If you suffered financial hardship as a result of the measures taken during the pandemic, you may have applied for one of the many benefits provided by the Canadian government, including the Canada Emergency Response Benefit (CERB).
These benefits were provided by the Canada Revenue Agency (CRA) between 2020 and 2022 to serve as temporary income support to Canadians who needed it. However, the government soon discovered that many CERB benefit recipients were not actually eligible for these payments. As such, the government is taking steps to demand repayment of CERB payments from those who have now been deemed ineligible.
Have you discovered that the CERB payments you received must now be repaid to the government? If so, how do you make these payments? And what happens if you fail to repay your debt?
How Do You Know If You Have To Repay CERB?
CERB payments do not have to be repaid if you were eligible to receive them. However, you may have to repay CERB if you didn’t meet the program qualifications or received the payment in error.
For instance, you may have received CERB payments from both Employment Insurance (EI) and the CRA for the same payment period. Or you may have earned a higher income during the CERB eligibility payment that would make you ineligible for the program.
Similarly, if you received a letter from the CRA, regarding your income eligibility, you may have to repay your CERB payments.
If either of these scenarios applies, you will be expected to pay back the CERB payments you received in full. That includes funds from each 4-week CERB payment period that you received payments.
If you knowingly made fraudulent claims to receive CERB payments, you could face repercussions.
Who Do You Make Your CERB Repayment To?
The organization you make your CERB repayments to depends on who you applied with.
If you received your CERB benefits from the CRA, you will be required to repay the CRA. On the other hand, if you received CERB payments from Service Canada, you must repay Employment and Social Development Canada (ESDC).
It’s important to understand that you only need to pay back one organization, not both. Do not repay the CRA if you received your payments from Service Canada, or vice versa.
How To Make A CERB Repayment
There are several channels to choose from to make your repayments. Your specific options depend on who you’re making your CERB repayments to.
To The CRA
You can make your repayments to the CRA in one of three ways:
- Online. Payments can be made via CRA My Account, CRA My Payment, or online through your financial institution.
- Mail. Send a cheque or money order to the following address:
| Revenue Processing – Repayment of CERB Sudbury Tax Centre 1050 Notre Dame Avenue Sudbury, Ontario P3A 0C3 |
- In person. Visit a Canada Post location and make your payment in cash or with your debit card.
To Service Canada
You can make your repayments to Service Canada in the following ways:
- Online banking. Make your repayments through your financial institution’s online banking portal. Start by choosing “Employment and Social Development Canada,” then enter your Social Insurance Number (SIN) to create your client ID. Then, transfer your payment to ESDC.
- Mail. Send a cheque or money order to the following address:
| ESDC Remittances P.O. Box 1122 Matane, Quebec G4W 4S7 |
How Will The CERB Repayment Affect Your Taxes?
All CERB payments were taxable. You probably already paid taxes on these benefits when you filed your income taxes.
If so, you can claim a tax deduction once you pay back your CERB benefits. That way, you won’t pay taxes on benefit amounts you repaid.
When and how you can claim a deduction depends on when the repayment is made:
- Repayments made in 2021: You may claim the deduction on your 2020 or 2021 tax return, or split the deduction between your tax returns.
- Repayments made in 2022: You may claim the deduction on your 2020, 2021, or 2022 tax return, or split the deduction between your tax returns.
Note: Repayments made after December 31, 2022: You may only claim a deduction in the year the repayment is made.
What If You Can’t Afford To Repay Your CERB?
If you don’t have enough money to cover the CERB benefit amounts you’re required to repay, you may be able to arrange a payment agreement with the CRA. This will allow you to pay back your debt over multiple installments over a period of time.
To set up this arrangement, follow these steps:
- Calculate your monthly income and expenses.
- Contact the CRA to set up a payment arrangement.
- Start making payments on the scheduled dates.
If you can’t make any payments due to financial hardship, reach out to the CRA. You may be able to put off making CERB repayments until your financial situation changes.
Can You Use A Loan If You Can’t Make Your CERB Repayment?
Yes, you can use the funds from a personal loan to pay off your CERB debt. That way, you’ll be completely free from your government debt without having to come up with the whole amount up front. Instead, you’ll be left with much smaller payments that you can spread over a longer period until your loan is repaid in full.
Keep in mind that you will be charged interest on the amount you borrow on a personal loan. The rate you pay will be based on your financial and credit health. The higher your credit score, the lower your interest rate will likely be.
You can check your credit score for free by using Loan’s Canada’s CompareHub.
File For Insolvency
For some Canadians, even an installment arrangement may not be enough to help, especially if they’re living paycheque to paycheque. In this case, the last resort may be to file for a consumer proposal or bankruptcy. This is an option if the CERB applications were made in error and were not done to fraudulently collect more.
A consumer proposal involves working with creditors to repay less than the principal owed, while bankruptcy involves surrendering much of your assets to a Licensed Insolvency Trustee to relieve your debts.
Tips On Making Your CERB Repayments
If you have found yourself having to repay part or all of your CERB payments, here are a few tips to consider:
- File your taxes early. Get on top of your taxes and consider filing them early to give yourself enough time to pay back the amount owed and to look into all repayment options available to you.
- Speak with a financial advisor or tax professional. Get in touch with a tax accountant or lawyer to find out if any adjustments are possible to your 2019 tax return.
- Repay CERB early. The sooner you repay your CERB overpayment, the better. This may help to avoid any tax implications.
- Come up with a workable budget. Review your budget in detail to see how to fit in your CERB repayments with all your other financial obligations.
Final Thoughts On The CERB Repayment
If you received a letter from the CRA informing you that you were ineligible for CERB payments, you’ll need to pay back what was given to you in error. It’s important to make these payments in a timely fashion to avoid any repercussions. If you are struggling to come up with the money to repay your debt, you can either reach out to the CRA to set up an alternative arrangement or consider taking out a personal loan to repay your CERB benefits.
