Tax Alert – Federal Government Announces Measures To Support Canadians Transitioning From The Canada Emergency Response Benefit

September 02, 2020

On August 20, 2020, Deputy Prime Minister and Finance Minister, Chrystia Freeland, along with  Minister of Employment, Workforce Development and Disability Inclusion, Carla Qualtrough, announced changes intended to support Canadians while transitioning from the Canada Emergency Response Benefit (CERB) to Employment Insurance (EI). This announcement included a four-week extension of the CERB, along with updates to the EI program and the introduction of three new recovery benefits for those who do not qualify for EI.

Extension of the CERB

The CERB, which provides a taxable benefit of $500 per week to eligible applicants, was extended earlier this summer by an additional eight weeks—from a maximum of 16 weeks to 24 weeks—and with this announcement will now apply for a total maximum eligibility period of 28 weeks. With many Canadians anticipated to exhaust their CERB benefits by the end of September, this additional four weeks of eligibility aims to help the government ease Canadians’ transition away from the CERB towards other forms of income support.

For more details regarding the CERB, including who is eligible and how to apply, please read our Tax Alert, The Canada Emergency Response Benefit (CERB) in Response to COVID-19.

Updates to the EI Benefits program

In order to enhance EI benefits and make them more available to those who may require continued income support, the government announced the following changes effective on September 27, 2020:

  • EI Premium Rate Freeze: The 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 also remain frozen at $2.21 per $100 of insurable earnings over the same period. 
  • 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 claim. This measure is intended to reduce the negative impact on EI benefit rates for workers who either lost their jobs or saw their hours of work reduced as a result of COVID-19.
  • Hours Credits to Enhance Access to EI Benefits: The government is allowing a one-time insurable hours credit of 300 insurable hours for regular benefits and 480 insurable hours for special benefits (sickness, maternity/parental, compassionate care or family caregiver) to assist those prevented from accumulating the number of insurable hours normally required because of the COVID-19 pandemic. Hours credits will be made retroactive to March 15, 2020 for claimants who want to transition early from the CERB to EI maternity, parental, compassionate care, family caregiver, or work-sharing benefits, but were not able to satisfy the hours requirement. The qualifying period will also be extended for these claimants. This credit will be available for new EI claims, for the period of one year.   
  • Minimum EI Unemployment Rate: In order to lower the hours required to qualify for EI regular benefits, the government is implementing a minimum unemployment rate of 13.1% for all EI economic regions. Fixing a minimum rate at 13.1% will set a uniform eligibility requirement for EI regular benefits at 420 hours of insurable employment (before the hours credit is applied), provide a minimum entitlement of 26 weeks of regular benefits, and set 14 as the number of best weeks of earnings used in the calculation of the weekly benefit rate. This measure will be in effect for one year, starting on August 9, 2020.
  • EI Fishing Benefits:  The government is implementing certain temporary measures to benefit self-employed fish harvesters who rely on EI fishing benefits in the off-season.

New Canada Recovery Benefits

To ensure that Canadians who do not qualify for EI benefits continue to receive income support as the COVID-19 pandemic persists, the government is introducing three new Canada recovery benefits:

The CRB would be made available to residents in Canada who:

Recipients of the CRB would be required to reapply every two weeks and attest that they continue to meet the requirements. Claimants will also need to look for and accept work when it is reasonable to do so in order to remain eligible. Claimants would be permitted to earn income from employment and/or self-employment while receiving the CRB; however, they would be required to repay 50 cents of the benefit for each dollar of their annual net income above $38,000 in the calendar year, to a maximum of the amount of benefit they received.

  1. Canada Recovery Benefit (CRB): The CRB would provide a taxable benefit amount of $400 per week for up to 26 weeks to those workers who are ineligible for EI, including those who are self-employed or who work in the gig economy.
    • 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 who are working and have had a reduction in their employment/self-employment hours as a result of 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.

This benefit would be available to workers who:

Workers could not claim the CRSB and receive other paid sick leave for the same benefit period. In addition to meeting the eligibility criteria for this benefit, workers would need to have missed a minimum of 60% of their scheduled work in the week for which they claim the benefit. A medical certificate would not be required to qualify.

  1. Canada Recovery Sickness Benefit (CRSB): The CRSB would provide a taxable benefit of $500 per week for up to two weeks to eligible workers who are unable to work because they are sick or must self-isolate due to COVID-19.
    • reside in Canada;
    • are at least 15 years old and have a valid SIN;
    • are employed and/or self-employed at the time of application; and
    • earned at least $5,000 in 2019 or in 2020.

In order to be eligible for the CRCB, individuals must:

  1. Canada Recovery Caregiving Benefit (CRCB): The CRCB would provide a taxable benefit of $500 per week, for up to 26 weeks per household, to eligible Canadians unable to work because they need to provide care to children or support to other dependents who have to stay home because of COVID-19.
    • reside in Canada;
    • be at least 15 years old on the first day of the period for which they apply for the benefit;
    • have a valid SIN;
    • be employed or self-employed on the day immediately preceding the period when 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 normal scheduled work within a given week because:
      • they are caring for a child under the age of 12 (on the first day of the period for which the benefit is claimed), who is unable to attend school or daycare because it is closed or because they are at high risk if they contract COVID-19, or if their regular caregiver is not available due to reasons related to COVID-19; or
      • they must care for a family member with a disability or a dependent who is unable to attend their day program or care facility because it is closed or because they are at high risk if they contract COVID-19, or if their regular caregiver is not available due to reasons related to COVID-19;
    • 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 CRB, the CRSB, short-term disability benefits, workers’ compensation benefits, or any EI benefits or Quebec Parental Insurance Plan benefits in respect of the same week.

Two members residing in the same household could not be in receipt of the benefit for the same period. Workers would apply after the period in which they are seeking income support and would attest that they meet the requirements.

The CRB, CRSB, and CRCB would become effective on September 27, 2020 for one year. The CRA would administer these new recovery benefits and Canadians would be able to apply through the CRA. More information will be provided by the CRA in the coming weeks on how to apply. The federal government has yet to introduce legislation to support these new benefits.

Transitioning from CERB to EI benefits

Canadians receiving CERB benefits through Service Canada, who are eligible for EI and continue to need income support, will be transitioned to the EI program once they have received the maximum CERB benefits for which they are entitled. Those currently receiving the CERB from the CRA, who believe that they are entitled to EI benefits after exhausting their CERB benefits, will be able to apply for EI benefits through Service Canada after September 26.

Summary

These changes may impact you if you are expecting to transition from the CERB to other forms of income support after September 26, 2020. Contact your BDO advisor if you have any questions about applying for EI benefits, or for the new Canada Recovery Benefits.


The information in this publication is current as of August 26, 2020.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.

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