On Monday, May 11, eligible Canadians will be able to go online, once again, as the third eligibility period for the $2,000 monthly Canada Emergency Response Benefit (CERB) begins. This four-week period runs from May 10 through June 6, 2020. To date, the Canada Revenue Agency has received more than 11 million applications for the CERB from 7.6 million unique applicants, and paid out nearly $30 billion in benefits.
For most Canadians, the process of applying for, and then receiving, the CERB has been a snap. According to the CRA, most applicants are able to complete the online application in under two minutes and receive their payment via direct deposit within three business days.
But, with parts of the country starting to reopen, some businesses, likely buoyed by the 75 per cent Canada Emergency Wage Subsidy, are starting to rehire employees previously laid off. If you suspect you may soon be working again, you may want to think twice before deciding to reapply for another CERB payment, lest you be required to return, or repay, the CERB if it turns out that you no longer meet the eligibility requirements for the upcoming period.
With that warning in mind, let’s review the basic eligibility requirements for the CERB, and what steps you may need to take to return it, should you determine that you no longer qualify.
Who is eligible?
The CERB is available to workers, residing in Canada, who are at least 15 years of age, have not quit their job voluntarily, and who have “stopped working because of reasons related to COVID-19.” Note that you do not have to be formally laid off to collect the CERB as you can receive the benefit even if you remain attached to your company, provided you meet all the eligibility requirements. This allows employees to continue to receive non-cash benefits, such as medical and dental coverage, without impacting their eligibility. You can still qualify for the CERB if you volunteer to be temporarily laid off by your employer to help them manage the pressures on their business.
You may also be entitled to the CERB if you stopped working for other reasons, including if you’re in quarantine or sick due to COVID-19, you’re taking care of others because they’re sick, or you’re taking care of children (or other dependents) because their care facility is closed.
If you’re self-employed, operating as a sole proprietor or your business is incorporated, you can also qualify provided you meet the eligibility criteria.
Income requirements to be eligible for CERB
To qualify for the CERB, you must have had (self-)employment income of at least $5,000 in 2019 or in the 12 months prior to the date of application. The CRA has stated that while filing an income tax return for 2019 is not an eligibility requirement to get the CERB, you will need to confirm, when applying online, that you satisfied the $5,000 income requirement.
The $5,000 includes all (self-)employment income, including tips and honoraria. Pensions, student loans and bursaries are not considered employment income and are excluded. The $5,000 of income need not be earned in Canada, but, as stated above, you need to reside in Canada to collect the CERB.
Income limitation while collecting CERB
When you submit your first claim, you cannot have earned more than $1,000 in (self-) employment income for 14 or more consecutive days within the four-week benefit period of your claim. For subsequent claims, including the third claim period starting on Monday, you can’t have earned more than $1,000 in (self-) employment income for the entire four-week benefit period of your new claim.
The CRA has stated that applications will be verified against tax records to confirm income.
How much can you get?
The CERB provides $500 per week for a maximum of 16 weeks and is available from March 15, 2020, to Oct. 3, 2020. You must apply by Dec. 2, 2020 and can receive payments retroactively if you qualify. The calculation of the 16 weeks begins with the first week for which you’re receiving the CERB, but the 16 weeks do not have to be taken consecutively.
Paying back the CERB
If you no longer meet the eligibility requirements for the CERB, you shouldn’t apply. The government is also encouraging Canadians who think that they may be returning to work in the weeks ahead such that they no longer will be eligible to consider waiting a little longer before applying for the upcoming period, so that you can make a “more informed decision.”
You are required to repay the CERB if you no longer meet the eligibility requirements for the 4-week period in question. This could happen either because you earned more than $1,000 in (self-) employment income, you applied for the CERB but later realized you weren’t eligible, or you received a CERB payment from both Service Canada and the CRA for the same period.
To return an uncashed CERB cheque, simply mail it back to the Sudbury Tax Centre, to the attention of “Revenue Processing – Repayment of CERB”, along with your Social Insurance Number and the reason you’re returning the cheque (“not entitled” or “overpayment.”)
If your CERB was paid by direct deposit or you’ve already cashed the government’s cheque, you can mail your own cheque repaying the CERB to the address above or, starting May 11, use a new feature on the CRA My Account website to repay it.
Tax reporting
Finally, keep in mind that the CERB is taxable but no tax is withheld at source, so recipients need to estimate the tax liability they may owe taking into account all income for 2020. Recipients will receive a T4A tax slip for the amount of CERB received.
If you repay a CERB payment, that amount will not be included on the T4A slip. To ensure that your 2020 tax slip is correctly issued, the CRA is asking anyone who is required to repay their CERB to do so by Dec. 31, 2020. If you need more time to repay, recipients are encouraged to contact the CRA by Dec. 31, 2020 to ensure that they have an agreed upon payback schedule.