Updated October1, 2020
Note: All this information is subject to change until the CRB legislation passes. Thus, the CRB benefit, and these comments, are just a proposal at this point, although it is extremely likely it will pass.
The proposed Canada Recovery Benefit (CRB) will provide $500 per week for up to 26 weeks to workers who are self-employed or are not eligible for Employment Insurance (EI). In particular:
- gig workers will be eligible for the CRB;
- workers who have exhausted the CERB will be eligible;
- employees who have exhausted their EI will be eligible; and
- employees who have not worked enough insurable hours for EI will be eligible.
The CRB is designed to replace the CERB, which is ending on October 3, 2020.
Note: The CRB is only a proposal at this time. It has not been legislated yet. This article references updated government announcements only, not the law (which does not exist yet). Once we know more, we will update this post further.
Update September 24, 2020: The draft legislation (Bill C-2) for the CRB is up now on the Parliament of Canada website. Next, on September 25, CTV News reported the NDP supported the draft bill, paving the way to a successful vote.
A worker or self-employed person may be eligible for the CRB if they:
- are not eligible for EI (for example, if they are self-employed or are employed but did not work enough insurable hours to qualify for EI or if EI was already exhausted);
- reside in Canada;
- 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;
- had employment and/or self-employment income of at least $5,000 in 2019 or in 2020; and
- have not quit their job voluntarily
This is the abridged text of the Canada Recovery Benefit Act showing the CRB eligibility requirements:
3 (1) A person is eligible for a Canada recovery benefit for any two-week period falling within the period beginning on September 27, 2020 and ending on September 25, 2021 if
(a) they have a valid social insurance number;
(b) they were at least 15 years of age on the first day of the two-week period;
(c) they were resident and present in Canada during the two-week period;
(d) in the case of an application … in respect of a two-week period beginning in 2020, they had, for 2019 or in the 12-month period preceding the day on which they make the application, a total income of at least $5,000 from the following sources:
(i) employment, (ii) self-employment, (iii) benefits paid to the person under any of [maternity and parental benefits entitlements] of the Employment Insurance Act, (iv) allowances, money or other benefits paid to the person under a provincial [materninity or parental leave plan], and (v) any other source of income that is prescribed by regulation; (e) in the case of an application … in respect of a two-week period beginning in 2021, they had, for 2019 or for 2020 or in the 12-month period preceding the day on which they make the application, a total income of at least $5,000 from the sources referred to in subparagraphs (d)(i) to (v); (f) during the two-week period, for reasons related to COVID-19, … they were not employed or self-employed or they had a reduction of at least 50% [income]…Canada Recovery Benefit Act
$5000 Income Requirement
To be eligible for the CRB, an individual needs a total income in 2019 or in the last 12 months from the application at least $5,000 from one of a mix of the following sources:
- EI maternity or parental benefits
- Income from an employer while on maternity or parental leave
Note: income from self-employment is revenue from the self-employment less expenses incurred to earn that revenue.
Does the CERB or EI regular benefits count as income? No, CERB and EI benefits do not count as income in regard to qualifying for the CRB. Only the above-mentioned types of income qualify.
How long is the CRB?
The CRB will last from September 27, 2020 for exactly one year.
The beginning of the CRB coincides around when the CERB expires (the last CERB period ends October 3).
Individuals may receive the CRB for up to 26 weeks.
How much is the CRB?
The CRB is exactly $500 per week for everyone who qualifies, regardless of income level. It was supposed to pay $400 per week when it was first announced, but the Federal Government increased it to $500 right before the CRB was set to launch.
Is the CRB ‘universal basic income’?
No, the CRB is not universal income support, it only applies to people who lost work because of COVID-19.
How much reduction in income is required?
A person is eligible for the CRB for any two-week period if during that two-week period, for reasons related to COVID-19, they were not employed or self-employed or they had a reduction of at least 50% in their average weekly employment income or self-employment income for the two-week period as compared to:
- For CRB payments for 2020: The total average weekly employment income and self-employment income for 2019 or in the 12-month period preceding the day on which they make the application.
- For CRB payments for 2021: The total average weekly employment income and self-employment income for 2019 or for 2020 or in the 12-month period preceding the day on which they make the application
Earning Income and Receiving the CRB
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 benefits 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.Supporting Canadians through the next phase of the economy re-opening: Increased access to EI and recovery benefits
Difference between CERB and CRB
The main difference between the CERB and CRB is that workers can earn more employment income on the CRB then they could with the CERB. On CERB, workers could only earn $1000 per month, whereas, on CRB, workers can earn employment income up to around $3,800 per month ($46,000/12). Note: claimants must pay $0.50 of the benefit for each dollar of their annual net income above $38,000.
Another difference between the CERB and the CRB is that CRB payments will be retrospective, meaning the money comes after a two-week period of loss of income. This means applicants must wait for two weeks before receiving the first CRB payment. The CERB was prospective, people got money for the upcoming two-week period.
This means, for example, that those switching from CERB to CRB effective September 27, 2020, will be eligible for their first CRB payment as of October 11.
What’s more, the CRB applications are processed through the CRA whereas the CERB had the CRA and Service Canada process applications. An individual will need a CRA account before he or she can apply for the CRB, unlike the CERB where all you needed to do was call or click Service Canada. I would assume this makes the CRB harder to apply for people who do not meet the $5000 income threshold, but I can’t say for certain until the application portal opens up on September 27, 2020.
The other main difference was to be that the CRB only pays $400 per week, whereas the CERB paid $500 per week. However, right before the CRB launched, the Federal Government announced that the CRB will be $500 per week just like the CERB.
Is the CRB taxed?
Yes, just like the CERB, the CRB will be taxed. However, unlike the CERB, the CRB will withhold taxes from each payment (source).
When are you ineligible for the CRB even if you earned income last year?
Individuals are only eligible for the first CRB payment if they had $5000 in income in 2019 or 2020 and they lost their job (or had an income drop of 50%) because of Covid-19.
Individuals are not eligible for the CRB they quit their employment or voluntarily ceased work unless it was reasonable to do so (i.e. a constructive dismissal).
Thereafter, individuals are entitled to the next CRB payment unless they:
- got a new job or replaced their lost income above 50%;
- failed to return to their employment when it was reasonable to do so if their employer had made a request;
- failed to resume self-employment when it was reasonable to do so, or
- declined a reasonable offer to work in respect of work that would have started during the two-week period;
- they were not present in Canada;
- They received the Canada Recovery Sickness Benefit or a Canada Recovery Caregiving Benefit in the two week period claimed;
- they placed undue restrictions on their availability for work; and
- they did not seek work during the two-week period.
Source: Sections 3(d), 3(e), 3(f), 3(h), 3(i), 3(j), 3(k) of the Canada Recovery Benefits Act.
Can you go on EI and CRB at the same time?
No, section 3(G) of the Canada Recovery Benefits Act states that individuals are ineligible for the CRB if they received EI in the same two week period.
If an individual is eligible for EI, and they have a stoppage of work, they must go on EI first. Then, once that person has exhausted their EI entitlements, and they still have a stoppage of work, they would go on the CRB until that is benefit exhausted.
CRB or EI?
Individuals should apply for the CRB if they are ineligible for the new EI system.
If an individual is eligible for the new EI system, they should apply for and receive EI first. After EI is exhausted, they should then go on the CRB. Technically, someone could go on EI for 26-45 weeks (depending on the region), and then go on the CRB for 26 weeks.
Why? Because EI has qualifying periods that are time-limited, whereas the CRB has no such limits (for one year at least). It is best to exhaust EI while you still can, and then receive the CRB after that. In addition, EI pays more than the CRB if you earn more than $905 per week.
Note: EI and CRB both pay a minimum of exactly $500 weekly before tax.
How to apply for the CRB?
Claimants will apply for the CRB using a CRA My Account (not a My Service Canada Account) once it launches on September 27, and then again after every two-week period for which they are seeking income support and must attest that they continue to meet the requirements.
Update, October 1, 2020: The new legislation is expected to pass quickly. To that end, applications for the CRB are expected to open October 11 or October 12. (source). We will update this post when we know more.
Contact Dutton Employment Law for a free phone consultation if you were terminated from work. We are an employment law group focusing on severance. We are located in downtown Toronto, but we serve all of Ontario.