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Instructions

1. Open the tax software
2. Review the Background information and Required slips (tax slips, receipts, etc.)
3. Provide all required information for the appropriate sections of the tax software
4. Once completed, compare your results with the solution provided
5. Afterwards, refer to the Takeaway points

Background information

Situation

Heather is a Status Indian under the Indian Act. She worked part time at First General Store Ltd. She applied for and received the Canada Recovery Benefit (CRB) in 2021 and she informs the volunteer that all of the income that made her eligible for the CRB is tax exempt.

Identification information

Identification information

Name	Heather Johnson
Social insurance number (SIN)	000 000 000
Address	123 Main Street City, Province  X0X 0X0
Date of birth	June 30, 1985
Marital status	Single

Required slips

T4A – Statement of Pension, Retirement, Annuity, and Other Income (Canada Revenue Agency)

Text version of the above image

T4A – Statement of Pension, Retirement, Annuity, and Other Income
Protected B
Payer’s name: Canada Revenue Agency
Recipient’s name and address:
Last name: Johnson
First name: Heather
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 22: Income tax deducted – line 43700: 1,000.00
Other information (see page 2)
Box 202: 10,000.00

T4 – Statement of Remuneration Paid (First General Store Ltd.)

Text version of the above image

T4 – Statement of Remuneration Paid
Protected B
Employer’s name: First General Store Ltd.
Employee’s name and address:
Last name: Johnson
First name: Heather
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 18: Employee’s EI premiums – line 31200: 315.90
Box 24: EI insurable earnings: 20,000.00
Box 28: Exempt CPP/QPP is checked
Other information (see over)
Box 71: 20,000.00

Review your results

Solution to Reporting tax exempt COVID-19 benefits.

Takeaway points

Steps to follow

1. Review their background information and required slips
2. In Interview setup, tick the boxes next to:
   • Tax return for a Status Indian in the Specific situations section
   • Employment income and employment insurance benefits (T4, T4E/RL-6) in the Employment and other benefits section
   • Pension income, other income and split pension income, COVID-19 benefits (T4A, T4A(OAS), T4A(P), T4A-RCA, T4RSP, T4RIF, T1032) in the Pension section
3. Click Status Indian in the left-side menu and select Yes from the Please confirm that you are a registered Indian, or entitled to be registered as an Indian under the Indian Act drop-down menu
4. Enter $10,000 into the Exempt benefits paid due to the COVID-19 field
5. Click T4 and employment income in the left-side menu, then click the + sign next to T4 income (earned in any province except Quebec) to complete the following fields:
   • Select Exempt CPP/QPP (rare!) from the field 28 drop-down menu
   • Select Box 71 – Indian (exempt income) – Employment from the Other information drop down menu
6. Click T4A and pension income in the left side menu, then click the + sign next to T4A – Pension, retirement, annuity, and other income (COVID-19 benefits) to select [202] Canada recovery benefit (CRB) from the Other information drop-down menu

Heather’s CRB payment is tax exempt because the employment income that made her eligible for the CRB was also tax exempt under the Indian Act. The software automatically generates form T90 which allows Heather to include this income in the calculation of the Canada workers benefit (CWB).

For more information, refer to UFile instructions.