As the spread of COVID-19 continues to affect our daily lives, we’re continuing to monitor the Canadian government’s rollout of financial help for Canadian businesses and individuals. CEWS vs. CERB, how do those benefit programs work, and who qualifies for what? We’ve also got the latest on taxes and deductions, provincial interest and penalty relief, and that bonus $300 with the Canada Child Benefit.
- Canada Emergency Wage Subsidy (CEWS)
- Canada Emergency Response Benefit (CERB)
- CEWS vs. CERB Taxes and Deductions
- Interest and Penalty Relief
- Canada Child Benefit
- Remain Resilient
Canada Emergency Wage Subsidy
Nearly 10,000 businesses have applied for the federal government’s $73-billion wage-subsidy program to help them deal with the novel coronavirus pandemic. The CEWS makes up half the $145 billion in federal spending on COVID-19 assistance. The subsidy should cover 75 per cent of an employee’s wages—up to $847 per week—for employers of all sizes and all sectors who have experienced at least 15 per cent drop in gross revenues in March, and 30 per cent in April and May. This 75 per cent “eligible remuneration” includes salary, wages and taxable benefits. The CEWS funding is retroactive to March 15 and goes until June 6. This gives employers three four-week periods to claim the benefit. The funds can be directed to employees, “much like a normal accounting process” Francesco Sorbara, Parliamentary Secretary to the Minister of National Revenue, told Global News.
Contrary to what some have understood, workers cannot receive financial help from both the Canada Emergency Response Benefit and the Canada Emergency Wage Subsidy program at the same time. “We really want employers to hire people back. We want people to switch back from the CERB to the wage subsidy,” Carla Qualtrough, the Minister of Employment, Workforce Development and Disability Inclusion, told reporters in April. The federal government wants to make it clear that workers cannot receive funding from both programs at the same time. “So, if you’re getting both, you should probably put one of them aside so that you can pay that back and you don’t get overly challenged with that down the road.” Justin Trudeau said the day CEWS launched, April 27, 2020. People will have to pay back whatever they received through CERB if the wage subsidy covers any of the same time periods.
Business owners are among those who may be eligible for the CEWS, but only if they were paying themselves as an employee of a corporation before March 15. If so, the business is able to qualify for the 75 per cent of the owner’s salary, if it also meets the program’s other criteria. Any employers who changed the legal structure of their business after March 15 are not eligible, according to the Canadian Federation of Independent Business (CFIB). Business owners who pay themselves in dividends are also not eligible.
The Ontario government allowed some businesses to reopen on May 4, the day before CEWS payments started rolling out on May 5, 2020. Businesses can apply using My Business Account, through an online application form or your accountant can do it for you using the Represent a Client option. Be sure to make use of the CRA’s online calculator to work out the amount of your benefit. Before you apply, check that your business details are correct and that direct deposit information for your payroll accounts are up to date to ensure any payments are processed quickly and easily. Reopening the province will be gradual and occur in stages, with two-to-four weeks between the launch of each stage to gauge conditions before moving to the next one. The first wave of businesses permitted to reopen include seasonal businesses and some essential construction projects.
Canada Emergency Response Benefit
The CERB is for Canadians who have lost all or most of their income because of COVID-19, whether they have lost their job or can’t work because they are sick, caring for someone who is sick, under quarantine, or providing childcare. This benefit offers individual Canadians $2,000 every four weeks and is running for up to 16 weeks, from March 15 to September 26, 2020. It’s available to the self-employed, contract workers, and wage earners who are not going back to work immediately (and thus covered by the wage subsidy). It is open for those who normally qualify for employment insurance (EI) as well as those who don’t. Anyone who applied for the Canada Emergency Response Benefit needs to reapply monthly if they want to continue receiving payments.
CEWS vs. CERB Taxes and Deductions
Both the CEWS and the CERB are taxable. However, through CEWS, employers withhold all applicable income taxes and payroll deductions, just like a normal pay period. With CERB, Ottawa isn’t withholding any tax at source on these benefits, so Canadians are getting the full $2,000 a month. The program’s payments aren’t subject to deductions like they are for the Canada Pension Plan and Employment Insurance. Instead, taxes paid on CERB payments depends on your total taxable income for 2020.
Interest and Penalty Relief
Ontario businesses will get five months (April through August 2020) of interest and penalty relief to file and make payments for most provincial taxes, including the Employer Health Tax. Ontario increased the Employer Health Tax (EHT) exemption for 2020 from $490,000 to $1 million. For employers, this means relief of up to $9,945. Instalment payments need to begin after payroll has exceeded the new $1 million exemption level. If you are an employer, find out how you can apply for the new exemption. This accompanies relief from the federal government on interest and penalties from not remitting Corporate Income Tax owing.
The Workplace Safety and Insurance Board (WSIB) is offering financial relief to all Ontario businesses to help reduce the financial burden of the COVID-19 pandemic. The relief package developed cooperatively with the Government of Ontario is worth up to $1.9 billion and all businesses covered by workplace insurance are eligible. It allows businesses who usually report and pay monthly, quarterly or annually, to defer reports and payments until August 31, 2020.
The following payments are eligible for deferral:
Monthly: March 31, April 30, May 31, June 30, July 31, Aug 31
Quarterly: April 30, July 31
Annual: April 30
In addition, there are benefit payments for those with a work-related illness, including COVID-19. As some people’s work puts them at greater risk of contracting the virus, claims received by the WSIB are being adjudicated on a case-by-case basis, taking into consideration the facts and circumstances. Read more about how WSIB makes decisions about COVID-19 claims in this PDF. They have determined that costs associated with COVID-19 related claims will not be allocated to an employer. Instead, they will be allocated on a Schedule-wide basis and there will be no change in premium rates for 2020. You can use WSIB’s online services and upload claim-related information online. The online services are the quickest way to send them information.
Canada Child Benefit
Families receiving the Canada Child Benefit (CCB) will get an extra $300 per child in May, Prime Minister Justin Trudeau said during a news conference on Sunday, May 3, 2020. This one-time financial boost is to help parents deal with the added pressures of COVID-19. Eligible families will automatically receive this bonus payment as part of their scheduled CCB payment in May. This increase is set to deliver almost 2 billion in extra support across the country to help families with the costs of taking care of their kids during this challenging time.
Hopefully, this clears up any confusion about CEWS vs. CERB eligibility, taxes and deductions, Ontario’s interest and penalty relief, as well as the bonus to May’s Child Care Benefit. Canada’s COVID-19 Economic Response plan is being updated and revised in real-time, with an aim to help viable Canadian businesses remain resilient during this challenging time. If you have any questions, remember that your accounting team is an “essential service”.