If you're on CERB, here's everything you need to know before using it all. #PersonalFinance with Elaine Smith.
Financial planners suggest putting 15 to 20 per cent of CERB in a separate savings account to avoid any surprises when filing returns next year.
CERB funds are taxable, something that many recipients seem to ignore. But come tax time, the federal government will issue recipients T-4A slips for the CERB funds they were paid so they can add it to their other income.
“The trick with CERB is that there is no withholding,” said Mark Kowalski, a chartered professional accountant (CPA) in private practice in Ottawa. Depending on your income level, “You need to set aside at the minimum 20 per cent,” he said.
“If you’re not able to eat or pay rent, you may not be able to set 20 per cent of the CERB aside,” Tatem said. “In that case, you’ll need to have a plan for paying your taxes.”
Whether or not people have taken his advice and set CERB money aside for taxes, Kowalski urges everyone to file their returns on time next year.