eligibility, and is available for up to 13 periods out of the 26 periods available between September 27, 2020 and September 25, 2021. 

• Payments are received net of 10% income taxes withheld at source. 
• Recipients will receive a T4A slip from the Canada Revenue Agency. 
• Slips should be received prior to March 10, 2021.
• Benefits will be reported in box 202 of the T4A slip and are reportable on line 13000 of your 2020 T1 Personal Income Tax and Benefit Return.  
• Taxes withheld will be reported in box 22 of the T4A slip and are reportable on line 43700 of your 2020 T1 Personal Income Tax and Benefit Return.  

Unique to the CRB only, repayment of the benefit is required if the individual’s annual net income (excluding the benefit) is over $38,000 in the calendar year.  $0.50 of benefit must be repaid for every dollar earned over $38,000.  The CRB repayment would be due on April 30, 2021 (or later if the taxpayer died after October in the 2020), with interest charged on late payments. 

Canada Recovery Sickness Benefit (CRSB)

This program provides a taxable $500 per week benefit for up to 2 weeks to workers who are: sick with COVID-19, must self-isolate for reasons related to COVID-19, or have an underlying health condition that puts them at a greater risk of getting COVID-19. 

• Payments are received net of 10% income taxes withheld at source. 
• Recipients will receive a T4A slip from the Canada Revenue Agency. 
• Slips should be received prior to March 10, 2021.
• Benefits will be reported in box 203 of the T4A slip and will be reportable on line 13000 of your 2020 T1 Personal Income Tax and Benefit Return. 
• Taxes withheld will be reported in box 22 of the T4A slip and are reportable on line 43700 of your 2020 T1 Personal Income Tax and Benefit Return.  

Canada Recovery Caregivers Benefit (CRCB)

Provides a taxable $500 per week benefit for up to 26 weeks, per household, for eligible Canadians who are unable to work due to caring for certain family members because of COVID-19.

• Payments are received net of 10% income taxes withheld at source. 
• Recipients will receive a T4A slip from the Canada Revenue Agency. 
• Slips should be received prior to March 10, 2021.
• Benefits will be reported in box 204 of the T4A slip and will be reportable on line 13000 of your 2020 T1 Personal Income Tax and Benefit Return. 
• Taxes withheld will be reported in box 22 of the T4A slip and are reportable on line 43700 of your 2020 T1 Personal Income Tax and Benefit Return.  

Canada Emergency Student Benefit (CESB)

This program provided eligible students with $1,250 per four-week period.  This amount increased to $2,000 per four-week period for eligible students who are disabled or have certain dependents.  The CESB was available from May 10 to August 29, 2020. 

• Payments were received without taxes withheld at source. 
• Recipients will receive a T4A slip from the Canada Revenue Agency. 
• Slips should be received prior to March 10, 2021.
• Benefits will be reported in box 198 of the T4A slip and will be reportable on line 13000 of your 2020 T1 Personal Income Tax and Benefit Return.   Benefits for eligible students with disabilities, or those with children or other dependents, will be reported on box 199.

Please note: the above summary may not be exhaustive. 

If you received benefits not noted here, your IG Consultant and tax advisor can help you identify whether the benefits you received may be reportable as taxable income to you in 2020.