Government Benefits: an Update
In the past month there have been a few more announcement about new benefits and extensions to existing benefits. Here is a short overview of the various programs announced since March 2020.
On June 5, the federal government announced Canadians that are eligible for the Disability Tax Credit (DTC) as of June 1 will receive up to $600 tax free without applying. The payments are expected in July. It’s not clear if it will be by cheque using the mailing address on file with Canada Revenue Agency or if it will be direct deposit.
Also unknown is if you apply for the DTC after June 1, do you still get a back payment of the $600 benefit?
The Manitoba Disability Economic Support Program was announced late May and provides a one-time $200 benefit to lower-income Manitobans with disabilities receiving Employment and Income Assistance benefits. The payment were made by cheque in June. No need to apply.
Both the federal and provincial government have announced payments to be made to seniors, regardless of their income.
The Manitoba Seniors Economic Recovery Credit provides a $200 one-time, refundable tax credit to Manitoba seniors (65+). The cheques were mailed late May 2020. It was not be direct deposit (they do not have your banking information). They used your address on your 2018 personal income tax return. If you do not receive the cheque, you can claim the credit on your 2020 tax return next Spring.
The federal government announced additional benefits for seniors. Every senior (65+) who is receiving OAS (Old Age Security) will receive $300. This will be paid the week of July 6 by direct deposit if you have that on file. Seniors with lower incomes receiving the GIS (Guaranteed Income Supplement) will get an additional $200 for a total of $500. If both spouse are receiving GIS, they will each receive $500. These payments will not be reported on tax slips and you will not need to report these amounts on your 2020 tax return as income.
If you are a senior eligible for the DTC, you will receive a maximum of $600 (combination of the seniors benefit and the disability benefit).
Canada Child Benefit
All taxpayers receiving the Canada Child Benefit received an extra $300 per child added to their monthly benefit in May. This income is not taxable and is not reported as income on the tax return.
During the month of April all taxpayers eligible for GST credits based on the 2018 tax filing received a special one-time only GST credit. It was paid on April 9. The government even made GST payments to some taxpayers who did not receive the GST credit in the past year. It appears they “bumped up” the base amount so more taxpayers would qualify, so those with family incomes up to about $60,000 also received an unexpected GST credit.
The CERB (Canada Emergency Response Benefit) that pays $2,000 for a four week period has been fairly easy to apply for and to renew.
The CERB payments have been extended another eight weeks to a total of 24 weeks between March 15 and October 3 2020. And you can earn up to $1,000 of employment or self-employment income in the four week period.
Best to find the details on the CRA website; too detailed to explain here.
Remember it is taxable income, so depending on your other income, you may end up paying 26 to 46% tax on the benefit you receive.
And if you receive back pay from your employer for the same period, you will end up paying back some of the CERB (you cannot receive double the income for the same period). The government will ask employers for records of when employees worked. So employers, make sure you keep good records in 2020 for when we are asked about our employees.
If you are an employee that received double income, put some money aside so you can pay it back when you are asked. CRA will likely take back some refunds next spring if there is money owing.
If you do repay some or all of the CERB you received, keep a paper trail of your repayment. CRA may not have this information included on the tax slip that is issued next February. As tax professionals, we can include this as a deduction on your 2020 personal income tax, but we will need the paper work to prove it.
You can avoid any penalties for any over-paid CERB if you repay by December 30 2020.
The Canada Emergency Student Benefit is similar to CERB, but targeted to students who cannot find employment because of the pandemic. This benefit is available to those attending post-secondary school and those who graduated from secondary school in 2020 and are enrolled in post-secondary education for September 2020. The payment is $1250/month or $1750/month if you have dependants or you are disabled.
There have been so many program announcements since March it’s been difficult to keep up with them. If you are not sure if you qualify, I recommend checking out the CRA website. CRA has made it fairly easy to determine if you as an individual or you as a business qualify for a benefit.
And let’s review the tax deadlines.
CRA deadlines: June 1, June 15, June 30, September 1
June 1: the extended tax filing deadline (from April 30)
June 15: deadline for the self-employed (no changes)
June 30: deadline for businesses to pay amounts owing (like GST collected and normally due by June 15)
September 1: deadline to pay amounts owing for 2019 personal income taxes.
You can still file your taxes after June 1 and not be penalized or pay interest but only if you pay in full by September 1. If you do not pay in full, CRA will add penalty and interest to your amount owing.
If you receive GST credits, Canada Child Benefits, or Guaranteed Income Supplement, you are encouraged to file as soon as possible so these benefit payments are calculated accurately starting in July 2020. If you do not file now, the benefits will continue up to September, but CRA will use your 2018 income until they have your new 2019 tax info to re-calculate and adjust the benefits.
Bottom line: file your 2019 personal income taxes as soon as you can.
CRA is starting to ramp up their audit activity again; they had postponed it for a few months, but will be contacting taxpayers and representative again soon.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact us at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or info@SAtaxes.ca