Which Government Benefits do I Need to Report on my 2020 Tax Return?

By Randall Orser | Covid-19

Filing their 2020 Tax returns is going to be different and more complicated for many Canadians this year due to the way that Covid-19 has affected their lives.   Fluctuations in employment income, subsidies and credits from the government and the shift to working from home mean that there are different types of income that have to be reported on tax returns for 2020.  The tax filing deadline for personal taxes is has reverted back to April 30th after the extension given last year.

The CRA expects and encourages the majority of Canadians will file their taxes electronically which will allow refunds to be processed quicker.  If you are signed up for direct deposit you could get your refund in as little as 8 days. In 2019 90% of Canadians filed their returns electronically.  

Government Benefits Received in 2020 that you must report on your return include:

  1. Any covid related government benefits you received in 2020, including the Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiving Benefit (CRCB) all of which are considered to be taxable income.  A T4A or a T4E will be sent to you with the information that you need for your tax return.  
  2. You need to be aware that depending on your total income for 2020 you may owe some tax on your Covid benefits, especially the CERB or CESB as no tax was withheld when the payments were issued.  For the CRB, CRSB, or CRCB 10% tax was withheld at source but this may not cover your tax bill for all your income in 2020.
  3. If your total income for 2020 was over $38,000 you may have to repay 50% of the CRB you received for every dollar in net income you earned above $38,000 to a maximum of the CRB received in the year.

Government Benefits in 2020 that are not taxable include a one time GST/HST payment, the one time OAS pension payment of $300, GIS payments ($200) and the one time payment to people with disabilities up to $600.  These amounts are all tax free and should not be reported on your return.

Reporting income from your side hustle

A recent survey from H & R Block found that 25% of gig economy workers joined the gig workforce in 2020 working for companies such as Door Dash and 51% of these people will be filing as self-employed for the first time. If you are filing yourself using a tax software it is important to make sure you are filling out the correct section on your return.

Working from home in 2020

If you worked from home in 2020 and were not reimbursed by your employer for expenses including those for a home office you may be able to claim on your 2020 return for these expenses.   There are two ways in which you can claim your expenses, the new "temporary flat-rate" and the "detailed method". You can use the flat rate method if you worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020.  You can claim $2 a day for each day you worked from home up to a maximum of $400.  The benefit of this method is that you do not have to produce receipts to prove your expenses and you do not have to allocate any expenses between employment and personal use, and you will not require a signed for T2200 from your employer.

If you choose the detailed method to claim your expenses you must have worked from home more than 50% of the time for a period of at least four consecutive weeks in 2020. Using this method you can deduct expenses including rent, electricity, home internet etc.  Your expenses have to be allocated on a reasonable basis by dividing your workspace into the total finished area of your home and calculating your expenses based on how much of a percentage of your home you are using as a workspace.  If you use your workspace for both personal and work then you also need to allocate your expenses based on the number of hours per week that you work.

If you have any doubts about how to complete your tax return for 2020 it might be to your advantage to have a professional prepare it.

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About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.