The government introduced a number of measures in 2020 to assist individuals who have been affected by COVID-19. We’ve put the main ones together with some year-end considerations to take into mind if you’ve received any of these benefits this year:
Canada Emergency Response Benefit (CERB)
If you lost your job, were working reduced hours due to the COVID-19 pandemic, or were sick, quarantined or forced to stay home to care for children or other relatives in 2020, the CERB provided income support of $500 per week (or $2,000 per four-week eligibility period) for up to 28 weeks, with a maximum claim of $14,000.
Canada Recovery Benefit (CRB)
If you are not eligible for EI, perhaps because you are self-employed, you may qualify for the CRB, which began on Sept. 27, 2020, and runs until Sept. 25, 2021. You can receive a taxable benefit amount of $500 per week, for up to 26 weeks. You are required to apply after every two-week period for which you need support, and the deadline for applying for any two-week period is 60 days after the end of that period.
Unlike CERB, the government will be withholding 10% in taxes on any CRB payments, however, this may be insufficient to cover your tax liability on the CRB, which will be taxable at your 2020 marginal tax rates. In addition, if your total income (excluding the CRB) was over $38,000 in 2020, you may be required to pay back the CRB at a rate of $0.50 for each dollar of CRB received for income over this amount.
With the end of the year fast approaching, it’s a good idea to estimate any additional tax you may owe on the CRB and plan for potential repayment of the CRB if you estimate that your 2020 income could be over $38,000 this year.
Canada Recovery Sickness Benefit (CRSB)
If you are (self-)employed and don’t have a paid sick-leave program, the CRSB may provide a $500 per week taxable benefit, for up to two weeks, if you cannot work either because you are ill or because you must self-isolate due to COVID-19, or you are more susceptible to COVID-19.
Like the CRB, the amount is taxable and is subject to a 10% withholding tax, so you may end up owing some extra tax on the CRSB for 2020 come next spring.
Canada Recovery Caregiving Benefit (CRCB)
The CRCB provides a $500 per week taxable benefit, for up to 26 weeks, if you miss work to care for a family member in certain circumstances due to COVID-19. This benefit is also available from Sept. 27, 2020, to Sept. 25, 2021.
As with the CRB and the CRSB, the CRCB is taxable and subject to the 10% withholding tax, which may be insufficient to cover taxes owing on the benefit you receive. Accordingly, if you receive the CRCB, you may want to set aside some funds at year-end to cover any additional tax that could be owing next April.
Canada Emergency Student Benefit (CESB)
The CESB is taxable which means you will need to report any amounts you received from the CESB on next year’s income tax return.
You will receive a T4A tax slip for the amount of CESB you receive. The tax slip will also be available in your CRA My Account for the 2020 tax year.
Note that if you repay the CESB before December 31, 2020, the CRA won’t include the amount you’ve repaid on your T4A slip.
One-time Benefit to Persons with Disabilities
A one-time, non-taxable payment of up to $600 is available to eligible individuals with disabilities, in recognition of the extraordinary expenses incurred by these individuals during the COVID-19 pandemic.
If you have yet to apply for the DTC to be eligible for the one-time payment, make sure to submit your application by the newly extended deadline of Dec. 31, 2020. To get your payment, it’s also important to ensure the government has your current personal information, including your marital status, direct deposit details and correct mailing address.
If the CRA was able to confirm your eligibility for the payment by Sept. 30, you should automatically receive the payment on Oct. 30; otherwise, your payment may be delayed until January 2021 (if you are approved by Nov. 30) or spring 2021 (if you are confirmed to be eligible by the end of Feb. 2021).
CPP Contribution Limits
The CRA has announced the CPP contribution limits for the upcoming year. The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2021 will increase to $61,600 (from $58,700). In addition, the employee and employer contribution rates for 2021 are set to rise to 5.45% (up from 5.25%) and the self-employed contribution rate will increase to 10.9% (from 10.5%).
Pension Contribution Limits
The CRA has announced the 2021 contribution limits for Money Purchase Registered Pension Plans (RPP), Registered Retirement Savings Plans (RRSP) and Deferred Profit Sharing Plans (DPSP).
The contribution limits for 2020 and 2021 are as follows:
| 2020 | 2021 | |
| Money Purchased Registered Pension Plans | ||
| Contribution Limit | $27,830 | $29,210 |
| Pensionable Earnings | $154,611 | $162,278 |
| Registered Retirement Savings Plan | ||
| Contribution Limits | $27,230 | $27,830 |
| Previous Years Earned Income | $151,278 | $154,611 |
| Deferred Profit-Sharing Plans | ||
| Contribution Limits | $13,915 | $14,605 |
| Pensionable Earnings | $77,306 | $81,139 |
CRA Prescribed Income Tax Interest Rates
There will be no changes to the CRA prescribed income tax interest rates for taxable benefits, overpaid taxes and underpaid taxes in the first quarter of 2021 (January 1, 2021 – March 31, 2021).