Since our last article on government aid for employers during the COVID-19 health crisis, the Government of Canada has announced a number of additional programs and options to help employers through this difficult time.
Canada’s COVID-19 Economic Response Plan identifies all the federal supports available. Here are the most recent government aid options for employers and employees, as of April 1, 2020:
1. Canada Emergency Response Benefit (CERB) (Announced March 25, 2020)
- The CERB replaces the previously announced Emergency Care Benefit and the Emergency Support Benefit.
- The CERB provides a taxable benefit of $2,000 a month for up to 4 months.
- The CERB will be paid every 4 weeks and will be available between March 15, 2020 and October 3, 2020.
- workers who must stop working due to COVID-19 and do not have access to paid leave or other income support.
- workers who are sick, quarantined, or taking care of someone who is sick with COVID-19.
- working parents who must stay home without pay to care for children who are sick or need additional care because of school and daycare closures.
- workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work.
- wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.
The CERB will be available to workers:
- Residing in Canada, who are at least 15 years old;
- Who have stopped working because of COVID-19 or are eligible for EI regular or sickness benefits;
- Who had an income of at least $5000 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 4-week period.
Coordination with Employment Insurance (EI)
- Employees who have stopped working will be eligible to receive CERB whether they are EI-eligible or not.
- For employees who are already receiving EI regular or sickness benefits, they are eligible for CERB if their EI benefits end before October 3, 2020.
- For employees who have an EI application in progress, they do not need to reapply.
- For employees who receive CERB, they would be able to access EI benefits, should they still remain unemployed after their 4 months of CERB.
How to Apply
- Applications for CERB can be made online starting April 6, 2020.
- Employees should set up their CRA My Account in advance of applying for CERB and sign up for direct deposit to receive their benefits in a timely manner.
- Payments will be made approximately 10 days later.
More details on the CERB can be found here.
2. 10% Temporary Wage Subsidy (announced March 18, 2020 & received Royal Assent on March 25, 2020)
This subsidy is equal to 10% of the remuneration employers pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee, up to a maximum of $25,000 total per employer.
Eligible employers for the 10% Temporary Wage Subsidy
- Are a(n):
- Canadian-Controlled Private Corporation (“CCPC”) eligible for the small business deduction
- Partnership (if their members consist exclusively of individuals, registered charities, CCPCs eligible for a small business deduction)
- Non-profit organization
- Registered charity
- Have an existing business number and payroll program account with the CRA as of March 18, 2020; and
- Pay salary, wages, bonuses or other remuneration to an eligible employee (i.e. an individual who is employed in Canada)
How to Apply
- You do not need to apply for the subsidy.
- You receive the subsidy by reducing your employer payroll source deductions remittance.
- Continue to deduct income tax, CPP contributions and EI premiums from remuneration paid to your employees. Reduce the subsidy amount from the income tax remittance to the CRA. You continue to remit the CPP contributions and EI premiums.
More details can be found here on calculating the 10% Temporary Wage Subsidy.
3. Canada Emergency Wage Subsidy (announced March 27, 2020; details released March 30 and April 1, 2020)
- This per-employee subsidy provides up to 75% of employee salaries and wages (up to a maximum of $58,700 in annual earnings) to qualifying businesses, for up to 12 weeks, retroactive to March 15, 2020.
- The intention is for the wage subsidy to conserve Canadian jobs. The subsidy is meant to be used to keep employees working during the COVID-19 crisis, to re-hire previously laid off employees or to prevent future layoffs.
- The subsidy is available to individuals, taxable corporations, partnerships of eligible employers, registered charities and not-for-profit organizations.
- Public bodies (e.g. municipalities, local governments, Crown corporations, public universities, colleges, schools, hospitals) are not eligible.
- The employer must have suffered at least a 30% decline in revenue as a result of the coronavirus pandemic. Employers must be able to attest to the decline in revenue.
- Revenue from business carried on in Canada from arm’s length sources, using the employer’s normal accounting method, is considered.
- Eligibility is determined by the change in monthly revenues, year over year, for the calendar month in which the period began. The 3 claim periods are:
|Claiming Period||Reference Period for Eligibility|
|Period 1||March 15 – April 11||March 2020 over March 2019|
|Period 2||April 12 – May 9||April 2020 over April 2019|
|Period 3||May 10 – June 6||May 2020 over May 2019|
Subsidy Payment Details
- The subsidy is based on eligible employee remuneration paid between March 15 and June 6, 2020 and is the greater of:
- 75% of an employee’s wages 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% of the employee’s pre-crisis weekly remuneration, whichever is less. The definition of pre-crisis weekly remuneration have yet to be released.
- For new employees, employers are eligible for a subsidy of up to 75% of salaries and wages paid.
- Employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.
- There is no overall limit on the subsidy amount that an eligible employer can claim.
How to Apply
- Apply through your CRA My Business Account portal.
- Claims need to be submitted for each month. Subsidies are expected to be paid within 6 weeks of submission.
- Keep records of the reduction in arm’s length revenues and remuneration paid to employees.
Some Other Notes
- No double-dipping – Both the CERB and the Canada Emergency Wage Subsidy will be administered by the Canada Revenue Agency. Canadians will be able to get one or the other payment, but not both. The Canada Emergency Wage Subsidy cannot be claimed for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the CERB.
- No double-dipping #2 – Employers may be eligible for both the Canada Emergency Wage Subsidy and the 10% Temporary Wage Subsidy. Any benefit received from the 10% wage subsidy will reduce the amount available to be claimed under the Canada Emergency Wage Subsidy for the same period.
- No Taking Advantage – Employers will be required to repay amounts paid under the Canada Emergency Wage Subsidy if they do not meet the eligibility criteria and pay their employees accordingly.
- No Lying – This subsidy relies on the honour system and trusting employers to do the right thing. Penalties, including fines or imprisonment, may be applied to employers who file fraudulent claims, provide false or misleading information, or misuse funds obtained under the program.
More details on the Canada Emergency Wage Subsidy can be found here.
The landscape for government aid is changing quickly. We will keep you apprised as details become available. For an up-to-date listing of programs available to employees and employers, including business loans, access to credit, tax deferrals, industry-specific funding, and other supports, go to these Federal programs and BC Government programs links. For other provinces or territories, please check your respective government sources.
Our previous newsletters on the coronavirus and the workplace can be found here. As always, please feel free to reach out to us if you have any questions during this challenging time.
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