Employment insurance and CRA services have been a relief for those affected by COVID-19. But many of these benefits are also taxable at the end of the year, depending on your circumstance. To help avoid any unanticipated taxes, we’ve compiled an easy list of the available benefits, eligibility and associated tax rules.
For Those on Employment Insurance
As of Oct. 4, over 27 million Canadians have applied for employment insurance.1 Employment insurance is taxable, but you may be exempt if your 2019 net income is below the $66,375 limit.2
If your net income is above this limit, then you will be required to pay 30 percent of either:2
- Income in excess of $66,375
- Your total regular benefits
In addition to the standard deduction, there are a variety of specific situations that may allow you to be exempt from employment insurance tax at the end of the year. Make sure to check into the eligibility requirements for these options.
For Those Not on Employment Insurance
If you were not eligible for employment insurance, then you may have been eligible for one of the many CRA services in response to COVID-19.
Active services include:
- The Canada Recovery Benefit (CRB)
- The Canada Recovery Caregiving Benefit (CRCB)
- The Canada Sickness Recovery Benefit (CRSB)
- The Canada Emergency Wage Subsidy (CEWS)
The first three benefits are designed for employees or self-employed individuals, while the fourth is directed toward business owners. In addition, you may only apply for benefits to one of the first three services at a time, while the fourth is standalone. Taxation between these four benefits varies.
The Canada Recovery Benefit (CRB)
The CRB provides $900, after 10 percent tax, over two week periods (13 total) to those affected by COVID-19.3 This amount is considered income and half of every dollar will have to be repaid if your net income for the year is above $38,000.4
The Canada Recovery Caregiving Benefit (CRCB)
The CRCB provides $450, after 10 percent tax, over one week periods (26 total).5 Currently, this amount still counts towards your total income but does not need to be reimbursed.6
The Canada Recovery Sickness Benefit (CRSB)
The CRSB provides $450, after 10 percent tax, over one week periods (two total).7 Like the CRCB, the CRSB counts towards your total income for the year, but will not require reimbursement at this time.8
The Canada Emergency Wage Subsidy (CEWS)
The amount you receive under the CEWS will depend on your application. However, the CEWS will count on your Annual Return of Income as taxable income and you will be required to report how much of the CEWS was allocated to each employees’ salary.9
Understanding how these benefits affect your taxes at the end of the year can help you avoid unnecessary expenses and assure that they continue to be a source of economic relief. Therefore, make sure always to double-check your eligibility for these services and any tax requirements that may apply to them.
Please consult financial, legal, or tax professionals for information specific to your situation. The information and material presented are general, may have changed since the published date shown, and should not be considered financial advice. LetsPlan.ca is published in Canada exclusively for residents of Canadian jurisdictions where our products and services may be legally offered. The services offered within this site are available exclusively through our Canadian advisors. While we often provide original content, Twenty Over Ten initially provided the subject matter for this post. It has since been edited, reviewed and approved by our Privacy and Compliance Officer. Advisors may only conduct business with residents of the province(s) in which they are licensed and registered.