Understanding the Federal Government’s Financial Assistance Programs
This week millions of Canadians logged on to apply for the government’s Covid-19 benefit known as the Canadian Emergency Response Benefit (CERB). There is still a lot of confusion surrounding this and the other plans available, here are some facts that will hopefully answer your questions.
Canada Emergency Response Benefit (CERB) and Employment Insurance (EI).
The CERB is a taxable benefit that provides $2000/mth for up to 4 months. It is for workers who have lost their job or income as a result of the Covid-19 pandemic; whether it be from illness, quarantine, work disruption or having to care for others (children). Canadian workers qualify whether they qualify to receive EI or not. Applications are completed on-line or by phone, payments will be directly deposited within 5 days or 10 days if receiving cheque by mail. Anyone who applied for EI on or after March 15 will receive the CERB for the first 16 weeks. For those that would have received EI benefits below the $2000/mth threshold will have their payments bumped up to $2000/mth. For those who would normally qualify for the maximum EI benefit ($573/wk) will instead receive the lower CERB payment of $2000. Canadians already receiving EI benefits will continue to do so; if their benefits end before October and they continue to be jobless due to Covid-19, they can then apply for CERB. Those applying for EI sickness benefits are no longer required to provide a medical certificate. Those who are receiving non-eligible dividends will also be eligible for CERB.
Other Benefits for IndividualsWork-sharing Program
Employees whose hours have been reduced by 10-60% can claim EI for lost wages; the time-frame has now been extended from 38 to 76 weeks.
RIFFs The minimum withdrawal rate for RIFFs has dropped by 25% for 2020. (We are still waiting for instructions on how to adjust payments). A similar decrease will also apply to variable benefit payments under defined contribution pension plans.
Canada Child Benefit (CCB) The maximum annual CCB payment amount will increase by $300 per child for the 2019-2020 benefit year; adjustments are expected to be made for the May payment. The average increase for families will be approximately $550/yr.
Tax Filing Deadline The filing deadline for individuals 2019 tax return is now June 1. For trusts with a taxation year ending Dec.31.2019, the filing deadline is now May 1. Individuals and businesses that owe taxes can defer payments until September. Canada Revenue Agency has also suspended debt collection. Those who expect to receive the GST credit and/or Canada Child Benefit should still file their returns ASAP to ensure their payments for the 2020-2021 benefit year are properly calculated. U.S. taxpayers in Canada have until April 15 to file for an extension of the U.S. tax filing deadline.
GST Credit Those Canadians that are eligible for the GST credit will receive a one-time payment of approximately $400 for singles and $600 for couples; this was payable as of April 9.
Students Loans Payments are now paused until September 30, with no accrual of interest.
Benefits for BusinessesWage Subsidies The Canada Emergency Wage Subsidy is designed to help businesses cover up to 75% of wages to help keep their employees on payroll. The benefit will pay 75% of the first $58,700 ($847/wk) of an employee’s normal income. The subsidy is retroactive to March 15 and is expected to last 3 months (to June 6). Employers must show their revenues have dropped by 15% (pending approval-otherwise 30%) and employees receiving the benefit cannot apply for other unemployment benefits. Businesses that do not qualify for the wage subsidy may still qualify for the previously announced wage subsidy of 10%. Employers can apply for the wage benefit through their CRA My Business Account portal.
Business Loans Government-guaranteed bank loans are available for small businesses up to $40,000. The loans are interest-free for the first year or until Dec.31.2022 and up to $10,000 can be waived for repayment. To qualify, businesses much show they paid between $50,000 to $1 million in total payroll in 2019. These loans will be available by mid-April and should applied for through the businesses’ current financial institution.
Summer Jobs Program Pending approval, there will be an increase to the wage subsidy so that employers can receive up to 100% of the provincial minimum hourly wage for each employee. Employers will be allowed to hire staff on a part-time basis. Employers will also be allowed to adapt their projects and job activities to support essential services. And finally, the end date for employment has been extended to February 28.2021.
Wishing you and your loved ones a Happy Easter. Tell the kids not to worry, the Easter Bunny has been made an essential service!
Tracey
Source: Original article by The Canadian Press written by staff, posted April 3, 2020,