For most people the lifeline during an epidemic can turn into a nightmare for some tax time.
According to the Government of Canada, 27.56 million Canada Emergency Response Benefit (CERB) applications As of October 4, more than $ 81.64 billion had been paid to nearly 9 million applicants.
Tax experts with CH Financial Limited, A financial advisory group based in Calgary, told Global News that some Canadians may be surprised to learn that government financial assistance is taxable.
“All of this is fully taxable income and taxable,” said CEO Jeremy Clark.
Clark said depending on what employment and income people have during the year, they will have to face a hefty tax bill.
“CERB, the tax has not been stopped,” he added. “So you have two or three sources of income and not enough tax is withheld.”
“So there may be hundreds – or thousands of dollars to pay in taxes.”
This will definitely be considered when Calgary musician Michael Hope applies for CERB.
Hope is an assistant principal bassist Calgary Philharmonic. The unpacking began in mid-March this year as the Calgary Phil was preparing for a concert.
“Between rehearsals and concerts, we got an email that the concert was canceled, and that all concerts would be canceled for the future,” he said.
He applied for federal assistance a few months later.
“It would have been very difficult without it,” he said. “I made it, but just.”
Hope said he also received a lot of help from his employer and community supporters. Now that Small, virtual concerts are taking place He feels he does not need to apply for federal assistance again.
He was able to save some money coming in now so he wouldn’t be hit with a huge tax bill later, but not everyone knows.
“If you do not have the money and you need it to support your family and support you here and now, it’s not quite an option.”
How to avoid – or pay – a huge tax bill
Clark told Global News that it’s as difficult as it gets, that those who receive any kind of income assistance should put away a portion of that money. He suggests 15 to 20 percent, but does any amount.
“It’s always good to save some payment,” he said. “I know times are tough right now, certainly for a variety of reasons in Alberta, but I want to save a little – even 10 or five per cent – just on a rainy day fund, which I always think is good advice for people of any income level.”
For those who can’t keep up anyway, Clark said it’s not too late to start now.
The important thing is, do you pay what you can as soon as the bill arrives?
“Even if it’s two hundred bucks, I suggest you pay for it,” he said.
“And then the interest starts getting the rest of it. If you do not pay anything, you could go into a penalty situation.”
Clark said there is another thing to consider when it comes to taxes this year, and you can not claim from your work from home office expenses.
He hopes that these costs will also play a big role in your taxes, as millions of Canadians continue to work remotely.
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