Some Self Employed CERB Recipients  May Need To Repay Benefits

A lot of self-employed people who received CERB benefits were not qualified and will have to pay back the up to $14,000 in benefits that they received.

The confusion lies in whether the business income qualification is gross or net income.  Taxes and terminology are confusing at best.

It is very clear that the communications by CRA were unclear. However if you look more closely at things, and if you have some CRA/Taxation experience, you will see the writing is on the wall… or “The Devil is in the Details.” If you did not net more than $5,000 in taxable income, you are not qualified for the CERB benefits.

Note –  CRA specified the following:  “The criteria stated that a claimant must have earned a minimum of $5,000 pre-tax in the 12 months before applying, or in 2019 overall.”

The key word here is “pretax” which is saying that tax is only paid on net income. It is illogical to think the amount would be gross income. If we paid tax on gross income, it would put most small businesses out of business, because they would owe more tax than their net income.

CERB was to help people who experienced a cut in income, not a cut in losses, so the only way it makes sense is that the criteria would be based on net taxable income.

If a person only earned $5,000 in the previous year, getting $14,000 would mean that because of CERB they would have more money to spend than before CERB.

CRA sees the payments to those who were not qualified as an honest mistake, so they are not asking for penalties or interest.

CRA wants the money back in the year 2020. Failing to pay it back within the next month means that CRA will issue a T-Slip and it will trigger a tax liability for the money. That will complicate matters. Therefore, it is best to pay it back before Dec. 31, 2020.

In terms of fighting to keep the money, I see it as a hopeless cause.

Share this post