CRA and COVID-19

COVID-19 benefit payments from the CRA – T4A Statement of pension, retirement, annuity, and other income

The T4A slip issued by the CRA will show each benefit payment under its own box number in the Other information section of the slip.

Example of a T4A slip with the Income tax deducted in box 22, the Canada Recovery Benefit (CRB) reported in box 202 and the Canada Recovery Sickness Benefit (CRSB) in box 203

 

Types of emergency benefit payments that can be found on the T4A slip issued by the CRA include:

• Box 197, Canada Emergency Response Benefit (CERB)
• Box 198, Canada Emergency Student Benefit (CESB)
• Box 199, Canada Emergency Student Benefit (CESB) for eligible students with disabilities or those with children or other dependents
• Box 202, Canada Recovery Benefit (CRB)
• Box 203, Canada Recovery Sickness Benefit (CRSB)
• Box 204, Canada Recovery Caregiving Benefit (CRCB)
• Box 205, One-time payment for older seniors

These amounts are reported on line 13000 of the Income Tax and Benefit Return.

 

Provincial/Territorial COVID-19 financial assistance payments – T4A Statement of pension, retirement, annuity, and other income

The T4A slip issued by the province or territory will show the financial assistance payments under box 200 in the Other information section of the slip.

Here is an example of a T4A with the Provincial/Territorial COVID-19 financial assistance payments in box 200:

The Provincial/Territorial COVID-19 financial assistance payments amount is reported on line 13000 of the Income Tax and Benefit Return.

Canada Emergency Response Benefit (CERB) payments from Service Canada – T4E Statement of Employment Insurance and Other Benefits

Slips issued by Service Canada will show the total benefits paid in box 14 of the T4E and in some cases, tax-exempt benefits under the Indian Act in box 18. The amount shown in box 14 of the T4E, will be reported on line 11900 of the Income Tax and Benefit Return.

Here is an example of a T4E with the total amount of CERB payments reported in box 14 and the tax-exempt portion in box 18:

COVID-19 benefits - Determining  tax-exempt benefits under the Indian Act

The COVID-19 benefit payments that may be tax exempt on a T4A slip are:

• box 197 for Canada Emergency Response Benefit (CERB) payments;
• box 200 for provincial/territorial COVID-19 financial assistance payments;
• box 202 for Canada Recovery Benefit (CRB) payments;
• box 203 for Canada Recovery Sickness Benefit (CRSB) payments;
• box 204 for Canada Recovery Caregiving Benefit (CRCB) payments

 

The following payments are not tax exempt under the Indian Act:

• box 198, Canada Emergency Student Benefit (CESB);
• box 199, Canada Emergency Student Benefit (CESB) for eligible students with disabilities or those with children or other dependents;
• box 205, One-time payment for older seniors

Contrary to the T4E slip, the T4A slip will not indicate that these benefits are tax exempt.

An examination of the individual’s income may be needed to determine how these payments are treated on a Status Indian’s tax return.

If all of the income that entitled an individual to the COVID-19 benefit amounts is tax exempt, all of their COVID-19 benefit payments are considered tax exempt. For example, an individual who worked on reserve all year and earned tax-exempt employment income would receive COVID-19 benefits exempt from income tax. If all of the income that entitled the individual to the COVID-19 benefits was taxable, all of the benefit payments they received would also be taxable.

If part of the income that entitled an individual to the COVID-19 benefits is taxable, the benefit will be partially taxable. The exemption percentage can be set according to the most advantageous period for the individual by using either the previous fiscal year or the 12 months preceding the COVID-19 benefit request. For more information, see Taxes and benefits for Indigenous peoples and click on: If you received COVID-related benefits.

Individuals who need information on how to return or repay COVID-19 benefits

COVID-19 benefit payments made to anyone who is later found to be ineligible will need to be returned to the CRA or Service Canada.

As a volunteer, you will not have access to view any amounts an individual has owing. Should an individual require more information about COVID-19 benefit repayments, please refer them online to Repay COVID‑19 benefits or by phone at 1-833-966-2099 to speak to a representative.

Federal COVID-19 benefits repayment

An individual can claim a deduction for the 2021 repayment of federal COVID-19 benefits that were received in 2020.

The federal benefits involved are as follows:

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

The repayment will show in box 201 of their T4A slip for the 2021 tax year.

If the individual received their CERB from Service Canada, the amount repaid will be reported in box 30 of their T4E slip, along with other EI amounts repaid. Service Canada will send them a letter showing the exact portion of the amount in box 30 that is CERB repayment.

 They can claim this deduction for the federal COVID-19 benefits repayment in any of the following ways: 

• on line 23210 of their 2021 return
• on line 23200 of their 2020 return
• on both their 2020 and 2021 returns as long as the total amount claimed is not more than the combined amounts reported in box 201 of their T4A slip and the letter from Service Canada

 

The individual needs to confirm how they wish to claim the deduction for the repayment. If the individual wants to claim a deduction on their 2020 return but it has already been assessed, they will have to request an adjustment.

Provincial or territorial COVID-19 benefits repayment

If an individual repaid provincial or territorial COVID-19 benefits in 2021 for an overpayment of provincial or territorial COVID-19 benefits received in 2020, the amount repaid will be reported in box 201 of their T4A slip. They can only claim a deduction for the total amount repaid on line 23200 of their 2021 return.

Here is an example of a T4A with the repayment amount in box 201:

Since both the federal and provincial/territorial governments will issue the same type of slip with the same box number (box 201), it is important to look at the Payer’s name box to determine how to treat the repayment.

If the Payer’s name box says Canada Revenue Agency, the individual must inform the volunteer which year they wish to claim the deduction.

If the Payer’s name box says a provincial/territorial government, the repayment goes on line 23200 of the 2021 tax return.

Canada Recovery Benefit (CRB) clawback

Individuals are allowed to earn employment and self-employment income of $38,000 while receiving the CRB. However, they will be required to repay $0.50 for every dollar of net income they earn above $38,000 for that year (2020 or 2021). They will not have to pay back more than their benefit amount for that year.

Net income refers to income as identified on line 23600 of the individual’s income tax and benefit return for that year, excluding the CRB itself.

Example: Ali applied for the CRB and received $3,000 in 2021. His net income (excluding the CRB) was $45,000 for 2021. In this example, Ali made $7,000 over the $38,000 threshold. Since $3,500 is more than the benefit received, the clawback is the full amount of CRB he received.

When completing the tax return, UFile will automatically calculate the clawback and add the amount to line 23500, as a deduction. This ensures that the individual doesn’t pay taxes on any amount they must repay. This overpayment amount is then reported on line 42200 which may result in an amount owing for the individual.

Home office expenses for employees

For the 2021 tax return, an employed individual can choose to claim the Home office expenses using either:

• the temporary flat rate method, or
• the detailed method

 

Each employed individual working from home can use the temporary flat rate method to calculate their deduction for home office expenses if all of the following conditions are met:

• They worked from home in 2021 due to the COVID-19 pandemic
• They worked more than 50% of the time from home for a period of at least four consecutive weeks in 2021
• They are only claiming home office expenses and are not claiming any other employment expenses
• They were not reimbursed by their employer for home office expenses 
   

The temporary flat rate method allows eligible employees to claim a deduction of $2 for each day they worked at home in that period, plus any other days they worked from home in 2021 due to COVID-19, up to a maximum of $500.

Under this temporary flat rate method, employees do not need Form T2200 or Form T2200S completed and signed by their employer and are not required to keep or provide receipts.

For more information, see Home office expenses for employees.

Background information 

Slips required:

• T4A – Statement of Pension Plan, Retirement, Annuity, and Other Income slip (Canada Revenue Agency)
• T4 – Statement of Remuneration Paid (Great Services Inc.)

Pierre worked at Great Services Inc. He applied for the CRB and received payments in 2021. He also applied for and received the CRSB in the same year.

Points to remember:

• In the Interview setup, check the box next to Employment income and employment insurance benefits (T4, T4E/RL-6) in the Employment and other benefits section to enter the T4 slip
• In the Interview setup, check the box next to 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 to enter the T4A slip
  • Enter the Federal income tax deducted
  • Under Other information choose field 202 and enter the amount from the slip.
  • Click the + sign to enter the information from box 203

Information slip for Pierre:

T4 – Statement of of Pension, Retirement, Annuity, and Other Income (Canada Revenue Agency)

T4 – Statement of Remuneration Paid (Great Services Inc.)

Background information 

Slips required:

• T4A – Statement of Pension Plan, Retirement, Annuity, and Other Income slip (Canada Revenue Agency)
• T4 – Statement of Remuneration Paid (Madame Chic Ltd.)

Amy worked part time at Madame Chic Ltd. She applied for and received the CRB, the CRCB and the CRSB in 2021.

In 2020, she had applied for and received the CERB. In 2021 she found out she was ineligible and paid back $2,000 to the CRA. She informs the volunteer she wishes to claim what she paid back to the CRA in her 2021 income tax return.

Points to remember:

• In the Interview setup, check the box next to Employment income and employment insurance benefits (T4, T4E/RL-6) in the Employment and other benefits section to enter the T4 slip
• In the Interview setup, check the box next to 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 to enter the T4A slip
  • Enter the Federal income tax deducted
  • Under Other information choose field 201 and enter the amount from the slip.
  • Click the + sign to enter the information from box 202
  • Click the + sign to enter the information from box 203
  • Click the + sign to enter the information from box 204

Information slip for Amy:

T4 – Statement of Pension, Retirement, Annuity, and Other Income (Canada Revenue Agency)

T4 – Statement of Remuneration Paid (Madame Chic Ltd.)

Background information 

Slips included:

• T4A – Statement of Pension Plan, Retirement, Annuity, and Other Income slip (Canada Revenue Agency)
• T4 – Statement of Remuneration Paid (First General Store Ltd.)

Heather is a Status Indian under the Indian Act. She worked part time at First General Store Ltd. She applied for and received the CRB in 2021. She informs the volunteer that all of the income that entitled her to the CRB is tax exempt.

Slips required:

• T4A – Statement of Pension Plan, Retirement, Annuity, and Other Income slip (Canada Revenue Agency)
• T4 – Statement of Remuneration Paid (First General Store Ltd.)

Points to remember:

• In the Interview setup, check the box next to Employment income and employment insurance benefits (T4, T4E/RL-6) in the Employment and other benefits section to enter the T4 slip
• In the Interview setup, check the box next to 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 to enter the T4A slip
  • Enter the Federal income tax deducted
  • Under Other information choose field 202 and enter the amount from the slip.
• In the Interview setup, check the box next to Tax return for a Status Indian in the Specific situations section
  • Select Yes at the Please confirm that you are a Status Indian field
  • Enter the amount that is tax exempt in the Exempt benefits paid due to the COVID-19 field

Information slip for Heather:

T4 – Statement of of Pension, Retirement, Annuity, and Other Income (Canada Revenue Agency)

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