The information contained in the below publication was current at the time it was published. The COVID-19 programs evolve continuously, and the relevant information may have changed since publication. Readers are advised to discuss their particular situation with their Crowe BGK advisor.
This publication addresses various announcements made by the Federal Government and the federal tax authorities with respect to individual taxpayers. All important changes from the previous version of this publication are in italics.
Last update: October 6, 2020
I. End of the Canada Emergency Response Benefit (CERB), modifications to the employment insurance program and introduction of new temporary benefits
The Canada Emergency Response Benefit (CERB) ends when a worker has received 28 weeks of benefits or on October 3, 2020, whichever comes first. Workers have until December 2, 2020 to file an application retroactively for the CERB.
The Federal Government also announced changes to the Employment Insurance (EI) program and new income support benefits that will better support all Canadians. Thus, effective September 27, 2020, the government will transition individuals who have been receiving the CERB to a more flexible and generous EI program for those who qualify.
Moreover, the Federal Government is introducing a new suite of temporary recovery benefits to further support workers. New legislation, Bill C-4, An Act relating to certain measures in response to COVID-19, received royal assent on October 2nd, 2020. Below are the details regarding these announcements.
a. Changes to the EI program
EI claimants will receive a minimum benefit rate of $500 per week (or $300 for extended parental benefits) if this is higher than what their benefits would otherwise be.
Regular benefits will be accessible for a minimum duration of 26 weeks.
Hours Credits to Enhance Access to EI Regular Benefit and EI Special Benefits
The EI program will now be available to Canadians with 120 hours or more of insurable work.
Access to EI benefits is normally based on the number of insurable hours an individual has worked in the year prior to their application, or since their last claim. This is known as their qualifying period. However, the Government of Canada recognizes that the pandemic has prevented many Canadians from accumulating the number of insurable hours that is normally required, and is taking action to address this. To help individuals qualify with a minimum of 120 hours of work, EI claimants will receive a one-time insurable hours credit of:
The hours credit will also be made retroactive to March 15, 2020 for claimants who were looking to transition early from the CERB to EI maternity, parental, compassionate care, family caregiver or work-sharing benefits but could not establish their EI claim due to insufficient hours.
The hours credit will be available for new EI claims for one year.
Note for Quebec residents
As the Province of Quebec delivers maternity, paternity, parental, and adoption benefits through the Quebec Parental Insurance Plan, Quebec residents are not eligible for the measures relating to maternity and parental benefits.
EI Premium Rate Freeze
The government will freeze the EI insurance premium rates at the 2020 level for two years. Thus, employees will contribute $1.58 per $100 of insurable earnings for two years, and employers, who pay 1.4 times the employee rate, will contribute $2.21 per $100 of insurable earnings.
How to apply
To ensure a smooth transition to EI, the majority of Canadians who received the CERB through Service Canada and who are eligible for EI will be automatically transitioned. Service Canada will contact all EI clients to confirm whether they need to apply or are being transitioned automatically. Clients can also verify the status of their claim in their My Service Canada Account.
Canadians who will need to apply to Service Canada to access EI benefits include:
As is normally the case, Canadians become eligible for their first EI payment at the end of the two weeks that they are out of work.
b. Introduction of three new temporary benefits
The government implemented three new benefits, which are taxable benefits. These benefits are offered for one year, starting September 27, 2020.
1. Canada Recovery Benefit
The new Canada Recovery Benefit would provide a benefit amount of $400 per week for up to 26 weeks to workers who are not eligible for EI, mainly the self-employed and including those working in the gig economy. More specifically, this benefit would be available to residents in Canada who:
How much is the Benefit
The CRB provides a payment of $1,000 (before tax withheld) for each 2-week period a worker applies for. After the Canada Revenue Agency (CRA) withholds a 10% tax at source, the actual payment a worker can receive is $900 per 2-week period. The 10% tax withheld at sourced may not be all the tax a claimant needs to pay. The CRA will provide all claimants with a T4A information slip for the amount received. This T4A slip will have to be reported on the personal income tax return.
Claimants need to repay some or all of the CRB through their income tax return if their annual net income, excluding the CRB payment, is over $38,000. More specifically, claimants need to repay $0.50 of the benefit for each dollar of their annual net income above $38,000 in the calendar year to a maximum of the amount of benefit they received.
How to claim the Benefit
Workers must apply after every two-week period for which they are seeking income support and attest that they continue to meet the requirements.
Application for the CRB must be submitted online through the CRA My Account portal or by phone through automated toll-free phone line. Applications will be accepted as of October 12, 2020. Claimants should receive their payment within 3 to 5 days for applications made by direct deposit, and within 10 to 12 days for applications by cheque by mail.
A claim must be submitted no later than 60 days after the end of the two-week period to which the benefit relates.
2. Canada Recovery Sickness Benefit
The new Canada Recovery Sickness Benefit (CRSB) provides $500 per week, for up to two weeks for workers who are unable to work because they are sick or must self-isolate due to COVID-19. The benefit is available to individuals who:
Workers are not required to have a medical certificate to qualify for the benefit.
The CRSB provides a payment of $500 (before tax withheld) for each 1-week period a worker applies for. After the CRA withholds a 10% tax at source, the actual payment a worker can get is $450 per 1-week period. The 10% tax withheld at sourced may not be all the tax a claimant needs to pay. The CRA will provide all claimants with a T4A information slip for the amount received. This T4A slip will have to be reported on the personal income tax return.
Workers must apply after the one-week period in which they are seeking income support and attest that they meet the requirements.
Application for the CRSB are now being accepted by the CRA. Applications for the CRSB can be submitted either:
Claimants should receive their payment within 3 to 5 days for applications made by direct deposit, and within 10 to 12 days for applications by cheque by mail.
A claim for CRSB must be submitted no later than 60 days after the end of the week to which the benefit relates.
3. Canada Recovery Caregiving Benefit
The new Canada Recovery Caregiver Benefit (CRCB) provides $500 per week, for up to 26 weeks per household to eligible Canadians who are unable to work because they need to provide care to children or support to other dependents who have to stay home. More specifically, to be eligible for the Canada Recovery Caregiving Benefit, individuals need to:
The CRCB provides a payment of $500 (before tax withheld) per household for each 1-week period applied for. After the CRA withholds a 10% tax at source, the actual payment a household can get is $450 per 1-week period. The 10% tax withheld at sourced may not be all the tax a claimant needs to pay. The CRA will provide all claimants with a T4A information slip for the amount received. This T4A slip will have to be reported on the personal income tax return.
Workers must apply after the period in which they are seeking income support and attest that they meet the requirements.
Application for the CRCB are now being accepted by the CRA. Applications for the CRCB can be submitted either:
A claim for CRCB must be submitted no later than 60 days after the end of the week to which the benefit relates.
To promote compliance with the legislation, penalties may be imposed on a person if they:
Penalties can reach 50% of the benefit that was or would have been paid. The maximum of all penalties that may be imposed on a person is $5,000.
Additional consequences can apply where in cases where a person:
II. One-Time Payment to Individuals with Disabilities
The Government of Canada announced a one-time payment in the amount of $600 to cover exceptional expenses incurred by individuals with disabilities during the COVID-19 pandemic. The one-time payment is not taxable to the recipient and will be made by cheque or direct deposit.
In order to be eligible for the one-time payment, individuals must either have an existing valid Disability Tax Credit (DTC) certificate, must be eligible for the DTC and apply for it by September 25, 2020, or must be a beneficiary of certain disability pension plans.
The one-time payment will be automatically issued in the majority of cases. However, individuals whose DTC certificate expired in 2019 or who are eligible for the DTC but simply never applied must apply before September 25, 2020 in order to benefit from the one-time payment. It is important that individuals who wish to qualify for the one-time payment do not wait to complete the application for a valid DTC certificate with their 2020 Income Tax Return, as the deadline will already have passed.
III. Cyberattacks Targeting the Canada Revenue Agency (CRA)
In recent days, the CRA announced that it has been the target of cyberattacks that have forced the agency to temporary suspend access to its online services. Although such services have now been restored, we recommend, as a precaution, that taxpayers consider changing the password used to access the online services. In addition, we strongly recommend that individuals ensure there is a distinction in the passwords used for their various online accounts in order to reduce the risk of being subject to a cyberattack.
Taxpayers whose accounts have been subject to the recent cyberattacks will be notified by way of a letter from the CRA that will be sent via regular mail.
For more information, please do not hesitate to contact your Crowe BGK advisor.