Taxation of recent COVID benefits

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Taxation of recent COVID benefits

by UFile Team Équipe ImpôtExpert | Jan 10, 2022   Comments:

UFile Blog - Taxation of recent COVID benefits

As the COVID-19 pandemic rages on, the federal government continues to give benefits to those who are hit the hardest. Read on to learn about the latest benefits and how they affect your tax return.

Canada Recovery Benefit (CRB)

See our previous blog article for details. This benefit was phased out on October 23, 2021.

Canada Worker Lockdown Benefit (CWLB)

To replace the Canada Recovery Benefit (CRB), the federal government has introduced the new Canada Worker Lockdown Benefit (CWLB) as a temporary measure that offers income support to employees and self-employed individuals who cannot work due to a COVID-19 lockdown. Initially, the CWLB was only available to those whose region was designated by a COVID-19 lockdown order; however, pursuant to a recent announcement, the CWLB was expanded to include workers in regions where provincial or territorial governments have introduced capacity-limiting restrictions of 50 percent or more. 

To be eligible for this benefit, you must meet all the following criteria:

  • You reside in Canada
  • You are living in Canada when the benefits are paid
  • You are at least 15 years old
  • You did not receive any of the following:
    • Employment Insurance (EI) benefits
    • Canada Recovery Sickness Benefit (CRSB)
    • Canada Recovery Caregiving Benefit (CRCB)
    • Québec Parental Insurance Plan (QPIP) benefits
    • short-term disability benefits
  • You earned at least $5,000 in 2020, 2021, or in the 12 months before the date of your application from any of the following sources:
    • employment income (total or gross pay)
    • onet self-employment income (after deducting expenses)
    • maternity and parental benefits from EI or similar QPIP benefits
    • EI regular, special, or fishing benefits
    • amounts from COVID-19 benefits such as the Canada Emergency Response Benefit (CERB), the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), the Canada Recovery Sickness Benefit (CRSB)
  • You filed a 2020 tax return
  • You got the COVID-19 vaccine or it is not required to continue your work
  • You are not self-isolating or in quarantine due to international travel

The benefit amount is $300 per week ($270 after taxes withheld) and available until May 7, 2022, with retroactive application to October 24, 2021, should the situation warrant it.

Taxation of COVID benefits

As mentioned in a previous blog entry, all COVID-related benefits, including the CWLB mentioned above, are taxable on your tax return. These benefits are added to your other income.

Unlike the CERB, the tax on newer benefits such as the CRB and the CWLB was withheld at source. Therefore, your tax owing will be reduced accordingly on your tax return.

If you received an overpayment of any COVID benefits, you can deduct the overpayment in the year in which the benefit amount was received rather than the year in which the repayment was made. For the CWLB, the repayments should be reflected on the T4A slip.

The amount of CWLB received for the year will be shown in box 211 of the T4A slip, and the amount of CRB received will be shown in box 202.