The ministry said T4as were issued as income tax returns and not necessarily as statements of money owed. Similar to the T4 statements that employers provide to employees before tax season, the T4a statement details the taxable income that a person received directly from the federal government in the form of a COVID-19 benefit. Residents of Quebec will receive T4a and RL-1 slips. The T4a forms show how much money a person received from one or more of the following benefits: the Canada Emergency Response Benefit (CERB), the Canada Student Emergency Benefit (PECE), the Allowance Canadian Recovery Care Benefit (CEP), Canadian Recovery Sickness Benefit (CRSB) and Canadian Recovery Care Benefit (CRCB).
Those who received money under one of the benefit programs should enter the total amount they received last year on line 13000 of their 2020 income tax and benefit return. people registered in My Account and filing with NETFILE certified software, this information will be automatically entered in income tax returns.
The CRA says that while the tax was withheld at source for CRB, CRSB and CRCB, it was not collected for CERB or CESB. After all other sources of income, deductions, and credits have been calculated, some people may find they owe money when they file their returns, whether or not the taxes were withheld at source.
“It’s going to be difficult for people and it will be complex or complicated for the system,” Employment Minister Carla Qualtrough told CBC News last month.
“While people are filing their taxes, [we] are going to have to find out what they have been… what they owe taxes on, what has already been taken away from them. If you were claiming both CERB and CRB, we took the taxes out of the CRB, but we didn’t do that for the CERB – it’s incredibly complicated, ”she said.
Concerned about Canadians financially stressed by the pandemic, the CRA says it has expanded the means by which people can pay back amounts owed and urges taxpayers to contact the agency to see what options work best for them.
CRA and CERB
The CRA has already sent out 441,000 letters warning people who have received CERB that they may not be eligible for the benefits they have received so far. The letters called on beneficiaries who did not meet income requirements to repay the money by the end of 2020 so that it did not negatively affect their tax returns.
Described as “education letters” by a spokesperson for the CRA, the letters were sent to those for whom the agency said it was “unable to confirm … employment income and / or self-employment of at least $ 5,000 in 2019, or within 12 months prior to their application date “- one of the key criteria of the CERB program.
In recent weeks, many Canadians have reported receiving such letters and are now worried about having to repay thousands of dollars in benefits.
Many of those affected argued that the federal government was never clear on how the $ 5,000 amount would be calculated. Some point to the CERB app, which asks if the person has received “a minimum of $ 5,000 (before taxes) in the past 12 months, or in 2019 …” but makes no explicit mention of expense deductions.
The federal government admitted last month that it had provided unclear instructions to self-employed Canadians on how to apply for CERB. The CRA has said there will be no penalties or interest in cases where CERB needs to be repaid, but stopped before saying the payments would be waived.