*UPDATE*
The COVID-19 Response Measures Act (formerly Bill C-4) received Royal Assent on October 2nd. The Canada Recovery Benefit was increased to $500/week and the Canada Recovery Sickness Benefit was extended to include those with underlying conditions that make them more susceptible to COVID-19. Here is the complete News Release.
On September 8th, the government announced that the Canada Emergency Commercial Rent Assistance program (CECRA) would be extended by one month to September 30th. The deadline to apply is October 30th, 2020.
____________________________
The following is a summary of key Federal and Ontario Government announcements made over the past month that may be relevant to you and your business:
CERB extension and transition to EI
On August 20th, the Federal Government announced plans to extend the Canada Emergency Response Benefit (CERB) by an additional four weeks to a new maximum of 28 weeks. They also announced plans to temporarily simplify the Employment Insurance (EI) program to provide new EI claimants with a minimum benefit of $400 per week (or $240 for extended parental benefits) for at least 26 weeks beginning September 27th, 2020.
By effectively lowering the insurable hours required for EI eligibility to 120 (through a one-time insurable hours credit retroactive to March 15th, 2020), and freezing the benchmark unemployment rate used to determine benefits, these payments will become available to a considerably higher number of people.
Additionally, the Government is freezing the EI premium rates for both employers and employees at their 2020 levels for the next two years. The employee rate will remain at $1.58 per $100 of insurable earnings, and the employer rate will remain at $2.21 per $100 of insurable earnings.
Note: people who have been receiving CERB benefits through Service Canada and are already eligible for EI will be automatically transferred to the new EI program when CERB ends, but people who made their CERB application through the CRA will need to apply for the new benefit through Service Canada.
Read the full Government of Canada Backgrounder for additional details on the planned transition from CERB to EI.
Three new programs proposed
The Federal Government also announced on August 20th that it intends to introduce legislation on September 23rd to support the delivery of three new temporary benefits that would be effective for one year beginning September 27, 2020:
- The Canada Recovery Benefit would provide $400/week (up to 26 weeks) to self-employed Canadians and those ineligible for EI. To encourage claimants to return to work, recipients would be able to earn up to $38,000 in annual employment or self-employment net income while receiving the benefit. Beyond that threshold, they would need to repay 50 cents for every additional dollar earned above $38,000 in the calendar year to a maximum of the total amount of benefit they received—the same as EI recipients are required to do when working while receiving EI benefits.
Example: a worker receives 10 weeks of the Canada Recovery Benefit in 2020 for a total of $4000. If their net income in 2020 was greater than $46,000 (not including the Canada Recovery Benefit) they would have to repay the full benefit amount, as their net income exceeded the threshold by $8000 (twice the benefit payment amount).
- The Canada Recovery Sickness Benefit would provide $500/week (up to two weeks) to people unable to work due to COVID-19 related self-isolation or illness. Eligible workers would need to have missed a minimum of 60% of scheduled work within the benefit claim week and would not be required to produce a medical certificate.
- The Canada Recovery Caregiving Benefit would provide $500/week, per household (up to 26 weeks) to people unable to work because they must care for a child, dependent or family member due to a school or care-facility COVID-related closure.
All three benefits would be considered taxable income.
Read the full Government of Canada Backgrounder for additional details on the three proposed new benefit programs.
Updated CEWS calculator
The CRA launched an updated calculator mid-month to help employers prepare for Period 5 of the enhanced Canada Emergency Wage Subsidy (CEWS). Period 5—which opened for applications on August 17th—is the first Period for which the new, and considerably complex, subsidy rules apply. The updated rules replaced the previous flat subsidy with a sliding scale subsidy (and a ‘Top-Up’ subsidy) that is dependent on the percentage of revenue lost, allowing eligible employers who have experienced any drop in revenue to qualify.
The online calculator allows you to determine your optimal subsidy rate and provides you with an estimate of your expected subsidy. There is also a printable spreadsheet and statement so you can view your claim at a glance, and quickly and easily enter the required information into the CEWS application form.
Additional CEWS details and the CEWS calculator can be found on the CRA’s updated Canada Emergency Wage Subsidy web page.
CECRA extension
On July 31st, the Federal Government announced that the Canada Emergency Commercial Rent Assistance (CECRA) program would be extended by one-month to August 31st, 2020. Eligibility conditions remain unchanged. Existing applicants will need to reapply for the month of August by September 14th but are not required to reassess their July or August revenue decline if they previously qualified in April, May and June. New applicants need to apply by August 31, 2020. Additional details and the application portal can be found on the CMHC website.
Ontario Government extends interest and penalty-free period
On August 12th, the Ontario Government announced they were extending the interest and penalty-free period for outstanding Ontario business tax returns and payments to October 1st, 2020.
Tax filing and remittance deadlines technically remain the same, but penalties and interest will not be applied to filing or remittance deadlines missed between April 1st, 2020 and October 1st, 2020. This relief applies to the Employer Health Tax (EHT), tobacco tax, fuel tax, gas tax, beer, wine and spirits tax, mining tax, insurance premium tax, international fuel tax agreement, retail sales tax on insurance contracts and benefit plans, and race tracks tax.
Note: Payments due between April 1st and October 1st, 2020, still need to be made by October 1st, 2020.
S+C Partners is committed to helping you
Our team is ready to assist you. Please call us at 905-821-9215 or email us at tax@scpllp.com if you have questions or require any assistance.