Canada Recovery Benefit, Canada Recovery Sickness Benefit & Canada Recovery Caregiving Benefit

Introduction – The Canada Recovery Benefit, the Canada Recovery Sickness Benefit, and the Canada Recovery Caregiving Benefit & Rules

Millions of Canadians have been impacted by the ongoing COVID-19 pandemic. To ensure that Canadians continue to receive the financial support that they need, the Government of Canada recently introduced three new benefits: the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiving Benefit (CRCB).

The Canada Revenue Agency (the CRA) is responsible for administering the CRSB, the CRCB and the CRB benefits. On October 5^th, 2020, the CRA opened the application process for both the CRSB and the CRCB. The application for the CRB are available as of October 12^th, 2020. Eligible Canadians can apply for the CRSB, the CRCB or the CRB online through their CRA’s My Account or by telephone.

To ensure that the CRSB, the CRCB and the CRB benefits provide targeted support for Canadians in need, the Government of Canada implemented the following elements to the application process:

• Shorter eligibility periods of one week for the CRSB and CRCB;
• Shorter eligibility periods of two weeks for the CRB;
• Retroactive periods, meaning that eligible Canadians will be required to apply after the period has ended;
• A 10% tax withholding at source; and,
• A three-to-five day window to receive payments made by direct deposit, and a ten-to-twelve day window to receive payments by cheque, by mail.

The CRSB, the CRCB and the CRB application process includes safeguards in place to protect Canadians from fraudulent benefits claims and non-compliance. The safeguards include identity verification and security measures, to ensure that benefit payments are made and delivered only by Canadians who are eligible for the benefits and are entitled to receive them. In some instances, the CRA may request an applicant to provide additional documentation to support their benefit payment eligibility and application. Further, Canadians applying for the CRSB, the CRCB or the CRB benefits, who have not filed their 2019 T1 Personal Income Tax Returns may be required to provide additional information and supporting documentation before the CRA processes their application. Moreover, Canadians who receive the CRSB, the CRCB or the CRB benefit payment but are later found to be ineligible (for the benefit payment received) will be required to repay the amounts received back to the Government of Canada.

Key Features of the Canada Recovery Benefit (CRB)

The CRB provides income support to employed and self-employed Canadians who are directly affected by the COVID-19 pandemic and who are ineligible for Employment Insurance (EI) benefits.

Canadians who are eligible for the CRB will receive $1000 for a two-week period. However, 10% of this amount will be tax withheld at source. Accordingly, Canadians who are eligible for the CRB will receive $900 after tax (for a two-week period). If an applicant’s circumstances continue past the two weeks period (for which he or she received CRB), he or she may apply to CRB again for up to 26 weeks between September 27, 2020 and September 25, 2021.

To become eligible for the CRB, Canadians must meet the following conditions:

• An applicant must have stopped working and is ineligible to receive EI or had her or his employment income reduced by at least 50 per cent due to the COVID-19 pandemic. These conditions must be met for the entire two-week period for which Canadians are applying to receive the CRB benefit payment;
• Must be present in Canada;
• Must be at least 15 years old;
• Must have a social insurance number;
• Did not apply for or receive any of the following benefits during the period which the applicant is receiving CRB:
  • Canada Recovery Benefit (CRSB)
  • Canada Recovery Caregiving Benefit (CRCB)
  • Short-term disability benefit
  • Worker’s compensation benefits
  • Employment Insurance (EI) benefits
  • Québec Paternal insurance Plan (QPIP) benefits
• earned at least $5000 in 2019, 2020 or in the 12 months prior to submitting the CRB application from employment income, self-employment income or parental benefits;
• did not quit his or her job or reduce their hours voluntarily on or after September 27, 2020
• Applicants; and,
• Did not turn down reasonable work during the two weeks period for which the applicant is applying for CRB.

Key Features of the Canada Recovery Sickness Benefit (CRSB)

The CRSB provides income support to employed and self-employed Canadians (1) who are  unable to work due to an illness; (2) who must self-isolate due to COVID-19; or, (3) who have health conditions that put them at  high risk of getting infected with COVID-19.

Canadians who are eligible for CRSB will receive $500 for a one-week period. However, 10% of this amount will be tax withheld at source. Accordingly, Canadians who are eligible for the CRSB will receive $450 after tax (for a one-week period). If an applicant’s circumstances continue past the one-week period (for which he or she received CRSB), he or she may reapply to the CRSB for up to 2 weeks between September 27, 2020 and September 25, 2021.

To become eligible for the CRSB, Canadians must meet the following conditions and be employed or self-employed on the day before their first application period:

• Must be unable to work for at least 50% of their scheduled work week due to self-isolation for one of the following reasons (1) applicant is or may be infected with COVID-19, or (2) applicant is advised to self-isolate;
• Must be present in Canada;
• Must be at least 15 years old;
• Must have a social insurance number;
• Did not apply for or receive any of the following benefits during the period which the applicant is receiving CRSB:
  • Canada Recovery Benefit (CRB)
  • Canada Recovery Caregiving Benefit (CRCB)
  • Short-term disability benefit
  • Worker’s compensation benefits
  • Employment Insurance (EI) benefits
  • Québec Paternal insurance Plan (QPIP) benefits
• earned at least $5000 in 2019, 2020 or in the 12 months prior to submitting the CRSB application from employment income, self-employment income or parental benefits; and,
• Must not be receiving paid leave from an employer for the same period.

Key Features of the Canada Recovery Caregiving Benefit (CRCB)

The CRCB provides income support to employed and self-employed Canadians who are unable to work because they are caregivers to their children who are under the age of 12 years old or a family member who requires supervised care.

Canadians who are eligible for CRCB will receive $500 for a one-week period. However, 10% of this amount will be tax withheld at source. Accordingly, Canadians who are eligible for the CRCB will receive $450 after tax (for a one-week period). If an applicant’s circumstances continue past the one-week period (for which he or she received CRCB), he or she may reapply to the CRCB for up to 26 weeks between September 27, 2020 and September 25, 2021.

To become eligible for the CRCB, Canadians must meet the following conditions and be employed or self-employed on the day before their first application period:

• • Must be unable to work for at least 50% of your scheduled work week because he or she is caring for a family member under the age of 12 years old or a family member who requires supervised care due to one of the following reasons (1) daycare, day program or care facility is closed due to COVID-19; (2) regular care services are unavailable due to COVID-19; and, (3) the dependent person is (a) sick with COVID-19; (b) considered to be a high risk of being infected with COVID-19; or, (c) self-isolating due to COVID-19
  • Must be present in Canada;
  • Must be at least 15 years old;
  • Must have a social insurance number;
  • Did not apply for or receive any of the following benefits during the period which you are receiving CRSB:
    • Canada Recovery Benefit (CRB)
    • Canada Recovery Caregiving Benefit (CRSB)
    • Short-term disability benefit
    • Worker’s compensation benefits
    • Employment Insurance (EI) benefits
    • Québec Paternal insurance Plan (QPIP) benefits

• earned at least $5000 in 2019, 2020 or in the 12 months prior to submitting the CRCB application from employment income, self-employment income or parental benefits;
• must be the only individual, in the applicant’s household, applying to receive the CRCB for thar week; and,
• Must not be receiving paid leave from an employer for the same period.

The Benefits & Concerns Associated with the CRSB, the CRCB and the CRB Benefits

The CRSB, the CRCB or the CRB benefits and safeguard mechanisms reflects the Government of Canada’s effort to provide financial support to Canadians who have been impacted by the COVID-19 pandemic. However, the security measures, such as the need to provide identity verification and supporting documentation may cause delays in the application process which will likely result in further delays in the delivery and receipt of benefit payments. This is problematic because delayed benefit payments could create financial burdens for taxpayers and their families.

All three benefits, the CRSB, the CRCB and the CRB, are subject to the 10 percent withholding tax. This means that Canadians are not receiving the full amount that they are applying for. For some Canadians, an extra $50 weekly determines whether (or not) they can meet their financial needs. However, since these amounts are taxable it is reasonable for taxes to be withheld at source.

In addition, while all three benefits aim to provide financial support to Canadians who continue to be impacted by the COVID-19 pandemic, none of the benefits address seniors or individuals with disability and their financial needs. Further, while $500 weekly may be sufficient for some Canadians to meet their financial needs, it is less likely to meet the needs of families with three or four dependents. This demonstrates the need for benefit programs that are precisely designed to meet the needs of Canadians and their families who are impacted by COVID-19.

As previously mentioned, Canadians can apply for the CRSB, the CRCB or the CRB benefit online through their CRA’s My Account or by telephone. However, the recent cyberattack incidents against the CRA, which resulted in the temporary suspension of online services connected to My Account, demonstrate how CRA’s online services are not always reliable and they can create harmful consequences and have devastating effects on taxpayers including, but not limited to, financial hardships and identity theft.

Further, while the CRB requires applicants to have stopped working or have their employment reduced without quitting their job or reducing their hours voluntarily, both the CRSB and the CRCB require applications to be employed or self-employed on the day before their first application period. However, the CRSB, the CRCB or the CRB do not address benefit eligibility for Canadians who (1) are impacted by the COVID-19 pandemic; (2) are ineligible for employment insurance; and (3) can not meet the above-mentioned conditions.

Pro Tax Tips – The CRSB, the CRCB and the CRB Benefits

Canadians who receive these benefits when they are not eligible face tax audit and will have to repay the amounts with interest and potentially with penalties. If you have questions concerning the Government of Canada’s CRSB, CRCB and or CRB Benefits, or if your application for any of the above-mentioned benefits is rejected and you would like to dispute the CRA’s decision please contact our law office to speak with one of our experienced Certified Specialist in Taxation Canadian tax lawyers.