This article originally appeared on the SimpleTax blog. SimpleTax has joined Wealthsimple to become Wealthsimple Tax. Now you can invest, trade, save, and do your taxes all in one place.
The Canada Emergency Response Benefit (CERB) was launched by the federal government to help Canadians who have lost their jobs because of COVID-19. It provides temporary income support of $500 per week for up to 28 weeks for workers who:
stopped working due to COVID-19 or
are eligible for Employment Insurance regular or sickness benefits or
have exhausted their Employment Insurance regular benefits or Employment Insurance fishing benefits between December 29, 2019 and October 3, 2020.
While these funds will be welcome relief for many, it's important to remember that the income is taxable and there are no deductions taken when you receive the money. This means that you will be taxed on the full amount when you file your 2020 tax return next year. To avoid nasty surprises next tax season, you should consider setting aside a portion of any CERB income, based on your federal and provincial tax rates.
You can also use our tax calculator to quickly estimate your federal and provincial taxes.
To learn more about eligibility and how to apply for CERB, visit the CRA’s website.Easy, fast, and even fun. Wealthsimple Tax is CRA-certified tax software that you’ll actually want to use. And you only pay what you want, no catch — get started.
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