Canada Emergency Response Benefit

[Warren Toda]

Applications for the Canada Emergency Response Benefit will start on April 6.  It's $2,000/month. Obviously millions of people will apply for this so expect the system (i.e. the web site) to be jammed.

To minimize overload, they are suggesting that people apply on certain days of the week based on their month of birth. But I doubt this will stop people from rushing forward as if it's a Black Friday sale at Walmart.

You have to (re)apply every month. If your situation gets better (yeah, right) then don't reapply.

They say that once you apply, money will be sent in three business days if you have direct deposit.

[Warren Toda]

For self-employed people like photographers, CERB will end September 27, 2020, at which point it will (probably) be replaced by CRB. Less letters and less money.

The Canada Recovery Benefit (CRB) will be $400 per week and it will last for either 26 weeks or one year - the government's web site currently has contradictory information. But the "one year" bit is in bold text so that must be the correct information. 

There will also (probably) be CRSB (Canada Recovery Sickness Benefit) which will pay you $500/week for up to two weeks if you "cannot work because you are sick or must self-isolate for reasons related to COVID-19." Basically the government will be offering you ten days of paid sick time between September 27, 2020, and September 2021.

More details will be released once they figure out what they're doing.

[Blair Gable]

As I understand it, if you hit a certain amount of income you have to pay half back. If you make a higher certain amount, you have to pay it all back.

The question I always have, is what number do you use to determine eligibility, or if you have to pay some back - before or after expenses? I believe the number you use is after expenses. Am I right?

[Warren Toda]

Under CERB, self-employed people could earn up to $1000/month. But if you made $1001 or more, you had to pay back the entire $2000. The rules for the upcoming CRB have not been released.

The eligibility amount for photographers would not include job expenses. For example, if you billed a customer $1000 for photography plus $200 for expenses, that would count as a $1000 earning. But you can't subtract long-term costs (e.g. depreciation cost of gear) to lower that $1000.

Presumably the government will send you a T4A slip (or maybe they will create a new form) in early 2021 to show how much CERB/CRB you received.  I assume CERB/CRB will just be added to your total income. Then long-term costs (i.e. business overhead) and any other deductions can be used to lower your income tax, including any tax payable on the CERB/CRB money you received.

I don't know if CERB/CRB will be considered a pensionable earning so you might have to pay CPP on the CERB/CRB money.

[Daniel Crump]

Let's just say doing taxes next year is going to be... an adventure?

Here is what I've been able to find so far from the government, which might answer some questions. Of course just like with CERB there is a chance this info will change right up to and after that September 27 start date.

Canada Recovery Benefit
The new Canada Recovery Benefit would be effective from September 27, 2020 for one year and would provide a benefit amount of $400 per week for up to 26 weeks to workers who are not eligible for EI, mainly the self-employed and including those working in the gig economy. These individuals may still require income support if they continue to be unable to return to work due to COVID-19 or had their income reduced relative to pre-COVID-19 pandemic (attestation-based).

The benefit would be available to residents in Canada who:

are at least 15 years old and have a valid Social Insurance Number (SIN)
have 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
are not eligible for EI
had employment and/or self-employment income of at least $5,000 in 2019 or in 2020 and
have not quit their job voluntarily
Workers would apply after every 2 week period for which they are seeking income support and attest that they continue to meet the requirements. In order to continue to be eligible for the benefit the claimant wound need to look for and accept work when it is reasonable to do so. The benefit is taxable.

To encourage claimants to return to work, they would be able to earn income from employment and/or self-employment while receiving the benefit, as long as they continue to meet the other requirements. However, to ensure that the benefit targets those who need it most, claimants would need to repay some or all of the benefit through their income tax return if their annual net income, excluding the Canada Recovery Benefit payment, is over $38,000. In other words, claimants 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.

This means that for a worker who received 10 weeks of the Canada Recovery Benefit in 2020 for a total of $4000, they would have to repay all of the benefit if their net income exceeded the threshold by $8000 (twice the benefit payment amount). In this example, the worker would have to repay the full benefit amount if their net income was greater than $46,000 (not including the Canada Recovery Benefit) in 2020.

The Government of Canada intends to introduce legislation to support the delivery of the new recovery benefits.

Scenario for the Canada Recovery Benefit: Self-employed worker whose business is affected by the COVID-19 pandemic

Ibrahim is a self-employed bookkeeper in Toronto, ON
He earned $34,000 in 2019 but his business has slowed due to COVID-19
Ibrahim 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 Ibrahim qualify for:

With the Canada Recovery Benefit, he could receive $400 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

Main thing seems to be 26 weeks and a $38,000 (CRB not included) cutoff before any repayment.

Link here: https://www.canada.ca/en/employment-social-development/news/2020/08/supporting-canadians-through-the-next-phase-of-the-economy-re-opening-increased-access-to-ei-and-recovery-benefits.html

[Warren Toda]

Handing out CERB money to those who need it is good but the government missed several opportunities. As much as people want money, they also want work.

The US Library of Congress is asking the US public for pandemic photos so that it might have an official record of this historical event. Canada has done / is doing nothing.

Canada should've hired photographers in many cities across the country to document the pandemic. Instead of paying people $2000/month to stay home, why not pay them to do what they're good at? A national picture desk would have coordinated the photography to produce a comprehensive and organized collection of images.

Library and Archives Canada is going to have an empty hole for 2020 as it does for many other important periods in our history. It seems our country's historical record will be dependent on Instagram and Flickr.

[Warren Toda]

The new Canada Recovery Benefit (CRB) will start on October 12, 2020, and will be retroactive to September 27, 2020. The CRB will run until September 25, 2021.

Those who are not eligible for employment insurance (e.g. self-employed photographers) can get $1,000 per two-week period, less $100 held back for income tax. Note that you may still need to pay more in income tax when you file your tax return.

You have to apply every two weeks for CRB which is paid out in two-week periods.

You can apply for a maximum of 13 two-week periods between September 2020 and September 2021. I guess the theory is that either the pandemic will end soon and work will come flowing back, or, you'll find some work during the year and won't need a full year's worth of benefits.

You can work and still collect CRB as long as you earn less than 50% of your average weekly income from 2019, 2020 or the last twelve months.  There is a limitation if you earn more than $38,000/year in 2020 or 2021, in which case you have to pay back 50% of any amount above $38,000, up to a maximum of total CRB received.

Be sure to read the information at the link above.

[Warren Toda]

Let's just say doing taxes next year is going to be... an adventure?

T4A slips for 2020 are now available through your CRA account. I don't know if they will be mailing slips to everyone. The CRA is mailing T4A slips to everyone who collected any type of CERB .

General tax forms (and here) for 2020 have just been published on the CRA site. But some 2020 tax information has not yet been published (as I write this), specifically the two publications that most photographers need:

     T4002 - Self-employed Business, Professional, Commission, Farming, and Fishing Income.
     T2125 - Statement of Business or Professional Activities

These two don't change too much from year to year but you still need current information. Hopefully they will be posted soon.


Update: T4002 and T2125 forms for 2020 have now been published.

[Daniel Crump]

Thanks for keeping us updated, Warren.