COVID-19 Canada Recovery Benefits & the Indian Act Tax Exemption

  • April 05, 2021
  • Jessica Alves, lawyer, Buset Law

In two recent tax rulings, the CRA stated its views regarding the tax treatment of COVID-19 recovery benefits received by First Nation individuals and the Canada Recovery Benefit repayment requirement for individuals exempt from taxation under section 87 of the Indian Act

Recovery benefits, including the COVID-19 recovery benefits provided under the Canada Recovery Benefits Act (CRBA), are included in income by virtue of subparagraph 56(1)(r)(iv) of the Income Tax Act (the “Act”), unless a specific exemption under another provision of the Act applies.

Under subsection 8(2) of the CRBA, an individual who receives Canada Recovery Benefits (CRB) is required to repay an amount equal to 50 cents for every dollar of net income earned over $38,000.00 in the calendar year (excluding CRB payments), up to the total amount of the CRB received by the individual in that year.