1. As set out in our March 19, 2020 article, COVID-19: An Overview of Federal and Provincial Aid Packages and Alberta Employment Implications, the Federal government had just announced an $82 billion aid package for Canadians and businesses affected by the COVID-19 pandemic. At that time, details surrounding certain programs, like the Emergency Support Benefit - which was to provide up to $5 billion in support for workers who are not otherwise eligible for Employment Insurance ("EI") - had not yet been released.
However, after a marathon session on March 24 and 25, 2020, Parliament (and then the Senate) passed an aid package called the Canada Emergency Response Benefit ("CERB") - now worth up to $107 billion - to assist Canadians during the pandemic.
In short, the CERB:
a) replaces the previously announced Emergency Care Benefit and the Emergency Support Benefit; and,
b) provides a taxable benefit of up to $2,000 per month for 4 months to wage earners, contract workers or self-employed individuals who do not otherwise qualify for EI who:
- Have lost their job;
- Are sick;
- Are quarantined;
- Are taking care of someone who is sick with COVID-19; or,
- Are working parents who must stay home without pay to care for children who are sick or at home due to school or daycare closures1.
In addition, workers who are still employed, but are not receiving income as a result of disruptions to their work due to the pandemic would also qualify for CERB. This will hopefully allow businesses to keep employees while maintaining the ability to quickly resume operations as soon as it becomes possible.
Notably, given the current strain on the EI system - which is trying to process approximately 1 million EI applications - all workers who have ceased working due to the pandemic are eligible to receive the CERB, regardless of whether they are also eligible for EI. This is to ensure that all affected workers have relatively quick access to income support.
Applications for CERB will be accessible through a secure web portal starting in early April. It is anticipated that payments could be made within 10 days of application. The payments would continue to be paid every 4 weeks and be available between March 15 and October 3, 2020, but only for maximum period of 4 months per individual recipient. This means that those who are currently working can still avail themselves of this program in the event that they lose their work in the coming months due to COVID-19.
Those already receiving EI benefits will continue to receive their benefits and are advised not to apply for the CERB. Should their EI benefits end before October 3, 2020, they could apply for the CERB if they remain unable to work due to COVID-19.
Other notable updates with respect to financial assistance available to Canadians include2:
- An extra $300 per month per child through the Canada Child Benefit ("CCB") for 2019-2020. This benefit will be delivered as part of the scheduled CCB payment in May. Those who already receive this benefit do not need to re-apply.
- A one-time special payment by early May through the GST Tax Credit for low and modest-income families. The average additional benefit is estimated to be close to $400 for single individuals and close to $600 for couples. Eligible individuals do not need to apply for this benefit and will receive it automatically;
- A 6-month interest-free moratorium on the repayment of Canada Student Loans for all student loan borrowers. Students do not need to apply for the repayment pause; and,
- The individual tax filing deadline has been deferred to June 1, 2020 with any new balances due, or installments, deferred to August 31, 2020.
Individuals who are eligible for the CCB or GST Tax Credit are encouraged not to delay filing their 2019 income taxes so that their entitlements can be properly determined.
Finally, on the business side, there has been some further clarity to the recently-announced Temporary Wage Subsidy for Employers ("TWS"). In short, the TWS is a 3-month measure that will allow employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency ("CRA")3.
The TWS is available to employers:
- At non-profit, charitable organizations or Canadian-controlled private corporations;
- Who have an existing payroll program account with the CRA on March 18, 2020; and,
- Pay salary, wages, bonuses or other remuneration to an employee.
The TWS is equal to 10% of the remuneration paid by an employer between March 18, 2020, and June 20, 2020, up to $1,375 per employee and to a maximum of $25,000 total per employer.
The subsidy must be calculated manually. For example, if an employer has 10 employees earning monthly salaries of $4,000, for a total monthly payroll of $40,000, the subsidy would be 10% of $40,000, or $4,000.
Once the TWS has been calculated, an employer can reduce its current remittance of federal, provincial or territorial income tax to the CRA by the amount of the subsidy. Employers should note that they cannot reduce remittances of either their Canada Pension Plan ("CPP") or Employment Insurance Premiums to the CRA under the TWS.
Other notable aspects of the TWS include that:
- If the subsidy exceeds an employer's income tax remittance, they can reduce future remittances to benefit from the TWS - even if that remittance is in respect of remuneration paid after June 20, 2020;
- The TWS does not affect deductions an employer makes from employee salaries (such as income tax, CPP contributions or EI premiums);
- The TWS is considered taxable income and should be reported as such in the year the subsidy is received; and,
- Employers should keep the following information to support their TWS calculation: (1) total remuneration paid between March 18 and June 20, 2020; (2) the federal, provincial or territorial income tax deducted from that remuneration; and (3) the number of employees paid during that period.
Scott Venturo Rudakoff's employment group is here to assist employers and employees navigate the uncertainty surrounding layoffs and terminations created by the COVID-19 situation. Do not hesitate to call or email any of our employment law practice members if you have a question about your obligations as an employer or rights as an employee.
About Mackrell International - Canada - Scott Venturo LLP is a full service business law firm in Calgary, AB and a member of Mackrell International. Mackrell International - Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario and Quebec. Each firm is regionally based and well-connected in our communities, an advantage shared with our clients. With close relations amongst our Canadian member firms, we are committed to working with clients who have legal needs in multiple jurisdictions within Canada.
This article is intended to be an overview and is for informational purposes only.