Tax Measures Under Canada’s COVID-19 Economic Response Plan

As of June 1, 2020, the CRA has opened up its National Leads Program to information about fraud in COVID-19 federal aid programs, including the Canada Emergency Response Benefit (“CERB”), CESB, and CEWS (each of which is defined infra).

Federal Tax Measures for Canadians

Temporary Income Support for Individuals

The Government of Canada has introduced temporary[41] measures to help Canadians as Canada’s economy restarts. On October 2, 2020, Bill C-4, An Act relating to certain measures in response to COVID-19[42], received royal assent and was enacted into law the following recovery benefits:

  • A simplified EI program took effect September 27, 2020, and includes a temporary minimum of 120 hours of work in the past 52 weeks required to qualify. There will be a minimum benefit rate of $500 per week and at least 26 weeks of regular benefits.
  • A new Canada Recovery Benefit[43] (“CRB”) is available since September 27, 2020, for one year, and provide a benefit amount of $1000 for a 2-week period, for up to 13 periods (26 weeks). The benefit is for workers who are not eligible for EI, mainly the self-employed and including those working in the “gig” economy, who are currently not working for reasons related to COVID-19, or had a reduction of at least 50% in average weekly income compared to the previous year due to COVID-19. Recipients can earn employment and self-employment income while receiving the CRB. However, recipients will have to reimburse $0.50 of the benefit for every dollar of net income they earn above $38,000 during the calendar year at the same time their personal tax return is due.
  • A new Canada Recovery Sickness Benefit[44] (“CRSB”) is available since September 27, 2020, for one year, and provide a benefit amount of $500 per week, for up to two weeks. The benefit is for workers who are unable to work at least 50% of their scheduled work week because they are sick or must self-isolate due to COVID-19.
  • A new Canada Recovery Caregiving Benefit[45] (“CRCB”) is available since September 27, 2020, for one year, and provide a benefit amount of $500 per week for up to 26 weeks per household. The benefit is for workers who are unable to work at least 50% of their scheduled work week because they are caring for a child under the age of 12 or for a family member because schools, day-cares or care facilities are closed due to COVID-19 or because the child or family member is sick and/or required to quarantine.

Amounts received under all three benefits program are taxable and a 10% withholding tax will be applied at source. T4A slips will be issued by the CRA to reflect the total COVID-19 benefits received and the amounts withheld at source.

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