Canada's Covid Support Programs | E009
Full Transcript:
Jason Pereira: Hello, and thank you for joining me for The Wisdom of Wealth, a show where we help educate Canadians about fundamental financial literacy topics to help you make better and more informed decisions and to know when and where to reach out for help. I'm your host, Jason Pereira. Today on The Wisdom of Wealth, we are going to talk about the programs available to Canadians to help cope with the financial impact of COVID-19 and how these programs are changing. Most of these programs have been around for some time now, and many Canadians have figured out what it is they're entitled to, but there are some changes that are happening at the end of September 2020, so today, I'm going to review all the programs briefly, but spend more time on the ones that are changing to let you know what's happening there.
Jason Pereira: By now, you're likely familiar with CERB, the Canadian Emergency Response Benefit. This is the primary support benefit that people who lost their jobs, were unable to work or who were laid off due to COVID are entitled to. The benefit is simple to understand. It's a maximum of $2,000 per month for up to 28 weeks. And while on this benefit, you can still earn up to a thousand dollars per month without losing CERB. However, this benefit is coming to an end on September 27, 2020, and will be replaced by employment insurance and three new different government programs for people who don't qualify for EI. The Canadian Recovery Benefit, or CRB, the Canadian Recover Sickness Benefit, or CRSB, and the Canadian Recovery Caregiving Benefit, the CRCB. Now, let's take a look at each of these.
Jason Pereira: The normal employment insurance program, or EI for short, is being changed in order to accommodate COVID-19. As of September 27th, you will qualify for EI if you were employed for at least 120 hours of work in the last 52 weeks. If you fall short of that, they will consider longer periods if you could not work due to COVID. You have to be able to work and you have to have not left your previous job voluntarily, which means you didn't quit. You were laid off or fired. If you qualify, you will receive up to $400 per week. So yes, this is on average, less than you received under CERB. However, EI on its own would have left many, many people who are self-employed or contract workers out in the cold. In order to help these people during the pandemic, the government developed the three new programs I mentioned earlier. If you're not eligible under EI, you may qualify for one of these new programs. So let's look at how these programs work.
Jason Pereira: If you are self-employed and do not qualify for EI, then you could qualify for the Canada Recovery Benefit, or CRB, which would pay you a total of $400 per week for up to 26 weeks. Now, this period could be extended depending on what happens with the pandemic, but as of right now, it's scheduled to end in March 2021. In order to qualify for this, you have to not be eligible for EI, reside in Canada, be at least 15 years old, have a valid SIN number and have stopped working or been forced to reduce work due to COVID-19. In addition, you have to have made at least $5,000 of self-employment income in 2019 or 2020, and again, not quit work voluntarily. Now, what happens if you go back to work but test positive for COVID? After all, you're forced to self-isolate. Well, that's where the next program comes in to play.
Jason Pereira: The second new benefit is the Canada Recovery Sickness Benefit or CRSB. It's a program designed to help people forced to self-isolate or take time off work due to exposure to COVID-19 or a positive test. The CRSB provides people with $500 per week for two weeks while you're isolating. In order to qualify, you have to, again, reside in Canada, be at least 15 years old, have a valid SIN number and have stopped working due to exposure to COVID-19. You also have to have made at least $5,000 in 2020. And when I say that you have stopped working, you have to basically be unable to perform at least 60% of your regularly schedule job duties. So if you can work from home while in self-isolation, you won't qualify. Now, you also have to not be eligible for other forms of paid sick leave and not be receiving any other government income support benefits already. You can't double dip.
Jason Pereira: Lastly, if you can't work because you're caring for somebody else because of COVID-19, then you could qualify for the CRSB. CRCB is a support program designed to help those who cannot work because they must provide care to children or family members due to the closures of schools, daycares, or other care facilities. CRCB will provide those caregivers with up to $500 per week for up to 26 weeks. In order to qualify, you must, again, reside in Canada, be at least 15 years old, have a valid SIN number, you've had to stop working due to COVID-19 or reduce work due to COVID-19, had at least $5,000 of income in 2020, and again, be unable to perform at least 60% of your regularly scheduled duties due to the situation, and you are caring for either a child under the age of 12 or a family member that is a dependent with a disability. You also cannot be eligible for other sick leave or other income support benefits. Again, you can't double dip. So whether you qualify for EI, CRB, CRSB or CRCB, you will have to apply for these programs as of September 27th, 2020. One other point to remind everybody about is that these benefits are taxable, yet no taxes have been withheld prior to them being paid to you. So you should, if you can, hold onto some of this money for the tax bill that you will face when you file next year.
Jason Pereira: In addition to the various income support programs, several other changes were made in the last few months to help Canadians cope with COVID. None of these are subject to change right now, so I'll quickly review them. These benefits include extra time to pay taxes owing. Please note that the deadline expires on September 30th, and any taxes still due after that time will attract interest and penalties. So if you can, make sure you pay that off in advance. The six month mortgage deferral program that Canadians were able to obtain from their banks is soon to come to an end. This is going to expire at the end of September. So if you were part of these programs and deferring your mortgage or other debt payments, know that as of the end of the month, you're going to have to start making payments again. The top-up for low income essential workers and frontline workers that was put into place will continue on for now.
Jason Pereira: In addition to the benefits already listed, there are a series of benefits available to certain groups of Canadians. For instance, Canadians with disabilities were previously given a tax-free $600 amount and a lower amount for disabled seniors. Students and recent graduates were previously entitled to the Canada Emergency Student Benefit, at $1,250 to $2,000 per month program to help them. It has now ended as of the end of August. Students were also entitled to an increase in the Canada Student Grant Program of up to $6,000 and increased access to student assistance. Seniors also benefit from a reduction of required withdrawals from the registered retirement income fund, thereby reducing the amount of taxable income should they opt to do so. This amount is 25% less than you would otherwise have to take out, so talk to your advisor about whether or not that makes sense for you. Lastly, indigenous peoples are beneficiaries of a number of programs, including support payments, community service payments, hygiene and nutrition programs, and several others. For more details, be sure to look at the Government of Canada website.
Jason Pereira: In addition to the support programs that governments have put in place for individuals, there are several programs put in place to support businesses through this trying time. The Canada Emergency Wage Subsidy is a government program designed to help employers who have suffered losses of revenue in the pandemic with subsidies that could cover up to 75% of employee wages if they've seen revenues decline by over 70%. The amount a business can qualify for depends on how much of a downturn in revenue they have suffered and over what period of time. The benefit has to be applied for a monthly, and any business that has seen a revenue decrease at all should consider applying because they may qualify for a lesser amount. Businesses are also entitled to the Canadian Emergency Business Account. This is an interest-free loan of up to $40,000. Any business that had payroll of $20,000 for expenses of over $40,000 in 2019 will qualify for this loan as long as they have a business bank account, regardless of how the pandemic has impacted them. The loan is interest-free until the end of 2022, and if you pay back 75% of the loan prior to December 31st, 2022, the government will waive repayment of the remaining 25% up to a maximum of $10,000. Now, please note applications for this loan do close on October 31st, so if you qualify and have yet to apply, please do so right away through your local bank.
Jason Pereira: The Canadian Emergency Commercial Rent Assistance Program is a program designed to help businesses impacted by the pandemic with their rents. The rental assistance program would cover up to 50% of a business's rent if the landlord were to reduce the rent by 25%. The program is also scheduled to end in September, and as of this recording, there's been no announcements about extending it. So if you're currently receiving these benefits, please be sure to stay informed about upcoming changes. In addition to the CEWS, the CEBA and the CECRA, the government has put together a lengthy list of several other business programs to support business through this trying time. These include extending the work-share program that allows jobs to be shared amongst multiple employees, which was previously limited to 38 weeks and has now been extended to 76, creating 116,000 job placements for youth employment in various programs, extending the maximum time that someone can be laid off to six months before the triggering of severance, extending deadlines for tax payments to August, so if you haven't paid them yet as a business, you're late, please get on that, waiving tariffs on certain medical goods, and guaranteeing loans for businesses for as little as 6.2 million to a maximum 80 million for large businesses.
Jason Pereira: Beyond what I mentioned here, there's a very long list of programs targeting different industries and interest groups, and these programs continue to change and evolve on a regular basis. So, frankly, I understand that the rapid pace of change can be frustrating and confusing, especially in times of health and stress and concern. and even more so if you're counting on these programs to sustain your lifestyle and your business. Just as the pandemic continues to unfold, so too these various initiatives. So for your own benefit, be sure to stay informed. The best resource is the Government of Canada's Ministry of Finance website.
Jason Pereira: While there's a lot of uncertainty in the world today, there's one thing that is certain, we are going to, as a nation, have to pay for all these benefits and stimulus at some point higher taxes. Over the last few months, we've heard rumors of everything from higher tax rates to higher tax rates on capital gains, higher HST rates, and even taxing the capital gains on principal residences. I've had clients inquire on many occasions over the past few months about what is to be done in anticipation of this. In general, I would say the answer is probably nothing. We know the tax law will change, but we don't know when, and we don't know how. And yes, while you could do certain things in anticipation of that change, this could prove expensive and unnecessary. These strategies or tactics you put in place may be anticipation of changes that never come or may not come for years. Alternatively, you could end up having no impact whatsoever and costing you more money for nothing. When you don't know the rules of the game, you're playing blind. That said, be sure to seek out advice for your own personal situation. If you are willing to take some risk and spend some money now to save money later potentially, then by all means be informed, but know that it may not work or may not pay off at all, but at least be educated about it.
Jason Pereira: So some general advice. If you're someone who's had their employment impacted by COVID, then do what you have to do to stay prudent with your spending right now. The support payments are not huge. If you're someone who's been able to go back to work after your job was interrupted due to COVID, know that that situation could change again if we go back into a phase two or phase one situation if there's another wave or an outbreak. So at this time, take advantage. Be financially prudent and plan for the worst, and if you're one of those people who's lucky enough to have not been adversely impacted by COVID at all, just remember that the entire economy is connected, and while you've come out of this fine, the longer this goes on and the deeper things go, the more likely it's going to affect everyone. So don't think you're immune. Now, more than ever, what matters to all of us is being prudent with both our health and our wealth.
Jason Pereira: That's it for today's episode on programs to support you through the COVID-19 pandemic. As you can see, things are changing, so please stay informed and thank you again for joining us for The Wisdom of Wealth. We hope that you will join us again as we seek to improve your financial literacy and help you live a better life. Until next time, take care.