On March 25, 2020, the federal government passed legislation that would provide support for millions of Canadians who are impacted by the economic effects of COVID-19. The total package is worth $107 billion - including $52 billion for direct support payments and $55 billion in tax deferrals - which is a significant increase from the original $82 billion price tag that was initially introduced last week.
While some of the support measures had been previously announced, they had not yet been passed into law, and at the time of announcement there were details outstanding. With the passing of the Bill C-13, An Act respecting certain measures in response to COVID-19, changes from the previous announcements have been made and some – although not all – of the outstanding details have been addressed.
Wage subsidy program
Further information has been released with on the previously announced wage subsidy program.
While it was previously noted that this program would be available for “small employers”, we now know that this will include:
- All Canadian-controlled private corporation’s (CCPCs) that would have a business limit in the prior year (ending before March 18, 2020) that is greater than nil.
- This would generally include businesses with less than $15 million in taxable capital employed in Canada.
- The rules clarify that any CCPC whose business limit would have been ground down due to passive income in excess of $50,000 would still be eligible for the wage subsidy. .
- Individuals (excluding trusts).
- Partnerships (where all members are either individuals, corporations or charities).
- Non-profit organizations, subject to certain requirements.
- Registered charities.
Businesses will not need to apply for this program, but rather calculate the subsidy manually and reduce their remittances accordingly in the first remittance period that includes remuneration paid between March 18, 2020 and June 20, 2020.
Canada Emergency Response Benefit
While it was previously announced that the federal government would be creating an “Emergency Care Benefit” and an “Emergency Support Benefit”, these benefits have since been combined and replaced with a new Canada Emergency Response Benefit (CERB).
The CERB will provide $2,000 per month (i.e. $500 per week), for up to 4 months (from March 15, 2020 to October 3, 2020), for workers who have lost their income as a result of the COVID-19 pandemic.
Canadian residents who are at least 15 years of age at the time of application and earned at least $5,000 in income from employment or self-employment in the last 12 months qualify to receive the CERB.
The benefit is meant to be wide-reaching, and will apply to, but may not be limited to:
- Canadians who have lost their job, are sick, or are quarantined;
- Those who are taking care of someone who is sick;
- Working parents who must stay home without pay as a result of school and day-care closures; or
- Workers who are still employed but are no longer receiving income as a result of disruptions caused by COVID-19.
There are specific exclusions that apply enacted and those hoping to receive the benefits should familiarize themselves with these rules prior to applying. If someone receives the benefit when they were not entitled to or receives more than they were entitled to, they would be required to repay the overpaid amounts as soon as possible. However, no interest would accrue on the amount payable.
Those who may not be eligible for employment insurance (EI), such as contract workers or self-employed individuals, could still be able to access the CERB. Those who are already receiving regular EI benefits will continue to receive those benefits and should not apply for the CERB.
Canadians who apply for this benefit would begin to receive their CERB payments within 10 days of application. The benefit is taxable so will have to be included in income when filing the personal tax return for 2020. It has been noted that the CERB will be accessible through its own web portal – separate from EI – beginning in early April. Applicants will also be able to apply via telephone. Specific application details are not yet available at this time. We will continue to provide updates as they are announced.
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