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Tax Update: Government of Canada Announces CERB and EI Changes

26/08/2020


Current as of August 20, 2020 13:00 MST

The Canada Emergency Response Benefit (CERB) will be extended by an additional four weeks to a maximum of 28 weeks. The many Canadians expecting to exhaust their CERB benefits at the end of August will now be able to access an additional month of support.

Employment Insurance (EI) will be available to more Canadians, including those who would not have qualified for EI in the past. This simplified EI program is effective September 27, 2020. Applications for the new recovery benefits will open in October, with payments flowing in three to five days after application submission.

CERB and EI style=

New Recovery Benefits

The government is proposing to implement three new benefits to replace CERB:

  • The Canada Recovery Benefit (CRB) will provide $400 per week for up to 26 weeks, to workers who are self-employed or are not eligible for EI and who still require income support and who are available and looking for work. This benefit will support Canadians whose income has dropped or not returned due to COVID-19. The benefit will allow Canadians to earn more income while on claim as well as include links to Job Bank, Canada’s national employment service, with career planning tools for those seeking employment. In addition, the government will be working with provinces and territories to share information to ensure that Canadians have access to tools and training opportunities to successfully return to the workforce.
  • The Canada Recovery Sickness Benefit (CRSB) will provide $500 per week for up to two weeks, for workers who are sick or must self-isolate for reasons related to COVID-19.
  • The Canada Recovery Caregiving Benefit (CRCB) will provide $500 per week for up to 26 weeks per household, for eligible Canadians unable to work because they must care for:
    • a child under age 12 due to the closures of schools or daycares because of COVID-19.
    • a family member with a disability or a dependent because their day program or care facility is closed due to COVID-19.
    • a child, a family member with a disability, or a dependent who is not attending school, daycare, or other care facilities under the advice of a medical professional due to being at high-risk if they contract COVID-19.

Employment Insurance Changes

Summary:

Temporary measures to help Canadians access EI benefits more easily include:

  • 120 hours of work required to qualify;
  • Minimum benefit rate of $400 per week; and,
  • At least 26 weeks of regular benefits.

One-time insurable hours credit: To help individuals qualify with a minimum of 120 hours of work, EI claimants will receive a one-time insurable hours credit of:

  • 300 insurable hours for claims for regular benefits (job loss)
  • 480 insurable hours for claims for special benefits (sickness, maternity/parental, compassionate care or family caregiver)

The hours credit will also be made retroactive to March 15, 2020

Minimum unemployment rate: A minimum unemployment rate of 13.1% is being used for all EI economic regions in order to lower the hours required to qualify for EI regular benefits. This measure is effective for one year starting on August 9, 2020.

Minimum benefit rate: EI claimants as of September 27, 2020 will receive a minimum benefit rate of $400 per week (or $240 for extended parental benefits), if this is higher than what their benefits would otherwise be.

Employment Insurance Premium Rate Freezes

EI premium rate freeze: The government is freezing the EI premium rate for employees at the 2020 level of $1.58 per $100 of insurable earnings for two years. The rate for employers, who pay 1.4 times the employee rate, will also remain unchanged at $2.21 per $100 of insurable earnings. This is the lowest rate since 1980. This will save employers and employees approximately $2 billion.

Cost and Implementation

Cost: The three new recovery benefits, which will be taxed at payment, are expected to cost $22 billion. The extension of CERB another $8 billion and added EI costs are pegged at $7 billion, for a total of $37 billion.

Implementation: The government intends to introduce new legislation to support the implementation of the new benefits. Parliament is currently prorogued until Sept. 23, when the House of Commons will begin a new session with a speech from the throne crafted by the Liberal government.

For more details: https://www.canada.ca/en/employment-social-development/news/2020/08/supporting-canadians-through-the-next-phase-of-the-economy-re-opening-increased-access-to-ei-and-recovery-benefits.html