CRB benefits you were not entitled to?

The Social Benefits worksheet calculates a repayment of CRB, if applicable. I don’t understand:

  1. How would we know if the client received benefits they were “not entitled to”?
  2. Why is it that if we enter an amount in that line 25, they DON’T have to pay anything back???

I would think this has to do with people who are required to make a direct repayment of the CRB benefit because it was determined they were not entitled to have received the benefit, but by the end of 2021 had not been able to repay the full amount.

In the case of your client who received 10,000; If his net income was lets say 60,000 he would end up repaying the full 10,000 as a social benefit repayment on his 2021 T1 return. However, the government of Canada would still be expecting a direct repayment of the 10,000 because they determined he was not entitled to receive it. Without Box 25 on Chart 3 of the CRB Worksheet your client would end up repaying 10,000 on his T1 return and another 10,000 directly to the payor. Unfortunately, the Government of Canada would still issue the T4A with the payment in box 202 regardless of whether the recipient was actually entitled to it.

To add in another complication… not necessarily related to your question …

If the client made his repayment in 2021 he may be able to allocate that repayment back to his 2020 T1 or claim it on his 2021 T1 return. If the client makes a CRB repayment during 2022 he can claim the deduction on his 2022 T1 or allocate the payment back to his 2021 T1 return.

In any event, if he makes these repayments after 2021, but has already been forced to repay the amount on his 2021 T1 return he could end up paying double of what he actually received if it wasn’t for that adjustment on line 25 of the worksheet. I don’t believe that a social benefit repayment of the CRB on your T1 return extinguishes your responsibility for making a direct payment back to the issuer.

Clear as mud?

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Yeah, that’s what I’m guessing, too, but how would you know if they repaid it or not? The client could tell you they did, and you enter the amount on line 25, which reduces their balance owing (or increases their refund). But, if the client lied, or was confused about it, and didn’t actually repay anything, the tax preparer might be responsible for manually entering that false information.

So, before I do something that I might get in trouble for, I would like to verify it somehow. I haven’t seen these repayments show up on any client’s CRA account, but maybe the ones I checked were all individuals who didn’t HAVE to repay?

I’m not sure if the debt would show up anywhere in Represent a Client or AFR (ie CDE screen in TaxCycle), but presumably if the client is/was required to repay CRB benefits they would have some type of paperwork or invoice for the purported over payment.

One would think that if they repaid the CRB during 2021 it would be on the T4A (Box 201). If the amount the T4A shows for a repayment is zero or less than the amount of the invoice then that might suffice to establish the amount that was included in the T4A to which the client was not entitled? Just thinking out loud I guess.