I would like to advise my clients that if you normally receive a tax refund or owe a nominal amount, this may change for the 2020 tax year, especially if you received any of the government benefits implemented to support Canadians during the pandemic. These benefits include:
- Canada Emergency Response Benefit (CERB)
- Canada Emergency Student Benefit (CESB)
- Canada Recovery Benefit (CRB)
- Canada Recovery Sickness Benefit (CRSB)
- Canada Recovery Caregiving Benefit (CRCB)
All pandemic related benefits are considered fully taxable income on your 2020 tax return. Depending on the specific benefit received, the federal government withheld either nothing or 10% for tax. Please keep in mind heading into tax season that if you had other income in 2020 you will have to pay tax on your benefits at your marginal tax bracket and may owe money when you normally get a refund or your refund may be lower than usual.
Even if you have a balance owing and are unable to make payment in full to the Canada Revenue Agency by the filing deadline (April 30) I still recommend filing your return on or before that date to avoid a late filing penalty. Also, income tested benefits such as Canada Child Benefit and GST credit are reliant on the filing of your tax return and may stop if you do not file.
For my part, I will do everything I can to maximize your deductions and credits so that you pay as little tax as possible.