CRA has announced new COVID relief measures for individuals filing their 2020 tax returns. As part of their scheme to reduce the financial burden on individuals who need it most, CRA has announced interest relief for those who meet the eligibility criteria.
A lot of individuals who received CERB/CRB or other COVID-19 relief payments will unfortunately owe taxes to CRA when filing their 2020 tax returns. Because CERB payments are considered as taxable income, and had zero income tax deducted at source, it means that most will owe tax balances on those payments received.
What are the criteria to qualify for interest relief on tax balances owing?
- You must have a 2020 balance owing to CRA
- Your 2020 total income must be $75,000 or below
- You must have received a COVID-19 benefit payment (CERB, CESB, CRB, CRCB, CRSB) during 2020
- You must have filed your 2020 tax return
The majority of tax payers who received a COVID-19 benefit will meet the above criteria.
What does the interest relief mean?
If you have a tax balance owing to CRA from your 2020 tax return and meet the above criteria, you will not be charged interest on that balance owing until after April 30, 2022. This provides individuals with tax balances owing an additional 12 months to settle their tax balance owing with CRA.
Late filing penalties
Please note, there is still the 5% late filing penalty for those with tax balances owing who fail to file their 2020 tax return before the end of April 30, 2021. This penalty means all individuals who file their taxes late, and have a tax balance owing will be hit with an additional 5% on top of their balance owing. An additional 1% penalty is added for each month the tax return is filed late, up to a maximum of 12 months (12%).
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