As we trudge through the ninth month of the COVID-19 global pandemic, you are no doubt weary of the overused clichés and underwhelming messages that we are “all in this together”. While the war to combat and ultimately conquer COVID-19 is a collective one, daily survival on all fronts is very much an individual battle. In this blog, we discuss the financial front and the government’s efforts to help support Canadians in their fight.
CERB v. CRB
The Canada Emergency Response Benefit (CERB), which is now closed, was the federal government’s first economic support benefit for employed and self-employed Canadians who were directly affected by COVID-19. The CERB was available to workers who met all of the following criteria:
- At least 15 years of age;
- Residing in Canada;
- Stopped working due to reasons related to COVID-19 or were eligible for Employment Insurance (EI) regular or sickness benefits or had exhausted their EI regular benefits or EI fishing benefits between December 29, 2019 and October 3, 2020;
- Had employment or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of application for the CERB; and
- Had not voluntarily quit/resigned from their employment.
For more information regarding the CERB, please visit the Government of Canada website at: https://www.canada.ca/en/services/benefits/ei/cerb-application.html#eligible
Following the expiration of CERB, the federal government implemented new recovery benefits that are retroactive to September 27, 2020 and available until September 25, 2021. One such benefit is the Canadian Recovery Benefit (CRB) which provides eligible workers with $500 per week (taxable, tax deducted at source) for up to 26 weeks (paid in two-week periods). To be eligible for the CRB, workers must meet all of the following criteria:
- At least 15 years of age on the first day of the period for which the CRB is applied;
- Possess a valid Social Insurance Number (SIN);
- Not be eligible for EI;
- Not employed or self-employed due to COVID-19 or are working (employed or self-employed) and income has reduced by at least 50% for reasons related to COVID-19;
- Are available and looking for work and must accept work where it is reasonable to do so;
- Had employment or self-employment income of at least $5,000 in 2019 or in 2020, or in the 12 months prior to the date of first application for the CRB;
- Have not voluntarily quit/resigned from employment, unless reasonable to do so; and
- Have not rejected a reasonable job offer, rejected a request to work, or failed to resume work if self-employed where reasonable to do so.
According to the federal government, “tax deducted at source” means that a portion of the CRB weekly benefit (flat 10% rate) will be withheld by the Canadian Revenue Agency (CRA) before payment is received. This withheld tax is credited against any income tax a worker is due to pay for the year.
No tax was deducted from the CERB which means that workers who received the CERB must include CERB payments on their 2020 tax returns. The requirement to pay tax in relation to CERB payments will depend on a worker’s total annual income.
2020 Tax Returns
The federal government notes that both CERB and CRB are taxable, and that, at the end of the year, the CRA will calculate the amount of tax owed based on a worker’s total income (including amounts received for the CERB and CRB).
In terms of clawback (repayment) for the CRB, workers will be required to repay $0.50 (50 cents) of the CRB for every dollar in net income earned above $38,000 (excluding amounts received for the CRB) to a maximum repayment of the CRB received in the year. The federal government further states:
The current employment terrain is as uncertain as it is unforgiving. If you are concerned about COVID-19 economic support benefits, or if you’ve been laid off and need a law firm, please contact one of our employment and labour law experts and we will help you navigate your way to the best possible resolution.