Never mind the debate about how much Canada’s emergency response benefit is, or should be, or should have been. That debate is ultimately going to be irrelevant in no time at all. A more pressing reality is that too many CERB recipients may have lost sight of the fact that it’s a taxable benefit.
My guess is that in the rush to pay bills, make rent, stay afloat, a lot of folks receiving the CERB may be setting themselves up for tax assessments they can’t pay. If the re-opening of the economy is slower than expected or desired, and taxpayers are generating reduced income after benefits end, April 2021 could get messy.
If you’re receiving emergency response benefit money, set aside just a little bit in case you’re into a tax payable situation for the 2020 taxation year.
Do what you can to ensure you’re not setting yourself up for a tax bill you can’t pay.
For those that do find themselves in that situation, deal with it head on. Don’t avoid Canada Revenue Agency if they begin contacting you. When you ignore them, the message CRA gets is that you don’t care about taxes. Not a good message to send. I recommend communicating with CRA in writing, or by fax. Communicating in writing will allow you to think about what you want to say, how you want to say it, and revise what you’ve written. When you’re done that, then send your communication.
Sending a fax will allow you to confirm that they’ve received your communication (print a confirmation of receipt from the fax machine), and will help you avoid being subjected to a whole bunch of questions over the phone.
Let’s hope Canada Revenue Agency operates with a modicum of patience and understanding when it comes to folks who are struggling with reduced income due to the Coronavirus.
