COVID-19 – Canadian Tax and Business News, release #18
Our COVID-19 Canadian Tax and Business News updates are our way of informing our clients, friends and business associates with recent information that may help businesses and individuals while coping with the outcomes from the COVID-19 pandemic.
Our goal is to monitor the news and release relevant information as it becomes available.
“When the well is dry, we know the worth of water.”
The summary below is based on our understanding and interpretation of the announcements made by the government. The information below is in summary form and subject to change until the proposals are passed as legislation. Contact one of our professionals to discuss these matters in the context of your situation before acting upon such information.
CERB and EI Enhancements
On August 20, 2020, newly appointed Finance Minister and Deputy Prime Minister, Chrystia Freeland, announced the expansion of the CERB by an additional four weeks up to September 26, 2020 providing an extra month of support to eligible Canadians. She also announced several enhancements to the traditional EI program as well as introduced new EI benefits as an expansion of the CERB through the EI program. The enhancement and expansion of the EI program comes into place on September 27, 2020 which is in line with the expiration of the CERB program. Note these programs are proposed at this time and have not been passed as law. Prime Minister Trudeau has prorogued parliament until September 23, 2020 where it is expected the proposed changes will get the required parliamentary approval.
Enhancements to the EI program
- Insurable Hours Reduced – The minimum required insurable hours to qualify for EI benefits has been drastically reduced in response to the impact the pandemic has had on Canadians ability to work and accumulate insurable hours. As part of the EI enhancements, individuals will now only require 120 insurable hours to access EI benefits. This reduction is retroactive to March 15, 2020 which is beneficial for individuals that attempted to transition to certain EI programs from CERB early, but they did not accumulate enough insurable hours under the traditional model to apply. This reduction will only be available for new EI claims for one year.
- Increase in minimum weeks – Traditionally, an individual can access EI benefits from a range of 14 to 45 weeks. In response to the pandemic, the minimum entitlement has been set to 26 weeks of regular benefits. If an applicant is eligible for a longer period of benefits, the higher number will be used.
- Increase in minimum benefits – New claimants will receive a minimum benefit rate of $400 per week or $240 per week for extended parental benefits. This minimum benefit rate will only apply to individuals whose benefits would otherwise be less than the minimum threshold.
Expansions to the EI program
The Government is introducing three new benefit programs that will be in place for one year to help individuals who do not traditionally qualify for EI but have been adversely impacted by the pandemic. The three new programs are highlighted below and are viewed as extensions to the CERB via the EI expansion.
Canada Recovery Benefit (CRB)
The new CRB will provide a taxable benefit of $400 per week for up to 26 weeks to individuals who are not eligible for traditional EI benefits. Eligibility criteria is similar to the CERB and is detailed below:
- 15 years of age with a valid SIN;
- Earned employment and/or self-employment income of at least $5,000 in 2019 or in 2020;
- Did not quit their job voluntarily;
- Stopped working due to COVID-19 and are available and looking for work; and
- If working, must have had a reduction in their employment/self-employment income. As of the publication date of this article, there was no mention of a specific reduction threshold. We expect the government to clarify this in the coming weeks.
Under this program, workers would have to apply after every two-week period they are looking for income support and attest that they meet the qualifications. If an individual’s annual net income, excluding the CRB, is over $38,000, there is a claw back of $0.50 per each dollar earned over the $38,000 threshold. As a result, individuals with net income greater than $46,000 would not be entitled to the CRB as it would have to be fully repaid. Although the CRB is excluded in determining annual net income, other COVID-19 support benefits, such as CERB, are included when determining net income.
Canada Recovery Sickness Benefit (CRSB)
The new CRSB will provide a taxable benefit of $500 per week for up to two-weeks for individuals unable to work because they are sick or have to self-isolate due to COVID-19. The CRSB is also only available for one year from September 27, 2020. There is no requirement to provide a medical certificate to support a claim. However, an individual must miss a minimum of 60% of their scheduled work week to qualify. Similar to the CRB, individuals applying for the CRSB must attest that they meet the requirements when applying. Individuals can apply after the one-week period they are seeking support. Eligibility criteria for the CRSB:
- Residents in Canada who are at least 15 years of age with a valid SIN;
- Work as an employed or self-employed individual at the time of the application;
- Missed a minimum of 60% of their scheduled work week for which the benefit is being claimed;
- Earned at least $5,000 in 2019 or 2020; and
- Must not be in receipt of paid leave from an employer or other sick leave benefits.
Canada Recovery Caregiving Benefit (CRCB)
Similar to the CRSB, the CRCB will provide a taxable benefit of $500 per week for up to 26 weeks per household to eligible Canadians. The CRCB is available for one year and looks to support individuals unable to work in order to care for children or a disabled dependent because schools, daycares or care facilities are closed due to COVID-19. Two individuals in the same household cannot receive the CRBC for the same period. Eligibility criteria for the CRCB is detailed below:
- Residents in Canada with a valid SIN who are at least 15 years of age on the first day of the period they apply for a benefit;
- Work as an employed or self-employed individual the day before the period they are applying for;
- Earned at least $5,000 in 2019 or 2020;
- Must not be in receipt of workers’ compensation benefits, short-term disability benefits, EI benefits (including the newly introduced programs), CERB or paid leave from an employer for the same week; and
- Unable to work a minimum of 60% of their normally scheduled work week because of one of the following:
- The individual must care for a child under 12 because their school or day care is closed due to COVID-19 or their normal caregiver is not available for reasons related to COVID-19; or
- The individual must provide care to a family member with a disability or a dependent because their day program or care facility is closed due to COVID-19, or their normal caregiver is not available for reasons related to COVID-19.
It should be noted that if a child is unable to attend an open school or daycare or if a family member with a disability is unable to attend their day program or care facility based on advice of a medical professional because they are at high risk if they contract COVID-19, the CRCB would still be available.
Individuals who are already receiving CERB through Service Canada and max out their CERB entitlement will be transitioned to the EI program if they are eligible and need income support. In some cases, these individuals may have to reapply for EI after their CERB entitlement has been exhausted.
Individuals who applied for CERB through the Canada Revenue Agency (CRA) will need to apply for EI through Service Canada. Further details on the application process are expected over the coming weeks.
As we all try to stay safe, we need to remind ourselves business will get back to normal but in the meantime lets all do our part to get to normal as soon as we can. If you have any questions or require further information, don’t hesitate to reach out to us.