Repaying COVID-19 benefits & 2022 personal taxes
Updated: Jan 6
It may not be too early to think about your 2022 personal income tax... if you repaid COVID -19 benefits you will want to read on...
As announced in Budget 2021, individuals who received certain federal COVID-19 benefits in 2020 or 2021 and make repayments before January 1, 2023, can request to claim a deduction for all or part of the repayment on their income tax and benefit return for the year they received the benefit, the return for the year they repaid the benefit or split the deduction between the two returns.
The COVID-19 benefits that apply are listed below:
Canada Emergency Response Benefit (CERB) from CRA or Service Canada
Canada Emergency Student Benefit (CESB)
Canada Recovery Benefit (CRB)
Canada Recovery Sickness Benefit (CRSB)
Canada Recovery Caregiving Benefit (CRCB)
A new form, T1B, Request to Deduct Federal COVID-19 Benefits Repayment in a Prior Year, will be available for the 2022 tax year to allow an individual to claim a deduction for the overpayment of federal COVID-19 benefits received in 2020 or 2021 that was repaid in 2022.
Service Canada will send the taxpayer a letter showing the amount of CERB they repaid. T4A and T4E slips will be sent to individuals and available in My Account by the end of February 2023.
You can complete Form T1B and submit it with your 2022 return. The form will allow you to choose which tax year(s) you would like to apply the deduction to. We recommend that you discuss with your Accountant what year to apply the repayments. Note that your return(s) for those prior years (2020 and-or 2021) will then be automatically reassessed to apply the deduction as part of your clients’ filing of their 2022 personal tax return. As a result, separate requests to change prior year returns will not be required. Awesome right?
🍃Tip: If you have repaid federal COVID-19 benefits before January 1st, 2023, inform your Accountant of the option to use Form T1B to have the deduction automatically applied to a prior tax year(s). This way she can ensure that the corresponding adjustments are included as part of her services when preparing your 2022 income tax return.
Claiming a deduction for repayments of federal COVID-19 benefits on your personal tax return(s) will reduce your net income and may impact other benefits, such as the Canada child benefit and the goods and services tax/harmonized sales tax (GSTHST) credit.