Prologue – The Only Certainties Are Death And Taxes
But are these payments taxable and if so by whom? "U.S. persons living in Canada could benefit from #COVID19 aid from both Canada and the USA" /via @globeandmail https://t.co/UVHB8N65Ok
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) September 21, 2020
The above tweet references an article in the Globe and Mail on May 7, 2020. The article contains interesting perspectives, but much has changed since that time.
COVID-19 and the role of government assistance
Both the US $1200 payments under the CARES Act and Canada’s CERB payments were designed to fulfill the same purpose. Specifically, that purpose was to get relief money into the hands of individuals who were suffering from the the COVID-19 pandemic. It appears that payments were made generously with few qualifications for receipt of payments. The qualification appears to have been that an individual was a tax resident of the country. The $1200 CARES Act payment and the CERB payment were to fulfill the same function. Therefore, it would seem logical that both the CERB and CARES Act payment should be taxable in each country or neither payment should be taxable in the country. But, different characterizations of the payments appear to lead to different results.
First let’s review what we do know.