Benefit Taxation

TAX TIPS FOR THOSE WHO RECEIVED COVID19 BENEFITS

Canadians who received COVID-19 emergency or recovery benefits payments from the CRA will receive a slip called T4A.

Starting in early January 2021 and no later than March 10, 2021, Canadians will begin receiving T4A slips from the Canada Revenue Agency (CRA). The T4A is virtually identical to the T4 slips Canadians usually receive, but rather than employment income, they provide the amounts of COVID-19 emergency and recovery benefits received from the CRA in 2020.  Residents of Quebec will receive both a T4A and RL-1 slip.

Due to the unprecedented financial hardship brought on by the COVID-19 pandemic, millions of Canadians sought the support of the Government’s emergency or recovery benefits, which include the Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB), and Canada Recovery Caregiving Benefit (CRCB). These emergency and recovery benefits are considered taxable income, and recipients must enter the total of the amounts they received last year on their 2020 income tax and benefit return.

How do Canadians use the T4A to fill out their 2020 income tax and benefit return?

  • When filing:
  • Information from their T4A will need to be entered on line 13000 of their 2020 income tax and benefit return as income, just like a regular T4 slip.
  • If they are registered for My Account and filing with NETFILE-certified software, this information will be automatically entered into their return.
  • After they have entered the information and filed their return, they should keep their T4A slip, and all tax documents, for at least six years.

2)   After filing:

  • Since these payments are taxable, depending on their personal circumstances, the type of COVID-19 emergency benefits received, other sources of income, deductions and credits, your constituents may find that they owe tax.
  • The CRA understands the financial strain that this might cause, especially with the ongoing pandemic.
  • To help Canadians, payment arrangement parameters have been expanded to give Canadians more time and flexibility to pay any balance owing.
  • Individuals who cannot make a payment in full are advised to contact the CRA to make a payment arrangement.
  • It is important for Canadians to file their return by the filing deadline to keep receiving benefit and credit payments, such as the Canada Child Benefit.

3) What to do if there is an issue?

  • If you do not get a T4A slip:
  • If you received benefit payments and do not get a T4A slip by March 10, you should be able to get a copy through CRA’s My Account for individuals or by contacting the CRA

 

  • If there is a problem with the amounts reflected on the T4A:
  • If you notice that the T4A does not reflect the income you actually received: check whether you may have repaid an amount and it is not reflected on the slip, or did not make a repayment but the income reported on the slip has been reduced by some amount.
  • In either of these cases, contact the CRA by phone at 1-800-959-8281 or, for those outside of Canada and the US, at 1-613-940-8495.

 

  • If you get a T4E instead of a T4A:
  • Many Canadians applied for COVID-19 emergency benefits through Service Canada.
  • If you received these payments from Service Canada, you will get a T4E Statement of Employment Insurance and Other Benefits, so that you can complete their 2020 tax and benefit return.
  • Information from a T4E will need to be entered on line 11900 of the 2020 income tax and benefit return. As with a T4A, this information will be entered automatically for individuals who are registered for My Account and filing with NETFILE-certified software.
  • For more information on when you can expect the T4E from Service Canada,  contact the department through their various service channels.

 

4)        If you were not eligible for the benefit:

  • There have been questions in recent weeks about eligibility for the CERB and what to do if you believe you were ineligible.
  • It is important to note that no one has been deemed ineligible for the benefit, and there is no requirement for repayment at this time.
  • As has been stated, the Government of Canada continues to look at options to respond to these concerns.
  • The CRA is committed to being flexible and responsive to the different situations Canadians are in and will work with individuals on a case-by-case basis.

If you encounter difficulties with your benefits and taxes that you are unable to resolve through these means, please contact my office for assistance.



OTHER TAX TIPS FOR 2020 FILING

What is the deadline to file and pay this year?

For most, the deadline to do their 2020 taxes is April 30, 2021. However, individuals can file online as early as February 22, 2021. For those who owe a tax debt, the deadline to pay is also April 30, 2021.

Individuals who have never filed a return before, haven’t filed in a while, or would like to file for previous years, have several ways to do so. To get started, individuals should be directed to the step-by-step guide for filing a return.

Can constituents still file on paper?

Filing online is the fastest and most secure way to do your taxes, but the CRA will continue to support those who chose to file on paper or by phone.

Constituents who filed a paper return last year should be mailed the 2020 Income Tax Package by February 19, 2021. It may arrive late due to COVID-19 delivery delays and it may take 10-12 weeks to process. The CRA encourages taxpayers to file electronically, where no processing delays are anticipated. Those who choose to file by paper are encouraged to file as soon as they have their slips and any other documents needed. This will help avoid interruptions to any benefit and credit payments.

Where can constituents find tax help from the CRA?

 Through the Community Volunteer Income Tax Program (CVITP) volunteers may be able to complete and file individuals’ taxes virtually by videoconference, by phone, or through a document drop-off arrangement. Since May 2020, the CVITP has assisted more than 170,000 people with the filing of their income tax and benefit returns. Those who cannot file electronically this year are encouraged to seek a CVITP clinic through the national directory.

Those who have self-employment income are not eligible for the CVITP. However, the Liaison Officer service helps small business owners and self-employed individuals with their tax-related questions, explains business deductions, common tax errors, provides an overview of helpful tools, and offers advice and help with setting up an effective bookkeeping system. For more information, go to canada.ca/cra-liaison-officer.

The CRA Outreach Program provides support to community organizations that want to help your clients with their taxes and their benefits. A CRA outreach officer can meet with them to provide information and answer questions on benefits and credits. To set up a meeting, go to canada.ca/cra-outreach.

As the CRA strives to put people at the centre of everything we do, we are also making it easier for your constituents to get answers to their questions on the phone. New service enhancements for 2021 include increasing the number of available agents, extending hours of operation, and a new automated callback service. Further, the CRA is improving the user experience of the Personal income tax section of their website, which will allow constituents to more quickly and easily find answers to their questions without having to call the CRA.

The Problem Resolution Program (PRP) will continue to be available to further support you this tax season. To ensure the CRA’s ability to give you timely service, the PRP contact list for your office is only for use for Members of Parliament and their constituency office.

 What changes have been made to the home office expenses deduction?

 Due to COVID-19, more Canadians than ever are working from home. The CRA made the home office expenses deduction more accessible and easier to claim. To simplify the process for employees and employers, the CRA introduced a new Temporary flat rate method to calculate the deduction.

The temporary flat rate method allows eligible employees to claim a deduction of $2 for each day they worked from home in 2020 due to the COVID-19 pandemic, up to a maximum of $400 for the year. This method can only be used for the 2020 tax year.

Employees with larger claims for home office expenses can still choose to use the existing detailed method to calculate their home office expenses deduction.

How do constituents report emergency and recovery benefit income related to COVID-19?

To assist Canadians facing financial hardship as a result of the pandemic, a number of COVID-19 benefits were introduced last year. Income from these benefit payments are taxable. Some provinces or territories may have sent out pandemic related payments that are considered taxable income. These amounts should be included on an individual’s tax return.

Canadians who received COVID-19 recovery benefits payments from the CRA should have received a T4A slip. The CRA recently released a statement on how to report these amounts on a return to help constituents. Those who have questions about the slip, including if they think there may be a mistake or they have received it in error, should contact the CRA.

How is the CRA helping people with tax debt this year?

Many individuals have seen their financial situation affected by COVID-19 and will find themselves owing money to the CRA, possibly for the first time. The amount of tax owing depends on personal circumstances, benefits received, and other sources of income, deductions and credits.

Newly announced on February 9, 2021, targeted interest relief is being provided to Canadians who are facing income tax debt for the 2020 tax year as a result of having received COVID-related income support benefits. These individuals will not be required to pay interest on any outstanding income tax debt for the 2020 tax year until April 30, 2022. The Canada Revenue Agency (CRA) will automatically apply the interest relief measure for individuals who meet these criteria.

The Government of Canada is also taking steps to allow self-employed individuals who applied for CERB based on their gross income from self-employment to keep their payments, provided they met all other eligibility requirements. The same approach will apply whether the individual applied through the Canada Revenue Agency or Service Canada.

Some qualifying self-employed individuals whose net self-employment income was less than $5000 may have already voluntarily repaid the CERB. The CRA and Service Canada will return any repaid amounts to impacted individuals.

Even if constituents do not qualify for these new measures, the CRA has made it easier than ever to make a payment arrangement so individuals may have more time and flexibility to repay based on their ability to pay.

Even if a constituent cannot pay all of their balance owing right away, it is important that they file a return by the deadline to avoid potential interruptions to their credit and benefit payments.

While we are more flexible with individuals and small businesses who may be facing financial difficulties because of the pandemic, we remain firmly committed to fighting tax evasion and maintaining the integrity of the tax system.

How can people protect themselves from scams and fraud?

The CRA is taking fraud prevention measures and encouraging individuals to be scam smart with information about how individuals can protect themselves from fraud – you may have even seen our ads on TV. The CRA has a robust system and tools in place to monitor, detect, and neutralize potential threats when they occur.

Typically, scams target the most vulnerable taxpayers, including seniors and newcomers to Canada. If a constituent notices suspicious activity in My Account, they should contact the CRA immediately.

Also, Service Canada can support constituents who suspect that someone is using their social insurance number (SIN) fraudulently.

Victims of fraud will not be held responsible for any money paid out to scammers using their identity. We will work with affected Canadians to provide them with the support that they need. This includes offering credit protection if that is necessary.