Paying back the CERB money, what you need to know

The Canada Revenue Agency says it’s warning about 213,000 Canadians who may have been paid twice through the Canada Emergency Response Benefit (CERB) program that they could be called upon to repay the money.

There seem a total confusion for people who are impacted. A quick look at Reddit forums and you notice several impacted people receiving contradictory information. I hope this post will clarify some of the confusion.

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What if you have been contacted

If you received a letter. Keep in mind, it does not mean necessarly they are asking you for repayment. In fact, most people who received these letters were asked to provide their 2019 income tax return to assess their eligibility. See possible scenarios below:

  • earned more income than expected while you were getting the CERB? if you did you might be required to pay back
  • applied for the CERB from both Service Canada and the CRA at the same time? Just review your bank account info, if you have received the payment twice , you need definitely to return the extra payments
  • did not file your taxes for 2019? All you need to do is file your 2019 income tax to allow CRA to confirm your eligibility

Many people getting these letters are self-employed or contractors, often called “gig workers”.

Net income versus gross income

The government is now saying that you had to have earned $5,000 in net income, which is income after expenses. Many people thought they qualified as long as they made $5,000 in gross income, which is before expenses.

If the CRA contacts you because of the difference between your net and gross income, it’s important to get legal help. A legal advisor might be able to dispute CRA claim.

In the Canada Revenue Agency website, they are stating that you would have to repay the CERB in the following situations: ”Payments made to anyone who is later found to be ineligible will need to be returned. Any individuals who mistakenly received multiple payments or payments they did not apply for should begin the repayment process below.

In their website CRA will ask you which situation are you in. You need to pick the right one:

1- Earned more income than expected during the time you received the CERB payment

2- Applied for and got the CERB from both Employment Insurance/Service Canada and from the CRA for the same eligibility period

3- Applied for the CERB but later realized you’re not eligible

4- None of the above

Repayment scenarios

You have to distinguish between your first eligibility period and the subsequent ones as described by CRA in their website:

For your first eligibility period

If your employment or self-employment income was $1,000 or less (before deductions) for at least 14 days in a row during this 4-week period, you do not need to repay the CERB.

For subsequent eligibility periods

You will need to repay the $2,000 for an eligibility period if you earned more than $1,000 (before deductions) from employment or self-employment income during that period.

How to return or repay the CERB

Send back your payment to the department where you applied for it

CRA or

Service Canada

The easiest way to reimburse the CERB is through a transfer from your bank account, click CRA link below

Impact on your taxes

Your CERB amounts are taxable. You will receive a T4A slip before March 10, 2021 as per CRA website.

see possible scenarios if you already paid back the CERB:

  • You realized your mistake and paid back CRA after December 31st, 2020, you will unfortunately still be taxed on CERB in 2020 and your taxes will be adjusted only in 2021 tax return.
  • You realized your mistake and paid back CRA before December 31st, 2020, you will be able to deduct the amount paid back from your taxable amount shown in your T4A slip 2020.

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