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THREAD: CERB & CRA – TAX OWING
OK, so CRA has now initiated phase one of its attempts to balance the federal books on the emergency benefits measures from spring & through fall 2020 to battle the economic disaster from COVID. Formal collection letters were mailed recently 1/
OK, so CRA has now initiated phase one of its attempts to balance the federal books on the emergency benefits measures from spring & through fall 2020 to battle the economic disaster from COVID. Formal collection letters were mailed recently 1/
to Canadian CERB recipients who CRA think may not have either qualified for the thresholds or who may have gotten benefits twice (through both available portals, CRA and Service Canada.) The balances owing can be significant since CERB was paid out in gross, not net dollars. 2/
It seems many recipients either didn’t know this or just took the funds on offer due to the strained financial circumstances (many couldn’t pay rent) or just pure greed without considering the future tax liability.
CRA has demanded those in question pay up by December 31. 3/
CRA has demanded those in question pay up by December 31. 3/
Considering the sums, it is likely most won’t be able to do so.
So, what does that mean? Well, CRA aren’t likely to forgive the tax arrears in this case, even if the wording and qualification intents weren’t entirely clear. One had to have made $5,000 in income in either the 4/
So, what does that mean? Well, CRA aren’t likely to forgive the tax arrears in this case, even if the wording and qualification intents weren’t entirely clear. One had to have made $5,000 in income in either the 4/
2019 tax year OR the previous 12 months before you applied. CRA assumes that is net income, not gross.
For the self-employed, that can be a very murky situation. Gross revenue minus expenses, etc., then net income (what you paid yourself ultimately.) But oh, you say – 5/
For the self-employed, that can be a very murky situation. Gross revenue minus expenses, etc., then net income (what you paid yourself ultimately.) But oh, you say – 5/
you can just file a T1 adjustment and alter your previous expenses to meet the $5,000 threshold? So what then will CRA say? They’ll say “Then let’s go back a few more years if those are your real expenses.” Essentially you’ve triggered an audit and may end up owing WAY more 6/
than that.
For those formerly on payroll who took CERB, you’re used to being paid in net dollars with tax already withheld by your employer. So you likely didn’t set aside funds for tax time. Oops. And if you’re now BACK on payroll, CRA can just mail your employer to garnishee 7/
For those formerly on payroll who took CERB, you’re used to being paid in net dollars with tax already withheld by your employer. So you likely didn’t set aside funds for tax time. Oops. And if you’re now BACK on payroll, CRA can just mail your employer to garnishee 7/
wages until the debt is settled. And no, there is no maximum level CRA can garnish to despite what the Internet may tell you.
Big trouble ahead for many Canadians. - FIN
Big trouble ahead for many Canadians. - FIN
