DId you know your CERB money is taxable?

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Six million Canadians have applied for the Canada Emergency Response Benefit (CERB) amid the novel coronavirus pandemic.

The federal income support program provides $2,000 every four weeks for up to 16 weeks to Canadians who’ve been financially affected by the pandemic. Ottawa isn’t withholding any taxes at source on those benefits, meaning recipients are getting the full $2,000 for now.

But the money is “taxable” and many Canadians are wondering just how much they’ll have to eventually pay back.

The short answer is, that will depend in large part on how much income you’ll have for 2020 as a whole.

Taxable income is simply arrived at by adding up all different sources of income regardless of their source.

For example, suppose you made $27,000 from work in 2020 and received the maximum CERB amount of $8,000 for four months. Your taxable income for the year would be $35,000.

If you’re looking for a rule of thumb, I would suggest saving up 20 per cent of each CERB payment.