As the CERB winds down, a new program has been proposed to take its place. The Canada Recovery Benefit aims to be effective for 1 year, as of September 27, 2020 and will provide up to $500 per week for 26 weeks to workers not eligible for EI – mainly gig economy & self-employed individuals. This benefit is taxable.
Such individuals unable to return to work due to COVID-19, or those who have reduced income versus pre-COVID-19 times would be eligible.
To be eligible, you must be a Canadian resident who:
- Is at least 15 years old with a valid Social Insurance Number
- has stopped working due to the COVID-19 pandemic and are available and looking for work; or are working and have had a reduction in their employment/self-employment income for reasons related to COVID-19
- is not eligible for EI
- had employment and/or self-employment income of at least $5,000 in 2019 or in 2020 and
- has not quit their job voluntarily
Eligible applicants can even receive the benefit while earning some income, so long as other eligibility criteria continue to be met.
The program intends to encourage people to return to work if possible. Once 2020 income (excluding the Canada Recovery Benefit) reaches $38,000, they would repay their benefit on future income at a rate of $0.50 to the dollar. In other words, benefit recipients would need to repay $0.50 of the benefit for each dollar of their annual net income above $38,000 in the calendar year to a maximum of the amount of benefit they received. In this manner, only those who need the benefit the most end up receiving it.
Scenario for the Canada Recovery Benefit: Self-employed worker whose business is affected by the COVID-19 pandemic
- Jack is a self-employed bookkeeper in Victoria, BC
- He earned $34,000 in 2019 but his business has slowed due to COVID-19
- Jack applied for and received the Canada Emergency Response Benefit (CERB) but his benefits will run out in September
- While his business has begun to rebound, it is still not business as usual and he is only back to working at 40% capacity
What could Jack qualify for:
- With the Canada Recovery Benefit, he could receive $500 per week for up to 26 weeks. If his annual net income for 2020 is above $38,000 (excluding the Canada Recovery Benefit payments), he would need to repay some or all of the benefit when he files his annual income tax return for 2020
This benefit is pending the passage of legislation in the House of Commons and Senate. More details will be made available soon.
This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.