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by Katie Weber
2020 has been a financial rollercoaster; with the ongoing global pandemic caused by COVID-19, Canadians have been affected in numerous ways. The most notable impact is how it has affected the financial circumstances of many Canadians. With growing unemployment rates, the Canadian government provided the Canadian Emergency Response Benefits (CERB) to support the employed and self-employed Canadians impacted by the pandemic.
Since March 25, 2020, CERB has provided qualifying Canadians with financial aid for a period of up to 28 weeks. As the Canadians continue to endure the pandemics repercussions, the Canadian government has announced its plans to transition from CERB to employment insurance (EI). The current proposal includes improvements to the EI program and three new recovery benefits (CRB) for those who are not eligible for EI.
Minimum EI unemployment rate across Canada:
On August 28, 2020, the Canadian government announced that it is freezing the EI Premium rate for employees at the 2020 level of $1.58 per $100 of insurable earnings for two years. The rate for employers, which is 1.4 times the employee rate, will remain unchanged at $2.21 per $100 of insurable earnings.
Freezing the premium rate will ensure that employees and employers do not have to pay increased EI premiums in a time of economic uncertainty, and help support job creation as the economy recovers.
Minimum Benefit rate:
As of September 27, 2020, all new EI claimants will receive a minimum benefit of $400 per week or $240 for extended parental benefits. Typically, the EI benefit rate is based on a worker’s average weekly earnings before their EI claims. This is intended to reduce the negative impact on EI benefit rates for workers who either lost their job or saw their hours reduced to COVID-19.
This means that if the COVID-19 pandemic has negatively impacted a worker’s weekly earnings either because they lost their job or saw their hours reduced. The minimum benefit rate of $400 will reduce the negative impact of EI benefit rates for these workers and align with the weekly benefit rate for the new Canadian Recovery Benefit.
Hours credits to enhance access to EI benefits:
The government allows a one-time insurable hour’s credit of 300 insurable hours for claims for regular benefits and 480 insurable hours for claims for special benefits to assist those prevented from accumulating the number of insurable hours normally required due to the COVID-19 pandemic. The hours credit will be made retroactive to March 15, 2020, for claimants who want to transition early from the CERB to EI maternity, parental, compassionate care, a family caregiver, or work-sharing benefits but couldn’t fulfill the hours’ requirement.
The Canadian government has place temporary measures to help Canadians access EI benefits more easily with a one-time insurable hour’s credit set out above. The hours credit is available for new EI claims for one year. To qualify you will only require a minimum of 120 hours of work and at least 26 weeks of regular benefits.
New Canadian Recovery Benefits (CRB)
The new Canadian Recovery Benefit provides a taxable benefit amount of $400 per week for up to 26 weeks for those ineligible for EI.
To qualify for this benefit, you must:
- are at least 15 years old and have a valid Social Insurance Number (SIN)
- have stopped working due to the COVID-19 pandemic and are available and looking for work; or are working and have had a reduction in their employment/self-employment income for reasons related to COVID-19
- are not eligible for EI
- had employment and/or self-employment income of at least $5,000 in 2019 or in 2020 and
- have not quit their job voluntarily
Canadian Recovery Sickness Benefit (CRSB):
The new Canadian Recovery sickness Benefit provides a taxable benefit of $500 per week for up to 2 weeks to eligible workers who are unable to work because they are sick or must self-isolate as a result of COVID-19.
To qualify for this benefit, you must:
- The cost of education expenses.residents in Canada who are at least 15 years of age and have a valid Social Insurance Number (SIN)
- workers employed or self-employed at the time of the application and
- workers who earned at least $5,000 in 2019 or in 2020
Workers would not be required to have a medical certificate to qualify for the benefit. Workers could not claim the Canada Recovery Sickness Benefit and receive other paid sick leave for the same benefit period. Workers would need to have missed a minimum of 60% of their scheduled work in the week for which they claim the benefit.
Canadian Recovery Caregiving Benefit (CRCB):
The new Canadian Recovery Caregiving benefit provides a taxable benefit of $500 a week for up to 26 weeks per household. THE CRCB is for Canadians unable to work because they need to provide care to children or support other dependents who have to stay home due to COVID-19.
To qualify for this benefit, you must:
- reside in Canada
- be at least 15 years of age on the first day of the period for which they apply for the benefit
- have a valid Social Insurance Number
- be employed or self-employed on the day immediately preceding the period for which the application is made
- have earned at least $5,000 in 2019 or in 2020
have been unable to work for at least 60% of their normally scheduled work within a given week because of one of the following conditions:
they must take care of a child who is under 12 years of age on the first day of the period for which the benefit is claimed:
- because their school or daycare is closed or operates under an alternative schedule for reasons related to the COVID-19 pandemic
- who cannot attend school or daycare under the advice of a medical professional due to being at high risk if they contract COVID-19, or
- because the caregiver who usually provides care is not available for reasons related to the COVID-19 pandemic, or
they must provide care to a family member with a disability or a dependent:
- because their day program or care facility is closed or operates under an alternative schedule for reasons related to COVID-19
- who cannot attend their day program or care facility under the advice of a medical professional due to being at high risk if they contract COVID-19, or
- because the caregiver who usually provides care is not available for reasons related to the COVID-19 pandemic
- not be in receipt of paid leave from an employer in respect of the same week, and
- not be in receipt of the CERB, the EI Emergency Response Benefit (ERB), the Canada Recovery Benefit, the Canada Recovery Sickness Benefit, short-term disability benefits, workers’ compensation benefits, or any EI benefits or Quebec Parental Insurance Plan (QPIP) benefits in respect of the same week
It is time to prepare for the upcoming tax season as the CERB payments are taxable by the Canadian government. As income tax was not deducted at the source, you may owe taxes for 2020.
The Canadian government will provide a T4A slip for the amount of CERB received. This is to be reported as income for your 2020 tax year.
If you repay your CERB payment you received, Canada Revenue Agency will not issue a T4A for that payment. However, repayments need to be made before December 31, 2020.
If the thought of repaying CERB and any other debts currently owing is weighing on your mind, we can help. Contact us to speak to an experienced debt relief manager who will discuss your unique financial situation to create a plan to pay off outstanding debts making your tax filings in 2020 a breeze.