CERB Repayments & Your Tax Refund

Written by

staterafp

Published on

April 25, 2024

Expecting a tax refund or GST/HST payment? You may not get it if you owe money to the CRA, including repayments of the Canada Emergency Response Benefit (CERB) and other pandemic supports you may have received. Here is what you need to know and why contacting the CRA is so important to get on better financial ground in 2024:

Canada Emergency Response Benefit Programs received by Canadians included the following:

The Canada Emergency Response Benefit (CERB) – not taxed at the source
The Canada Emergency Student Benefit (CESB) – not taxed at the source
The Canada Recovery Benefit (CRB) which replaced the CERB program – taxed at the source
The Canada Recovery Sickness Benefit (CRSB) - taxed at the source
The Canada Recovery Caregiving Benefit (CRCB) – taxed at the source

This income information was provided to taxpayers on T4A slips for inclusion of their 2020 tax return. These slips however were not notices of repayment for those who may have received benefits they shouldn’t have been entitled to. (People who repay any of these benefits are entitled to a refund of income previously reported).

So, who should be repaying? CRA provided some examples on their website:

Earned more income than expected during the time the CERB payment was received.
Applied for and got the CERB from both EI/Service Canada and from the CRA for the same eligibility period.
Applied for the CERB but later realized they were not eligible.

If COVID-19 benefits were received in error or the eligibility criteria was not met, taxpayers must repay the full amount received. Individuals who intentionally made fraudulent claims may face additional consequences, according to the CRA.

What happens on the tax return? The 2024 tax filing season marks the end of the COVID provisions with the exception of repayments of CERB and other pandemic benefits and the claiming of a deduction when repayment occurred. A deduction is claimable for the following COVID-19 relief benefits received in 2020/21 if repayments occurred in 2022 for:

Canada Emergency Response Benefit (CERB)
Canada Emergency Student Benefit (CESB)
Canada Emergency Recovery Benefit (CRB)
Canada Recovery Sickness Benefit (CRSB)
Canada Recovery Caregiving Benefit (CRCB)

What happens if you can’t pay? In the current economic environment, it may be increasingly difficult to pay tax-related debt. CRA has resumed confiscating tax refunds and tax credits like the Canada Child Benefit and the GST/HST Credit to collect on tax debt. If you are receiving EI benefits, repayment of your CERB debt from Service Canada will be recovered automatically at 50% of your EI benefit rate. Fortunately, no interest will be charged on the pandemic support debts.

CRA can take legal action if the pandemic support debts are not addressed. That can include garnishment of wages. The CRA is silent on garnishment of public or private pensions, but they can seize assets including a principal residence, car, boat, artwork, cottage, or rental property. CRA can also issue a Requirement to pay (RTP) to take funds that a third party such an employer or a bank. This RTP is usually 30% of take-home pay and 100% of funds held in the financial institution. They can also certify a debt in provincial or federal court and then register a lien against assets and property, including a personal residence to secure the debt and establish creditor priority in case of sale.

It’s most important to acknowledge the pandemic supports debt with CRA or Services Canada. Remember there may be other ways to repay. Have a tax specialist review prior year returns to make sure there are no errors or omissions that can result in a lost tax refund or benefits.