COVID-19 Economic Response Plan

The situation regarding COVID-19 is changing rapidly. This post is current as of April 20, 2020.

 

The Government of Canada announced the first phase of its economic response plan on March 18, 2020. In the weeks that have followed, the Government has made changes and additions to its plan and provided more details with respect to certain programs. This blog provides further information on some of the programs that might be useful to employers.

 

Canada Emergency Wage Subsidy (CEWS) and

On March 27, 2020, the Government first announced the Canada Emergency Wage Subsidy. On April 11, 2020, the COVID-19 Emergency Response Act, No. 2 (the "Act") received royal assent. The Act amends the Income Tax Act (the "ITA") to introduce the CEWS program as part of Canada's response to the COVID-19 pandemic.

Generally speaking, the program provides a subsidy for defined periods to employers who have experienced significant decreases in revenue. According to the Federal Government, the program is intended to prevent job losses, encourage employers to re-hire workers laid off as a result of COVID-19 and help employers resume normal operations following the crisis.

Employers eligible to apply for the subsidy include corporations (other than a corporations exempt from income tax under the ITA and public institutions), individuals, registered charities (other than public institutions) and certain partnerships.

The subsidy will apply to certain qualifying periods, being (1) March 15, 2020 to April 11, 2020, (2) April 12, 2020 to May 9, 2020 and (3) May 10, 2020 to June 6, 2020.

Eligible employers who suffer a drop in qualifying revenue of 15 per cent in March, 2020 or 30 per cent in either April or May, 2020 (as compared to the same months in 2019 or to certain months in 2020) may be able to access the subsidy for the relevant qualifying period.

Eligible employers will be able to apply for the Canada Emergency Wage Subsidy through the Canada Revenue Agency’s portal.

For more details regarding the CEWS, see our separate blog post at https://www.dalelessmann.com/news/blog/canada-emergency-wage-subsidy%E2%80%94next-steps:

 

Temporary Wage Subsidy

Organizations that do not qualify for the Canada Emergency Wage Subsidy may continue to qualify for the previously announced 10 per cent Temporary Wage Subsidy. For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10 per cent Temporary Wage Subsidy for a period, the Government has indicated that any benefit from the 10 per cent Temporary Wage Subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period.

For more details about the Temporary Wage Subsidy, see our separate blog post at https://www.dalelessmann.com/news/blog/canadas-tax-relief-measures-covid-19-pandemic-snapshot.

 

Employment Insurance Sickness Benefit

For employees who are eligible for Employment Insurance (EI) sickness benefits, the Government is:

  • Waiving the one-week waiting period for those individuals in imposed quarantine that claim EI sickness benefits. This temporary measure will be in effect as of March 15, 2020.
  • Waiving the requirement to provide a medical certificate to access EI sickness benefits.

 

Canada Emergency Response Benefit

On March 25, 2020, the Government passed legislation to establish the Canada Emergency Response Benefit (CERB). This taxable benefit provides $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic. The CERB replaces the previously announced Emergency Care Benefit and Emergency Support Benefit.

The stated goal of the CERB is to help businesses keep their employees as they navigate these difficult times, while ensuring they preserve the ability to quickly resume operations as soon as it becomes possible.

On April 1, 2020, the Government announced that Canadians will be able to apply for the CERB on Monday, April 6, 2020. The CERB will be paid every four weeks and be available from March 15, 2020 until October 3, 2020.

The CERB will provide income support to eligible workers. A worker is a person who is at least 15 years of age, who is resident in Canada and who, for 2019 (or in the 12-month period preceding the day on which they make an application for a CERB income support payment), has a total income of at least $5,000 from the following sources:

  • employment;
  • self-employment;
  • EI benefits; and
  • allowances, money or other benefits paid to the person under a provincial plan because of pregnancy or in respect of the care by the person of one or more of their new-born children or one or more children placed with them for the purpose of adoption.

On April 15, 2020 the CERB eligibility criteria was expanded to permit workers who have stopped working due to COVID-19 to earn up to $1000/month while collecting CERB. More specifically, workers are eligible for income support payments if:

  • when submitting their first claim, they have not earned more than $1,000 in employment and/or self-employment income for 14 or more consecutive days within the four-week benefit period of their claim; and
  • when submitting subsequent claims, they cannot have earned more than $1,000 in employment and/or self-employment income for the entire four-week benefit period of their new claim.

The Government has indicated that workers cannot be paid EI benefits and the CERB income support amount with respect to the same period The Government has provided the following administrative guidance:

  • If you are already receiving EI regular or sickness benefits, you will continue to receive those benefits until the end of your benefit period.
  • If you were eligible for EI benefits that started before March 15, 2020, and if your EI benefits end before October 3, 2020, you can apply for the CERB once your EI benefits stop, if you meet the eligibility requirements.
  • If you became eligible for EI prior to March 15, 2020, your claim will be processed under the pre-existing EI rules. If you became eligible for EI regular or sickness benefits on March 15, 2020 or onward, your claim will be automatically processed through the Canada Emergency Response Benefit.
  • If you are eligible for EI regular and sickness benefits you will still be able to access EI benefits after the period covered by the CERB.

For more details about the CERB, see https://www.canada.ca/en/department-finance/news/2020/03/introduces-canada-emergency-response-benefit-to-help-workers-and-businesses.html and https://www.canada.ca/en/services/benefits/ei/cerb-application.html.