Tax Measures Under Canada’s COVID-19 Economic Response Plan

The Government of Canada is working with provinces and territories through a new transfer to share the cost of a temporary wage boost for low-income essential workers (those earning less than $2,500 per month). Essential workers are those that the provinces and territories have deemed essential in fighting COVID-19, including front-line hospitals and nursing home workers, food suppliers, or essential retail service providers. Quebec and British Columbia have already implemented direct wage support for such low-income essential workers.

For post-secondary students and recent graduates who are not eligible for the CERB or EI, but who are unable to find full-time employment or work due to COVID-19, the government introduced the Canada Emergency Student Benefit[50] (“CESB”). The CESB provides $1,250 per month for eligible students from May to August 2020, and $2,000 per month for students with dependents and those with permanent disabilities. The CRA stated[51] that all applications for the CESB must be submitted before September 30, 2020. The CESB is administered by the CRA.

Canada’s First Ministers announced[52] a Federal/Provincial/Territorial Safe Restart Agreement that will establish a temporary income support program to provide workers with up to ten days of paid sick leave related to COVID-19.

CRA announced[53] new T4 reporting requirements for the 2020 taxation year. These additional reporting requirements will apply to all employers, and will be used to validate payments under the CEWS, the CERB, and CESB. Eligibility criteria for the CERB, CEWS, and CESB is based on employment income for a defined period. The new requirement means employers should report income and any retroactive payments made during these periods.

Longer-Term Income Support for Workers

The maximum duration of the Work-Sharing program, which provides EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers, is extended from 38 weeks to 76 weeks. In addition, eligibility requirements have been eased and the application process has been streamlined.

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