(From the October 2020 Edition of eFORUM)
By Jamie Golombek and Debbie Pearl-Weinberg
Clients who lost their job as a result of COVID-19 most likely would have been receiving the Canada Emergency Response Benefit (CERB). The CERB was originally launched in March 2020 and was the government’s principal emergency benefit for individuals, offered to both employees and the self-employed. As of August 30, the CERB has paid out $72.6 billion in benefits to 8.7 million unique Canadians.
In late August, the government announced an extension of the CERB for an additional four weeks, for a total of 28 weeks. The CERB will then transition into a simplified Employment Insurance (EI) program after September 26, 2020. In addition, three new temporary COVID programs were announced in August: the Canada Recovery Benefit for self-employed workers and workers not eligible for EI, the Canada Recovery Sickness Benefit, for workers who are unable to work because they are sick or must self-isolate, and the Canada Recovery Caregiving Benefit, for individuals unable to work because of the need to provide care or support for a child, family member, or dependant.
Each of these new programs will be available for one year from September 27, 2020. Let’s take a quick look at each of the three new programs.
Canada Recovery Benefit (CRB)
Clients who are self-employed are unlikely to qualify for EI, even under the new simplified EI program. Some employees may also be ineligible for EI as they may not have had sufficient hours of work. The CRB is meant to assist these categories of workers who continue to require income support. The CRB provides a taxable benefit of $500 per week, for up to 26 weeks, to workers who are not eligible for EI.
The CRB is available to Canadian residents who are at least 15 years old and have a valid SIN, have stopped working due to COVID and are available and looking for work, or are working but have experienced a reduction in their (self-) employment income for reasons related to COVID. Similar to the CERB requirements, the individual must not be eligible for EI, must not have quit their job voluntarily, and must have had (self-) employment income of at least $5,000 in 2019 or 2020. Recipients will have to apply after each two-week period for which they qualify for CRB, must continue to look for work, and must accept work when reasonable.
To encourage recipients to return to work, they can still earn income from (self-) employment while receiving the CRB, as long as they continue to meet the other requirements, but the government has included rules requiring repayments where income exceeds $38,000. Claimants will need to repay $0.50 of the CRB for each dollar of their annual net income above $38,000 in the calendar year, excluding any CRB payments, up to the amount of CRB they received.
Canada Recovery Sickness Benefit (CRSB)
For employees (or the self-employed) who don’t have a paid sick leave program, the new CRSB provides a $500-per-week taxable benefit for up to two weeks, for individuals who cannot work either because they are ill or because they must self-isolate due to COVID. The CRSB fulfills the federal government’s commitment under the Safe Restart Agreement with provinces and territories to provide sick leave due to COVID.
To be eligible for the CRSB, an individual must be a resident in Canada with a valid SIN, be at least 15 years old, be (self-) employed when the application is made, have missed a minimum of 60% of scheduled work in the particular week, not be otherwise receiving paid sick leave, and have earned at least $5,000 of (self-) employment income in 2019 or 2020. Further, the individual cannot be receiving paid leave from their employer for the same week. Recipients will have to apply after each one-week period for which they seeking the benefit.
Canada Recovery Caregiving Benefit (CRCB)
Finally, the CRCB provides a $500-per-week taxable benefit per household, for up to 26 weeks, if an individual misses work to care for a family member due to COVID. The CRCB can be shared among household members, but only one household member can receive the benefit in any one week. If a facility is available, but an individual prefers to keep a dependant at home, they are not eligible for the CRCB.
To qualify for the CRCB, the individual must have been unable to work for at least 60% of their normally scheduled work week because they must take care of a child who is under 12 years old, or provide care to a family member with a disability or a dependant. They must be caring for the child, family member, or dependant because either: their school, daycare, day program, or care facility is closed (or operates under an alternative schedule) due to COVID-19; a medical professional has advised that they cannot attend the facility due to being at high risk if they contract COVID-19; or because the caregiver usually providing care is not available because of COVID-19. Individuals cannot receive paid leave from an employer for a week that they are applying for this benefit. Recipients will have to apply after each one-week period for which they seeking the CRCB.
Jamie Golombek, CPA, CA, CFP, CLU, TEP, is managing director, tax and estate planning, with CIBC Private Wealth Management in Toronto. Debbie Pearl-Weinberg, LLB, is executive director, tax and estate planning, with CIBC Private Wealth Management in Toronto.