Canada Emergency Response Benefit

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.

MEMORANDUM

Date:                     Last updated on May 11, 2020

From:                    Crowe BGK Tax Group

Subject:                UPDATE: Canada Emergency Response Benefit – Technical Details

In the last days of March 2020, legislation was adopted to provide technical details pertaining to the new Canada Emergency Response Benefit (CERB) to provide urgently needed financial support to workers who have lost their source of income due to the COVID-19 pandemic.

The CERB is a taxable benefit of $500 a week for a maximum period of 16 weeks. It will be paid in blocks of four weeks at the time ($2,000). The CERB can be claimed at any point in time between March 15, 2020 and October 3, 2020.

Eligibility conditions

The CERB is available to workers who:

• are residents in Canada;

• are at least 15 years old;

• have stopped working because of COVID-19 or are eligible for Employment Insurance regular or sickness benefits;

• had income of at least $5,000 in 2019 or in the 12 months prior to the date of their CERB application;
  • The income of at least $5,000 must be from any of or a combination of the following sources:
    • Employment income;
    • Self-employment income;
    • Maternity and parental benefits under the Employment Insurance program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan;

• are or expect to be without employment income, self-employment income or benefits under the Employment Insurance program and/or similar benefits paid in Quebec under the Quebec for at least 14 consecutive days in the initial four-week period in respect of which they apply for the payment. For subsequent benefit periods, they expect to have no similar income.

  Examples of workers targeted by this measure would include but are not limited to:

• Job loss due to COVID-19;

• Workers who are still employed but not receiving income due to COVID-19;

• Workers who are sick or quarantined due to COVID-19;

• Workers who are absent from work to take care of others because they are in quarantine/sick due to COVID-19 or to take care of children or other dependents whose care facility is closed due to COVID-19.

On April 6, 2020, Service Canada has updated its website on the CERB. Pursuant to Service Canada, in applying the above-mentioned $5,000 test pertaining to prior income, a worker may include into this any non-eligible dividends that he/she received within the relevant period. It is important to note that the Canada Emergency Response Benefit Act which implements the CERB received royal assent on March 25, 2020, and that it does not include non-eligible dividends in the list of sources of income that are considered to determine if a worker is eligible to receive the CERB.

On April 15, the Federal Government announced changes to the eligibility rules to the CERB to:

• Allow people to earn up to $1,000 per month while collecting the CERB.

• Extend the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.

• Extend the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.

The Canada Revenue Agency (CRA) has indicated that the $1,000 a worker can earn while collecting the CERB includes employment and/or self-employment income. Per the CRA, this includes among others: tips earned while working, non-eligible dividends, and royalties. This does not include pensions, student loans and bursaries earned by a worker.

The legislation implementing the CERB has yet to be amended to accommodate these changes.

How to claim the CERB

Eligible workers can submit their application to the CERB to the Canada Revenue Agency (CRA) starting April 6, 2020. There are 2 ways to apply:

• Online with CRA My account

  https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html

• Over the phone with an automated phone service

1-800-959-2019

To help manage this, the CRA has set up specific days to apply.

A CERB application must be made for each 4-week period during which a worker is eligible to the CERB. There are no pre-established 4-week periods, and the start and end dates of each 4-week period that can decided by each worker.

Benefits will start within 10 days of submitting an application and will be retroactive to the eligibility date. There is no waiting period. Payments will be made through direct deposit or by cheque.

For more details regarding the CERB, please consult the Service Canada website:

https://www.canada.ca/en/services/benefits/ei/cerb-application.html

The CRA’s website also provide useful information on the application process:

https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra.html

Moreover, please note that the Federal Government has also implemented the Canada Emergency Student Benefit (CESB). For more details regarding the CESB please consult our publication on the Highlights of the Canada and Quebec COVID-19 Economic Response Plan.