Help Your Employees Understand CERB Income Tax Before, During, and After Application

Michael Pignatelli
Mar 11, 2022

Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.

The world has been going through many changes since the pandemic began. People's bustling lives in the city became limited work-from-home routines, while businesses faced unpredictable financial challenges.

When it comes to these changes, taxes are no exception. This crisis has prompted a lot of adjustments in the taxation system, particularly regarding income tax. For this reason, authorities like the CRA or IRS developed emergency benefits to help affected employees and workers.

One is the CERB income tax, an emergency benefit for Canadian employees. But as a business owner, what is your role in this program? Will you be overseeing or participating in the process at some point? Let's discuss how it works and help your employees understand what happens before, during, and after application.

How CERB Works Before, During, and After Application

As a business owner, it is important to be aware of the different types of taxes that you are liable to pay. It will help you and your employees understand your obligations and eligibility as taxpayers and keep your taxes in check.

The Canada Emergency Response Benefit (CERB) is an emergency beneficiary program aiming to support workers and employees who lost their occupations and income due to the COVID-19 pandemic. It provides eligible taxpayers with $2,000 per month and lasts for four months.

CERB Before Effectivity: Eligibility and Application

CERB is an emergency benefit, but it's not automatically and immediately provided without certain conditions and procedures. According to the CERB income tax act, you must be eligible for the following conditions and apply.

  • No application or receipt of benefits from CERB or EI within the same eligibility period
  • No voluntary resignation from your job
  • At least 15 years old and a Canadian resident
  • Earned a minimum of $5,000 (minus taxes) in 2019 or the last 12 months from employment, self-employment, or provincial benefits (maternity/parental leave-related)
  • Reduced work hours due to COVID-19
  • Loss of job due to COVID-19
  • Unable to work because of COVID-19 (e.g., taking care of someone)
  • Haven't earned more than $1,000 of income minus deductions for about 14 days in a row in 4 weeks
cerb income tax return - 5 people in a business meeting

Where the Employer Stands 

CERB is a program that aims to help employees and workers. As an employer, you are not obligated to interfere with the process (e.g., withholding or remitting the CERB tax). However, knowing is essential to make things clear.

For example, one or two employees might expect you to work their CERB application on their behalf, which is wrong. Instead, let them know that the beneficiary should handle and receive this payment directly. 

If your company is having financial issues, CERB can be a lifesaver. It's a relief to know that your employees have an extra source of income while you try to recover financially.

How to Apply for CERB

CERB applications are made online or by phone. You need to sign in to your CRA account for online applications, go to the CERB page, and select and confirm the necessary details. These include the period of application, declaration of eligibility, and payment information.

Meanwhile, automated phone service needs your social insurance number and postal code for an application. Call the CERB landline (1-800-959-2019) and comply with the instructions, similar to the online procedure.

Then, the CRA will look into your submitted application and verify your eligibility. If eligible, they'll ask you to contact them for validation.

What to Do When Application Is Denied

If the CRA denies your application, you may still ask for an explanation and submit a new one. Send a second review request via your CRA online account, fax, or mail. Include your reasons for disagreeing and any relevant files and information in the request.

If they reject it again and you still disagree, consider applying to the Federal Court for a judicial review. You should file it within 30 days of receiving CRA's response to your request.

CERB After Application: How It Works

As mentioned, you'll receive $2,000 per month ($500 weekly) into your bank account a month after application and will last for up to four months.

After CERB Period: How It Affects Your Taxes

So what happens after CERB takes place? One important thing to know is that CERB income is taxable. This means that the CERB income tax amount you receive is included when you file your 2019 tax return. How much tax to pay depends on the income you've earned.

You can file your CERB income tax return in two ways: with the CRA or with Service Canada.

If you file taxes via CRA:

  • They will provide a T4A slip (and an RL-1 slip if you're a Quebec resident) at tax time to record and confirm the CERB benefits you received. The slip is also accessible in your CRA account.
  • They will verify your tax slip(s) to ensure the accuracy of the amounts before including them in your personal tax income return.

If you file taxes via Service Canada:

  • You'll receive a T4E slip (and a T4E(Q) slip if you're a Quebec resident) at tax time or access it through your My Service Canada online account.
  • Service Canada will check and verify your tax slips for accuracy before filing and reporting your tax return.
cerb income tax amount - canadian personal income tax page on laptop 

When Is the CERB Program Available?

The CERB program was available from March 15 until December 31, 2020. Then, it was extended to a few weeks and closed on October 23, 2021. As of now, there are no announcements for a comeback; additionally, there were concrete plans for transitioning from CERB to Employment Insurance (IE) until 2022.

Unloop's Accounting Services: Take Care of Your Taxes With Accurate Financial Management

CERB income taxes are one of Canada's quick response programs to help employed and self-employed individuals deal with COVID-19-related financial concerns. So if you're a business owner who's financially affected by the pandemic, rest easy because there's a backup income for your employees when you can't provide them with everything.

On the other hand, this is also a reminder to improve your financial management. Before another crisis comes, ensure to keep your finances intact. Here at Unloop, we provide accurate and up-to-date financial records.
With our bookkeeping package, you will access the best accounting tools to accomplish your accounting goals. We also work with partner CPAs to help you file tax returns and ensure accuracy. Contact us today for an in-depth discussion.

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New York, NY 10003
United States
7676 Woodbine Ave #2
Markham, ON L3R 2N2
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