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Today we’re going to take a deeper dive into the new Canada Recovery Benefit (CRB). We covered this a few episodes ago, but there have been some large changes since then and we now know more fine details about the program.
This bill is expected to reach Royal Assent today and is expected to be launched around October 11th.
So join us today as we looks at many of the swirling questions about this program and other important details.
As an upfront disclaimer, this program is not for those that qualify or receive EI. The revamped version of EI was cover a few episodes back and now pays a minimum of $500 a week. Link to episode.
Canada Recovery Benefit Payment Amounts
So on with the CRB! The part that everyone wants to know is how much do you receive. The amount paid by this benefit is now $500 per week or $1,000 for each two-week period. This amount is fully subject to taxation and it’s expected that there will be source deductions taken up-front.
This means that an individual that receives CRB will have an amount less than the $1,000 per period. This amount deducted will be $100 for every two-week period. So for example, that $1,000 benefit would only pay $900 after deductions. Since this is taxable income, you’re essentially prepaying you taxes here.
Since only 10% is being deducted, this means that there will likely be an additional amount due when you file your taxes.
Now this move means that the cashflow received is less than under CERB which unfortunately will lead to some issues for some. On the other hand, the tax burden during tax season will be reduced because your are essentially paying for them now. As it stands, those that received CERB will typically have a tax bill that can easily be several thousands of dollars.
CRB Benefit Length
So the length of time that this benefit will last for is up to 13 periods which is 26 weeks. These periods are currently available from September 27th of this year until September 25th, 2021.
These periods also do not need to be continuous, so individuals can use the benefits during times of income drops. You just need to make sure that you claim a period within 60 days of a period’s end date as failure to do such will disqualify you for those two weeks.
Canada Recovery Benefit Qualifications
Couple boring rules to qualify for the program – you must not be receiving Employment Insurance, you have to be a Residents of Canada and present in Canada during the two-week period, be at least 15 years old on the first day of two-week period, and have a Social Insurance Number (SIN).
Like CERB, you must have also had employment and/or self-employment income of at least $5,000 in 2019, or in 12 months before application. For applications in 2021, this can include income from 2021. Income that’s included here is employment income, self-employed income, parental & maternity benefits and any other source of income prescribed by legislation.
For those that are self-employed, income is determined by using revenue minus eligible expenses and is counted when the work is done, but not paid.
Employment & Income Qualifications
During each two-week period you must also meet one of two definitions; Not employed or self-employed or have a 50% reduction of average weekly income (or an alternative amount if legislation is changed).
The calculations to determine this are a little complicated and there are slight variations whether you are applying in 2020 or 2021.
The basic idea is that your income earned during the two-week period must be 50% or more less than previous earnings. These previous earnings are called average weekly earnings and include income from employment, self-employment and other income sources.
Basically they look at all the income that you earned over a year and divide it by 52.
The list of what counts as income includes employment include, self-employed income, royalties, honoraria and excludes pensions, student loans and bursaries, maternity and parental benefits, and Canada COVID-19 emergency or recovery benefits. Now would probably also be a good time to make sure that your 2019 income taxes are completed.
So if you apply in 2020, they compare your current earnings to the average weekly earnings from 2019 or 12 months before the application. If you’re applying during 2021, you can also compare the average weekly earnings from 2020
During this time period you also need to have sought work or self-employed work and not restricted your ability to do such. You could also not have voluntarily quit your job unless it was reasonable to do such.
Some other clauses include that you must go back to work if an employer has requested it and it’s reasonable to do such. You must have resumed self-employment if possible and not declined any reasonable offer to work.
Annual Earnings Limit
To qualify for the program, you must also have earned under $38,000 and any amount above this will cause the benefits to be clawed back at a rate of 50%. This means that if you received the full $13,000 in benefits during a tax single tax year, you would need to have earned an extra $26,000 to have it fully clawed back to zero. This means that you will still partially receive benefits if you earn up to $64,000.
Since applications can be made in 2020 and 2021, you can also split the benefits over two years to minimize claw back.
When it comes to applications, it’s expected that they will begin around October 11th and be done over the CRA MyAccount portal. Applications will be made to allow those to apply for the backdated periods beginning on Sept. 27th.
Applications must be made every two-week period with an attestation that they continue to meet the requirements
That’s it for today’s episode, but thanks for listening and always you can contact me at email@example.com