The COVID-19 pandemic has been devastating to some, disruptive to others and downright depressing for everyone. The light at the end of the tunnel is that the Canadian Revenue Agency has good news for you.
The Government of Canada recognizes that many Canadians are still facing hardship due to COVID-19 and has taken decisive action aimed at helping individuals and businesses alike.
The CRA has put in place several Canadian tax relief programmes to help you recover from the downstream effects of the pandemic. This article will go through each of the latest updates on each benefit.
CERB Has Ended
The Canada Emergency Response Benefit stopped processing retroactive applications on 2 December 2020. You can no longer apply for this benefit which provided financial support to employed and self-employed Canadian citizens directly affected by COVID-19. If you still need income support, check your eligibility for other benefits.
Five Different Relief Programs
The Government of Canada has implemented a broad range of programmes that bring relief in five different areas:
- Canada Recovery Benefit (CRB)
- Canada Recovery Caregiving Benefit (CRCB)
- Canada Recovery Sickness Benefit (CRSB)
- Canada Emergency Rent Subsidy (CERS)
- Canada Emergency Wage Subsidy (CEWS)
The above programmes are still open for application. We will detail each one below.
Canada Recovery Benefit (CRB)
The Canada Revenue Agency (CRA) is administering the Canada Recovery Benefit (CRB). It aims to provide income support to the employed and self-employed who are not entitled to Employment Insurance (EI) benefits but have nevertheless been directly affected by COVID-19.
Eligibility for the CRB entitles you to receive $1,000 (less $100 withholding tax) for a two-week period.
If you still need assistance beyond the first two weeks, you will have to apply again. You can make successive applications every two weeks for 38 weeks, i.e., a total of 19 eligibility periods between 27 September 2020 and 25 September 2021.
To qualify for the CRB, you need to meet all the conditions below in respect of the two weeks being applied for:
For COVID-19-related reasons, you were not employed or self-employed, or your average weekly income was 50% less than the previous year owing to reasons related to COVID-19.
Calculations and CRB Eligibility
The 50% reduction is based on your average weekly employment or net self-employment income from the previous year. To calculate for periods in 2020, you may use the last 12 months or your 2019 income. For periods in 2021, you may use figures from the previous 12 months, 2019 or 2020.
Each time you make the application for CRB, you will have to verify that you meet the 50% reduction in earnings criteria. Self-employment income is your revenue minus any expenses incurred while earning that self-employment revenue.
Included in employment or self-employment income are any amounts earned from, among other things:
- tips earned while working
- non-eligible dividends
- honoraria (e.g., nominal amounts paid to volunteers for emergency services)
Do not include in the calculation amounts received from:
- Canada Pension Plan (CPP), Québec Pension Plan (QPP), or other pension income
- Social assistance or family support payments
- Student loans and bursaries
- Old Age Security (OAS) payments
- Maternity and parental benefits from EI or similar QPIP benefits
- Any Canada COVID-19 emergency or recovery benefits
You are eligible for the CRB if you did not apply for or receive benefits under the (CRSB) or (CRCB), any short-term disability benefits, EI (Employment Insurance) benefits, or Québec Parental Insurance Plan (QPIP) benefits, or if you did not qualify for EI benefits. Consult the other conditions of eligibility on the CRA website, or request one of the tax lawyers at Radnoff + Haworth.
Suppose you’re not eligible for the CRB. In that case, you may still qualify for other options under the CRA’s COVID-19 tax benefits programme.
Canada Recovery Caregiving Benefit (CRCB)
The Canada Recovery Caregiving Benefit administered by the CRA provides income support to self-employed and employed individuals under certain circumstances. Those who cannot work because they have to care for their child under 12 years old or for a family member in need of supervised care. This benefit applies if the school or facility that typically provides care is closed or not accessible because of the COVID-19 pandemic guidelines. It also applies if anyone concerned in this situation is sick, self-isolating, or at risk of severe health complications.
Subject to your eligibility, your household would receive $500 ($450 after the deduction of withholding tax) for each one-week period. You have to apply each week that the situation continues. Your household may apply each week for a total of 38 weeks in respect of any week or weeks between 27 September 2020 and 25 September 2021.
Canada Recovery Sickness Benefit (CRSB)
The Canada Recovery Sickness Benefit (CRSB) administered by the CRA provides income support to individuals who are either employed or self-employed but unable to work because they are sick or have to self-isolate due to COVID-19. Those who have an underlying health condition that puts them at a higher risk of contracting COVID-19 may also apply for the CRSB.
If eligible, you would receive $500 ($450 after the deduction of withholding tax) for a period of 1 week. You have to apply each week that the situation continues. You may apply each week for a total of 38 weeks in respect of any week or weeks between 27 September 2020 and 25 September 2021. You cannot apply for periods that are closed.
Canada Emergency Rent Subsidy (CERS)
Changes to lockdown support came into effect on 20 May 2021. The CERS online calculator incorporates these changes.
If a lockdown period is one week or longer, you may qualify for lockdown support even if the minimum lockdown period of one week overlaps two different claim periods. Your lockdown support may not have been correctly calculated if you used the CERS calculator on or before 20 May 2021.
- You are eligible for the Canada Emergency Rent Subsidy if you meet one of the following criteria:
- You had a CRA business number as of 27 September 2020
- You had a payroll account on 15 March, or payroll remittances were made on your behalf by another person or partnership
- You purchased the business assets of a partnership or another person or partnership who satisfies the previous condition, and you have made an election under rules governing special asset acquisition
- You meet any prescribed conditions that may be introduced (but which currently do not exist)
In addition, to qualify, the claim for this benefit has to be made by an eligible business, charity, or non-profit entity. Likewise, your organization must have experienced a drop in eligible revenue during the reference period. There is no minimum drop in eligible revenue required to qualify for the CERS.
Use the search box on the Canadian Revenue Agency website to find the precise definition of eligible revenue if you are not already familiar with this term.
The rules for calculating eligible revenue also apply to the Canada Emergency Wage Subsidy (CEWS).
The final eligibility criterium for the CERS is that you must have eligible expenses and a qualifying property.
Canada Emergency Wage Subsidy (CEWS)
If you are a Canadian employer who has experienced a drop in revenue during the COVID-19 pandemic, you may be eligible for the CEWS. The CEWS is a subsidy to cover a portion of your employee’s wages.
This subsidy aims to:
- Enable you to re-hire workers
- Give assistance to prevent further job losses
- Help you transition back to operating your business under normal conditions once again.
The next deadline for claim period 10 is 17 June 2021. The next period (period 16) opens on 6 June 2021.
Some new changes to the CEWS came into effect in April 2021. Indeed, the CEWS has effected several changes in the past few months, and you may well be confused. That is why there is a special section on the CRA site advising what you should do if you have missed a claim period deadline.
Eligibility for the CEWS is based on whether you had a CRA payroll account on 15 March 2020. You have to be an employer in one of the categories recognized by the CRA and have experienced a drop in revenue. As with the CERS above, there is no minimum drop in revenue required to apply, but it will affect the amount of the subsidy for which you qualify.
Canadian Tax Advice
Canada’s COVID-19 Economic Response Plan has many facets to it, and there are penalties for fraudulent claims. Therefore, it is worth engaging the help of professional tax lawyers to guide you through the maze of regulations that have recently come into play. Radnoff and Haworth Law Offices will ensure that you make error-free applications.
Our tax advisors can also ensure that you apply for all the benefits for which you are eligible. Regarding any tax debt you may have had before the COVID-19 pandemic, you might not know that you can negotiate with the CRA. Many people are trying to get back on their feet after the adverse effects of COVID-19, and Radnoff Law Offices can help you do so efficiently.
Canada’s COVID-19 Economic Response Plan
The implementation of the CRA Economic Response Plan has not been without problems. One such problem was the inconsistencies, now remedied, regarding how the CERS online calculator computed lockdown support amounts, mainly when a lockdown period spanned two qualifying periods.
If you have had trouble dealing with all these new Canadian tax regulations designed to help you, we would be happy to assist. Why not book a consultation to systematically address your issues and get you the tax benefits you are entitled to?
You can also contact us via phone or e-mail.