COVID-19 Tax Update: Eligibility Criteria and Application Processes for the Temporary Wage Subsidy and Canada Emergency Response Benefit
(Released April 6, 2020)
As we head into the second week of April, businesses, charities/NPOs and individuals will have access to several of the Federal government’s COVID-19 response initiatives. With that in mind, we wanted to provide an update on eligibility criteria, benefits, and logistics of the following measures:
Temporary Wage Subsidy Availability
Retroactive to remuneration paid from March 18, 2020 to June 19, 2020 (Period).
Complete Eligibility Criteria for the Temporary Wage Subsidy:
An employer that is a(n):
- individual (except a trust)’
- Canadian-controlled private corporation (CCPC) eligible for the Federal small business deduction (SBD)’
- registered charity’
- NPO’ or
- has an existing Federal business number (RC account) and payroll program account (RP account) with the CRA on March 18, 2020; and
- pays salaries, wages, bonuses or other remuneration to an individual employed in Canada.
Amount of Subsidy:
Equal to 10% of the remuneration paid during the period, up to $1,375/employee, to a maximum of $25,000/employer. Associated CCPCs are entitled to their own $25,000 limit.
How to Access/Apply for the Temporary Wage Subsidy:
Calculated manually by each employer, or their payroll service provider (PSP), and deducted from remittances made for a pay period. The amount is retained by the employer. Employers will need to keep documents and records to support their Subsidy calculations
Please note that the value of the Subsidy is taxable to the employer.
Calculation of the Subsidy Example:
- Employees during the Period: 5
- Monthly payroll: $5,000 average/employee = $25,000
- Maximum Subsidy for the Period: $1,375 x 5 = $6,87
|Period||Calculation||Decrease in Payroll Remittance|
|March 18 to April 19, 2020||$25,000 x 10%||$2,500|
|April 20 to May 19, 2020||$25,000 x 10%||$2,500|
|May 20 to June 19, 2020||$6,875 – $2,500 – $2,500||$1,875|
Employers should take note that the $1,375/employee limit supersedes the $25,000 employer limit, as seen in the example above.
Where the Temporary Wage Subsidy Exceeds Remittances
If the value of the Subsidy in a given pay period exceeds remittances, the excess Subsidy can be carried forward to a future pay period, including those after June 19, 2020.
Please note, employers can also choose to claim their total Subsidy at the end of 2020 and request the CRA to refund the amount or use it towards next year’s remittances.
Canada Emergency Response Benefit Availability:
Retroactive to March 15, 2020 to October 3, 2020. Individuals must apply by December 2, 2020 to receive retroactive benefits.
Complete CERB Eligibility Criteria:
The CERB is available to individuals without employment or self-employment income for reasons related to COVID-19 who meet all of the following conditions:
- Reside in Canada and are at least 15 years old,
- have stopped working because of COVID-19 or are eligible for EI regular or sickness benefits,
- had an income of at least $5,000[ii] in 2019 or during the 12 months prior to the date of their CERB application, and
- are, or expect, to be without employment or self-employment income for at least 14 consecutive days during their initial 4-week CERB period. For subsequent CERB periods, they expect to have no employment or self-employment income.
CERB Amount to be Received:
The CERB provides $500/week for up to 16 weeks. However, recipients will receive $2,000 in one payment representing a 4-week block. Initial CERB applications are for a single payment covering 4 weeks during the Period. If you remain without (self) employment income, you can apply for an additional 4-week period, up to a maximum of 16 weeks (4 periods in total).
Please note the amount received is taxable but tax will not be withheld at source.
How to Access/Apply for the CERB:
Applications for the CERB will begin the week of Monday, April 6, 2020.
There are two ways to apply for the Canada Emergency Response Benefit:
- online using CRA’s My Account[iii]; or
- by the phone via an automated toll-free line at 1-800-959-2019. Phone applicants will need to provide their social insurance number and postal code for security purposes.
Both services are available 21 hours/day, 7 days/week from 6 AM to 3 AM. Individuals who have applied for EI regular or sickness benefits on or after March 15, 2020 are automatically enrolled for the CERB. In hopes of avoiding system overloads, applications will be processed based on the following schedule:
Application Schedule for Canada Emergency Response Benefit:
|Individual Born in the Month of||Day to Apply for CERB||Best Day to Apply|
|January, February or March||Mondays||April 6|
|April, May or June||Tuesdays||April 7|
|July, August or September||Wednesdays||April 8|
|October, November or December||Thursdays||April 9|
|Any month||Fridays, Saturdays or Sundays||N/A|
[i] All members must be either individuals (except trusts), registered charities and/or CCPCs that are SBD eligible.
[ii] The $5,000 threshold can be met through a combination of any of the following sources: employment; self-employment; maternity and parental benefits under the EI program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan. The income also does not have to be from a source in Canada.
[iii] If you do not have a CRA My Account, please follow this link to register: https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html