Canada Recovery Benefits
On October 2, 2020, the Canadian government announced three new temporary Recovery benefits to assist Canadians unable to work, experiencing reduced income due to the COVID-19 pandemic, or recovering or tending to one sick with COVID-19. These recovery benefits are the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and Canada Recovery Sickness Benefit (CRSB). All three programs are administered by the Canada Revenue Agency (the “CRA”).
These new temporary benefits are replacing the Canada Emergency Response Benefit (CERB), as the economy safety restarts. Unlike CERB, the Recovery benefit periods are retroactive. Applicants can only apply within 60 days after the period for which they apply has concluded. The Recovery Benefits are available for those residing and present in Canada who meet the eligibility criteria. There is no citizenship or permanent resident status requirement.
For all Recovery benefits, the applicant must be residing and present in Canada during the period of application. Therefore, Canadians who were abroad and unable to return home due to the travel restrictions surrounding the pandemic are not eligible. Like CERB, the Recovery benefits are taxable and must be included in total income for the taxpayer’s taxation year if received.
Canada Recovery Benefit
The CRB was introduced by the Canadian government to provide assistance to individuals who are not eligible to receive EI regular benefits. These include individuals who are self-employed, or those who experience at least a 50% reduced income due to COVID-19. Eligible applicants for CRB can receive a taxable $500 each week for up to 26 weeks, starting from the period of September 27, 2020 and through September 25, 2021.
While the CRB benefits extend until the fall of 2021, to be eligible, applicants must be available and looking for work. Furthermore, they cannot decline work if offered to them, if it is reasonable to accept the work. There is a claw back for the CRB where taxpayers will be required to repay $0.50 of the Benefit for every dollar in net income earned above $38,000. The threshold does not include the CRB received.
Applications for the CRB began on October 12, 2020.
Canada Recovery Caregiving Benefit
The Canada Recovery Caregiving Benefit (CRCB) provides income support to employed and self-employed individuals who are unable to work because they must care for their child under 12 years old or a family member who needs supervised care. Eligible applicants can receive $500 for each one-week period or $450 after taxes since the CRA will apply a flat 10% deduction at source. Applicants can apply for up to a total of 26 weeks between September 27, 2020 and September 25, 2021.
CRCB applies if the individual’s school, or regular facility is closed or unavailable to them due to measures surrounding COVID-19, or because of sickness, self-isolation, or risk of serious health complications due to COVID-19. However, it does not apply if an individual voluntarily chooses to stay home to care for the child or individual when the child’s school or the individual’s regular facility is open. The exception to this is if in the opinion of a medical practitioner or nurse practitioner, the child or individual would be at risk of having serious health complications if the child contracted COVID-19. The same does not apply if there is an immune-compromised family member in the same household who does not require supervised care.
An individual does not need to use up all of their vacation or other types of leave to apply for CRCB, but they cannot double-claim for the period if they are receiving either CRCB or leave for the period. Furthermore, only one individual in a household may receive the CRCB (i.e. the maximum number of weeks must be shared with the partner).
The application process for CRCB was launched on October 5, 2020.
Canada Recovery Sickness Benefit
The Canada Recovery Sickness Benefit (CRSB) provides income support to employed and self-employed individuals who are unable to work due to sickness, being under quarantine, must self-isolate due to COVID-19, or have an underlying health condition that puts them at greater risk of contracting COVID-19. The individual must provide evidence of the opinion of a medical practitioner, nurse practitioner, person in authority, government or public health authority in respect to COVID-19 susceptibility.
Eligible applicants for CRSB can receive $500 for a one-week period, or $450 after taxes since the CRA will apply a flat 10% deduction at source. The CRSB is available for a maximum of two weeks within the period of September 27, 2020 through September 25, 2021.
CRSB does not apply if the individual must self-isolate but they are able to work from home for more than 50% of their scheduled work per week. An individual does not have to use up any other sick leave before applying for the CRSB. They can still apply even if they have access to private insurance, the EI program or another source of paid sick leave. However, an individual cannot double-claim for CRSB when they have already claimed the sick leave for the same period.
While the CRSB is restricted to COVID-related sick leave, through the streamlined EI program, workers will only require 120 insurable hours of employment to qualify for EI sickness benefits which they can use for any sickness. The application process for CRSB was launched on October 5, 2020.
While the three Recovery benefits ensure Canadians will continue to have access to much needed financial support during the ongoing pandemic, Canadians should be aware of the rules surrounding these benefits. Especially considering the claw back for the CRB, the consequences can be considerable if any of the benefits are taken beyond a certain income level or without eligibility. Retroactive penalties and interest are also a reality if excess payments are accidentally received. You may be asked to supply supporting documentation at a later date.
If you have any questions or concerns, speak with a tax lawyer or tax specialist to discuss if these benefits apply to your particular circumstances. Contact us today!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.