Canada

CRA says it will determine if artistic grant money counts as income for CERB case by case

The Canada Revenue Agency (CRA) is looking to clear up confusion over whether artistic grant money counts as income for the purposes of qualifying for emergency coronavirus relief benefits.

Reports this week suggested the CRA backtracked on its original guidance to artists that grants don’t count as income for the purposes of qualifying for the Canada Emergency Response Benefit (CERB) threshold, which is $5,000 net income in 2019 or in the 12 months prior to the application.

But the CRA told Global News it depends on the individual case.

“Artists and writers may receive a grant in the course of their business or employment, depending on the artist’s situation, that is considered employment or self-employment income (business income) for tax and benefit purposes,” CRA spokesperson Pamela Tourigny said in an email.

Canada’s tax agency says grant money would qualify as income for the purposes of relief benefits if the recipient is paying themselves to undertake a project. In terms of timing, grant income is considered earned at the time the work is performed.

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The CRA added that qualifying income from artist grants – for the purpose of CERB eligibility – is based on the amount of the grant minus the expenses the recipient has paid or will be paying to other people and businesses for work on the project.

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To illustrate this, Tourigny used an example of an artist who received a grant of $10,000 and started a project in June that will run until October. In the example, the artist expects to pay other people and businesses $6,000 in order to complete the project, and budgets $4,000 to pay his or herself a fee.

Read more: Received CERB payments? Watch your mailbox for T4A tax slips from the CRA

The grant income for this project would be considered $4,000. If the artist performed grant-related work in each of the five months, the monthly grant income for this project would be $800 per month – or $4,000 over five months.

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“In certain circumstances, where it is determined that the amount an artist or writer has received is neither business income nor employment income, the amount may be characterized as something else for income tax purposes,” Tourigny said.

“The key point is that these grants may qualify, but it depends on the artist’s unique situation. We are working on verifying CERB and CRB [Canada Recovery Benefit] applications on a case-by-case basis.”

The CRA added this doesn’t alter its position on the eligibility for artistic grants.

Read more: CERB repayment: What are your options if you can’t afford it?

This isn’t the first time there’s been confusion over income eligibility for COVID-19 emergency benefits.
Last month, the CRA asked some self-employed Canadians to repay CERB money for recipients that weren’t deemed as eligible.

According to the CRA, for self-employed Canadians, the qualifying income had to be net pre-tax income, whereas some self-employed Canadians had applied to the CERB based on their gross income.

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Employment Minister Carla Qualtrough told multiple media outlets earlier this month the repayments would not be forgiven as a result of the confusion.

–With files from Global News’ Rachel Gilmore 

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