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New recovery benefits for individuals

New recovery benefits for individuals

Bill C-4 introduces measures for those who may not qualify for EI, as CERB winds down

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Bill C-4 introduces three new temporary recovery benefits, which the federal government previously proposed and are intended support eligible individuals who may not qualify for Employment Insurance (EI) or who are unable to fully return to work due to reasons related to COVID-19. Namely, these benefits are the Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB-Sickness) and Canada Recovery Caregiving Benefit (CRCB-Caregiving).

These temporary recovery measures were originally included in Bill C-2, which did not proceed past First Reading. Instead, Bill C-4 reintroduced the measures with modified qualification requirements for the CRSB-Sickness. Bill C-4 received First Reading on September 28, 2020.

The federal government's August 20, 2020 announcement proposed a minimum EI benefit rate of $400 per week for new EI claimants as of September 27, 2020. The news release that accompanied Bill C-2 mentions that the government now intends to establish a minimum weekly benefit rate of $500 for new EI recipients, which is in line with the revised CRB. We expect this new minimum weekly benefit rate for new EI claimants will be introduced by regulation in due course.

Background

The federal government previously announced, on August 20, 2020, that it will extend the Canada Emergency Response Benefit (CERB) by an additional four weeks (to a maximum of 28 weeks, and expiring on October 3, 2020) and simplify the EI program to help eligible individuals transition from CERB to the EI system, starting September 27, 2020.

Among other changes, the government said it would allow more individuals to qualify for EI by effectively lowering the insurable hours required to qualify and providing a national minimum unemployment rate. The government also said that it would provide a minimum EI benefit rate of $400 per week for new EI claimants as of September 27, 2020. In addition, the government proposed the new temporary CRB, CRSB-Sickness and CRCB-Caregiving for eligible individuals who may not qualify for EI or who are unable to fully return to work due to reasons related to COVID-19.

For more details on the original announcement please see TaxNewsFlash-Canada no. 2020-69 "Canada Temporarily Enhances EI Program as CERB Winds Up".

Modifications to benefits

There are several differences between the benefits as originally proposed on August 20, 2020 and those currently included in Bill C-4, including that:

  • The CRB now provides a benefit of $500 per week (up from $400)
  • The CRB is extended to qualifying individuals whose income has dropped by at least 50% due to COVID-19
  • The CRSB-Sickness and CRCB-Caregiving are available to qualifying individuals who are unable to work for at least 50% of their normal hours in a given week (down from 60%)
  • The CRSB-Sickness may be available to qualifying individuals who cannot work due to certain conditions that make them more susceptible to COVID-19.

New temporary recovery benefits

The three new temporary recovery benefits introduced by Bill C-4 will be effective from one year starting September 27, 2020 and ending September 25, 2021. The benefits will generally be available to individuals who:

  • Are at least 15 years of age and have a valid Social Insurance Number
  • Are resident and present in Canada for the period in which the benefit relates
  • Have income of at least $5,000 in 2019, 2020 or in the 12 months preceding the benefits' application date from employment, self-employment or certain EI benefits or benefits paid to an individual under a provincial plan because of pregnancy, care of their newborn children or adoption; and
  • Self-employment income for the purposes of these benefits is defined as revenue net of expenses.

Individuals will be able to apply for these temporary recovery benefits through the CRA and will need to attest that they meet all requirements for each benefit period. Individuals may only qualify for one of these recovery benefits for a given benefit period and may be subject to penalties if they make false or misleading claims.

Notably, Bill C-4 also includes amendments to the Labour Code to ensure that federally regulated employees can also have access to these new benefits.

Canada Recovery Benefit (CRB)

This benefit provides $500 per week for up to 26 weeks to certain self-employed individuals or individuals ineligible for EI who require income support. The CRB is available to individuals who, due to COVID-19:

  • Were not employed or self-employed; or
  • Have experienced a drop of at least 50% in their average weekly employment or self-employment income for the two-week period of application as compared with their total average weekly employment and self-employment income in:
    • 2019 or in the 12-month period preceding the CRB application date (for applications made for 2020); or
    • 2019, 2020 or in the 12-month period preceding the CRB application date (for applications made for 2021).

To qualify, individuals must be available and looking for work, must accept work where it is reasonable to do so and meet other specific requirements. Individuals will have to apply for every two-week period and attest that they meet the CRB requirements.

Although claimants will be able to earn income while receiving the benefit, they will have to repay some or all of the benefit through their income tax return if their annual net income, excluding the benefit and certain other adjustments, is more than $38,000. Claimants will be required to repay $0.50 of the benefit for each dollar of their annual net income above the $38,000 limit in the calendar year to a maximum of the amount of benefit they received.

Canada Recovery Sickness Benefit (CRSB-Sickness)

Under this benefit, individuals who are employed or self-employed at the time of application may receive $500 per week for up to two weeks if they are sick or must self-isolate for reasons related to COVID-19. Individuals must be unable to work for at least 50% of the time they would have otherwise been scheduled to work or be unable to devote 50% of the time they would have otherwise devoted to work if they are self-employed because they:

  • Have contracted or might have contracted COVID-19
  • Have underlying conditions, are undergoing treatments or have contracted sicknesses that, in the opinion of a medical practitioner, nurse practitioner or certain government authorities would make them more susceptible to COVID-19; or
    Isolated themselves on the advice of their employer, a medical practitioner, nurse practitioner or certain government authorities for reasons related to COVID-19.
  • To qualify, individuals cannot have received other sick leave from an employer, EI benefits or benefits paid to an individual under a provincial plan because of pregnancy, care of their newborn children or adoption for the application period. Individuals will have to apply for each week they qualify and attest that they meet all CRSB-Sickness requirements.

Canada Recovery Caregiving Benefit (CRCB-Caregiving)

This benefit provides eligible individuals with $500 per week for up to 26 weeks per household if they are required to care for a child or family member due to COVID-19. Individuals must be unable to work for at least 50% of the time they would have otherwise been scheduled to work or be unable to devote 50% of the time they would have otherwise devoted to work if they are self-employed because they had to care for:

  • A child under the age of 12 or family member because schools, day-cares or care facilities are closed due to COVID-19, or
  • A child or family member has contracted or may have contracted COVID-19 and/or required to quarantine.

To qualify, individuals cannot have received paid leave from an employer, EI benefits or benefits paid to an individual under a provincial plan because of pregnancy, care of their newborn children or adoption for the application period. Individuals will have to apply for each week they qualify and attest that they meet all CRCB-Caregiving requirements. Two members of the same household cannot both receive the benefit for the same period.

For more information, contact your KPMG advisor.

Information is current to September 29, 2020. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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