After providing millions of Canadians with financial relief since the beginning of this pandemic, the Canadian Emergency Response Benefit (CERB) payments have come to an end.
As a second wave of the pandemic is upon us, Canadians still collecting CERB and remain without employment will be forced to transition to a recently updated Employment Insurance (EI) program or apply for three additional temporary pandemic benefits.
Those who have collected CERB through Service Canada and are eligible for EI will be automatically transferred to this new EI program. Those who have been applying for CERB through the Canada Revenue Agency (CRA) My Account, will have to apply for EI which will now all be administered by Service Canada.
One of the biggest differences between CERB and the new EI is that claimants will be required to self-report on their employment status and apply every two weeks to continue to receive benefits. This EI will be available to regular claimants as well as special claimants.
What makes this new transitioned EI different?
Claimants applying for regular benefits will apply to individuals who involuntarily lost their jobs and are actively looking for work while claimants applying for special benefits are for those who have been unable to work due to the special life circumstances such as sickness, maternity/parental leave and compassion leave.
In both cases, Canadians with 120 insurable hours – which works out to roughly 3.5 weeks of work in the last 52 weeks can apply for and receive the taxable EI benefit at a rate of $500/ week, for up to 26 weeks. This is in comparison to the 420 to 700 hours usually required. To meet the minimum hours to qualify for transitioned EI, claimants will receive 300-hour credits for regular benefits (to add to the 120 hours to meet eligibility) and 480 hours for special benefits. These insurable hours are available to EI claims made within the next year.
For those who do not qualify for EI, 3 new temporary benefits may apply to you. The CRA guesstimates this situation will apply to roughly 1 million Canadians.
The Canada Recovery Benefit (CRB) began September 27th. This is designed for workers who are self employed and are not “employees” and find themselves in need of support and ineligible for EI. It will provide $500 a week for up to 26 weeks. Similarly, to CERB, it is taxable, and you must have been unable to work. One requirement is that business hours must have been reduced by 50% due to Covid-19 and pandemic restrictions. You will also be required to have earned at least $5000 from employment/self employment in 2019 or 2020. Those who apply for CRB will be actively seeking employment and accepting work where it is reasonable to do so. This benefit must be applied for every two weeks.
It is important to note the CRA has stated that there will be a claw back from The Canada Recovery Benefit. Upon filing next years tax return, any with a net income over $38,000 in the year they claimed the CRB benefit, the claw back will be 50 cents on the dollar over $38,000 – this excludes income from the benefit itself. For example: If you make $40,000 in employment income outside of the CRB you will be required to pay back $2,000 as a claw back, due after filing next years income tax.
The Canada Recovery Sickness Benefit (CRSB) is a new taxable initiative providing $500 a week for up to 14 days for employees, or the self employed, who must self isolate due to Covid-19. Its qualifications are $5,000 of earned employment income in 2019 or 2020. Workers who miss a minimum of 60% of their scheduled work week due to self isolating are eligible. No medical certificate will be required, but workers will not be able to claim the CRSB and other paid sick leave for the same benefit period. Eligible workers will be required to apply separately for each one week period up to two weeks.
The Canada Recovery Caregiver Benefit (CRCB) will also be effective September 27th, 2020 for one year and will pay a $500/ week taxable benefit for up to 26 weeks per household. This benefit is for Canadian residents who are employed, or self employed the day preceding their application. They must have earned $5000 in employment or self employment income in 2019 or 2020, and have been unable to work at least 60% of their normally scheduled work week because of either – caring for a child 12 and under due to covid related school closures, the child cannot attend school due to being high risk at the advice of a medical professional, or their caregiver who usually provides care cannot do so due to the pandemic. Similarly, caring for a disabled family member or dependant because their day programs are unavailable or closed, they are at high-risk of contracting covid at the advice of a medical professional, or the caregiver who normally provides care is no longer due to the pandemic.
In addition, to claim the CRCB you must not be in receipt of any paid leave during the period you are applying for, and are not receiving CRB, EI, CSRB, short term disability benefits or workers compensation payments in the same week. Individuals must apply after each week they are seeking income support for.
For small businesses, the CEBA – Canada Emergency Business Account, which is a $40,000 interest free business loan, has been extended until Oct 31, 2020
It is important to note that the eligibility of these programs is subject to change as a second wave is upon us.
If you have any questions regarding the information above or possible eligibility, please feel free to reach out to us here info@shedotax.ca, or 289-758-9501.
To close, many Canadians who have collected all periods of CERB payments and are now relying on these new taxable benefits, have transitioned to EI, or have returned to work full time must be aware that they have likely exceeded the basic personal income amount of $13,229 for the 2020 income tax year. It is our recommendation here at SheDo Tax that you consider paying into involuntary T1 installments or have money set aside for tax season, when income tax will inevitably be owing. If you have not yet filed your taxes for the 2019 income tax year, we are also more than happy to help!
Have a wonderful day friends and be safe!
Rachel