In this April 6, 2020 update, we discuss the following:
- Useful Government of Canada and Canada Revenue Agency (CRA) websites
- Easier ways to arrange direct deposits of government payments
- Procedure for applying for Canada Emergency Response Benefit – you can submit applications now!
- More details about the wages subsidies
- Banks beginning to offer Canada Emergency Business Account loans
Government of Canada and Canada Revenue Agency (CRA) websites
During this crisis, we have been relying on the Government of Canada and CRA websites, which have provided good summaries and FAQs.
The following are some of the most useful web-addresses that you might want to save and refer to as the crisis develops:
COVID-19: Changes to Canadian taxes and benefits provides links to information on benefits to individuals and business, new income tax filing and payment dates and changes to CRA collections, audit, objections and appeals policies:
https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html
Frequently Asked Questions – Temporary Wage Subsidy for Employers
https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
The Canada Emergency Wage Subsidy
https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html
Canada Emergency Response Benefit
https://www.canada.ca/en/services/benefits/ei/cerb-application.html
Easier ways to arrange direct deposits of government payments
It is now easier to enroll for direct deposits with the CRA as you can now do so directly from your bank’s website rather than going through the CRA My Account.
However, if you want to apply for the Canada Emergency Response Benefit, you will need a CRA My Account. Alternatively, if you have a My Service Canada Account, you can use that account to access My CRA Account.
Procedure for applying for Canada Emergency Response Benefit (CERB)
The CRA portal to accept applications for CERB is now open.
If you plan to apply online, you have to access the CRA via CRA My Account and then go to COVID-19: Canada Emergency Response Benefit in the alert banner at the top of the page
If you prefer, you can use the CRA’s automated toll-free number – 1 800 959 2019
You will need the following information to complete the application:
- your social insurance number
- postal code; and
- the period you are applying for
CERB is a taxable benefit that will be paid in blocks of four weeks in the amount of $2,000, which is the equivalent of $500 per week. The benefit is for a maximum of 16 weeks and is available from March 15, 2020, to October 3, 2020.
In order to avoid the system being overwhelmed, applications have to be made based on the month of your birth, as follows:
| If you were born in the month of | Apply for CERB on |
|---|---|
| January, February, March | Mondays |
| April, May, June | Tuesdays |
| July, August, September | Wednesdays |
| October, November, December | Thursdays |
| Any month | Fridays, Saturdays and Sundays |
Eligibility
The benefit will be available to workers:
- residing in Canada, who are at least 15 years old;
- who have stopped working because of COVID-19 and have not voluntarily quit their job;
- who had an income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
- who are or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period. For subsequent benefit periods, they expect to have no employment income.
The CERB is only available to individuals who stopped work as a result of reasons related to COVID-19.
If you are looking for a job but haven’t stopped working because of COVID-19, you are not eligible for the Benefit.
Interaction of CERB and Employment Insurance
If you apply for Employment Insurance (EI) on or after March 15, 2020
Benefits will mirror CERB payments for the first 16 weeks as follows:
- if you would have received EI benefits below the $2,000-per-month threshold, your payment will be increased the maximum payment.
- if you would have qualified for EI of more than $500 per week (the maximum EI benefit is $573 per week) will instead receive the CERB payment of $2,000. However, such employees will still qualify for their usual benefits, whether lower or higher than $2000-per-month, after the four-month CERB period.
If you were enrolled or applied for Employment Insurance (EI) before March 15, 2020
If you were already receiving EI, you will continue to do so and need not apply to the CERB.
You will be able to switch to the CERB program if your EI benefits end before October if they remain jobless due to COVID-19.
Temporary Wage Subsidy for Employers
This taxable subsidy is based on 10% of remuneration paid between March 18, 2020, and June 20, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer.
The subsidy can be used to reduce your source deductions for the pay periods after March 18, 2020.
This wage subsidy is not available to non-CCPCs.
Canada Emergency Wage Subsidy (CEWS)
CEWS is a taxable subsidy payable to employers whose revenue has declined by at least 30% compared to the same period in 2019.
The subsidy is payable at a rate of 75% on salaries or wages actually paid during the period from March 15 to June 6, 2020, up to the first $58,700 normally earned by employees, or $847 per week.
The subsidy is the greater of:
- 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- the amount of remuneration paid, up to a maximum benefit of $847 per week, or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.
Any benefit from the 10% wage subsidy will generally reduce the amount available to be claimed under the CEWS in the same period.
The following claiming periods have been established:
| Claiming period | Reference period for eligibility | |
|---|---|---|
| Period 1 | March 15 to April 11 | March 2020 over March 2019 |
| Period 2 | April 12 to May 9 | April 2020 over April 2019 |
| Period 3 | May 10 to June 6 | May 2020 over May 2019 |
An employer’s revenue for this purpose would be its revenue from its business carried on in Canada earned from arm’s-length sources. Revenue would be calculated using the employer’s normal accounting method, and would exclude revenues from extraordinary items and amounts on account of capital.
The government is still working on guidance for non-profit organizations and charities.
The first subsidy payments are expected to be issued in the middle of May, following the launching of a dedicated portal in the next 3 to 6 weeks.
Canada Emergency Business Account (CEBA)
Financial institutions are beginning to provide portals on their websites to enable businesses to apply for the CEBA.
CEBA is a government-guaranteed, interest-free loan up to $40,000 for small businesses and not-for-profit organizations that demonstrate that their 2019 payroll was between $50,000 and $1,000,000.
Each financial institution will have its own variation on how the loans operate, but the basic terms of the loans are as follows:
- interest-free until December 31, 2022
- 25% of of the loan will be forgiven provided the remaining 75% of the loan has been repaid by December 31, 2022
- the loan will be converted to a term loan with an interest rate of 5%, commencing January 1, 2023
You should contact your financial institution to exactly what CEBA loans they are offering.