CESB - "Unable to Work"

On August 27, 2020, the government updated their comments on eligibility for the CESB. Applicants must either be:

• unable to work due to COVID-19;

• actively looking for, but cannot find work due to COVID-19;

• or currently working during the COVID-19 pandemic, but you expect your income from employment and self-employment to be $1,000 or less (before taxes) during the 4-week period you are applying for

Who is considerd “unable to work”?

Students who may be:

• self-isolating or in quarantine

• ill or have underlying health conditions

• caring for others who are ill or vulnerable to COVID-19

• caring for dependants while schools or daycares are closed, or

• studying abroad and waiting to be repatriated by the Canadian Embassy, or only allowed to work on campus, but cannot find work.

CESB criteria

COVID-Related T4 Requirements

On August 25, 2020 CRA updated their T4 requirements in respect of COVID-Related T4 reporting requirements:

How to report employment income during COVID-19 pay periods

Additional reporting requirements will apply to all employers, and will help the CRA validate payments under the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Response Benefit (CERB), and the Canada Emergency Student Benefit (CESB).

For the tax year 2020, in addition to reporting employment income in Box 14 or Code 71, use new other information codes when reporting employment income and retroactive payments in* the following periods:

• Code 57: Employment income – March 15 to May 9

• Code 58: Employment income – May 10 to July 4

• Code 59: Employment income – July 5 to August 29

• Code 60: Employment income – August 30 to September 26

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.

Example

If you are reporting employment income for the period of April 25 to May 8, payable on May 14, use code 58.

* Originally the word “for” was used. It was updated to “in” on August 26, 2020.

New T4 Reporting Requirements

CESB - Information Validation

On August 4, 2020, The Government of Canada updated their Canada Emergency Student Benefit web page to note that they will be validating information on some submissions. New details on the validation process has been released at https://www.canada.ca/en/revenue-agency/services/benefits/emergency-student-benefit/cesb-getting-payments.html#h-1a

Canadian Fiscal Snapshot Highlights

Key points

• The deficit is expected to reach $343 billion, resulting in a total debt of approximately $1.2 trillion.

• A budget or full fiscal update will be released in the fall.

• Changes will be announced to CEWS to stimulate rehiring and provide support to businesses during reopening.

• No new major incentives or expansions were announced.

• In a subsequent CTV interview, the Minister of Finance was asked how it would be paid for and whether taxes would be raised. The answer was no.

Revenue and expenditure projections

1 This represents those charges applied through the federal backstop, excluding the Output Based Pricing System. All these proceeds will be returned to their province/territory of origin including through Climate Action Incentive payments and other climate action supports.

Note:

1 EI benefits include regular EI benefits, sickness, maternity, parental, compassionate care, fishing and work-sharing benefits, and employment benefits and support measures. The remaining EI costs relate mainly to administration and are part of operating expenses.

2 Of the total Canada Emergency Response Benefit, the portion of payments made by ESDC, estimated to be $3.3 billion in 2019-20 and $32.9 billion in 2020-21, are expected to be charged to the EI Operating Account and reflected in EI benefits.

3 Other fiscal arrangements includes the Quebec Abatement (Youth Allowances Recovery and Alternative Payments for Standing Programs); payments under the 2005 Offshore Arrangements; fiscal stabilization payments to Alberta and Saskatchewan; and established terms for repayable floor loans.

4 This will be included as a transfer payment in the Public Accounts of Canada.

5 This will be included as a transfer payment in the Public Accounts of Canada.

6 This includes capital amortization expenses.

Fiscal Snapshot

Globe & Mail article

CBC highlights article

CRA Resumption of Activities Plan

On June 23, 2020 the CRA National Business Resumption Plan was released.  The Plan provides information to CRA employees regarding the staging of the resumption of program and corporate activities and operations that did not resume during the Agency’s critical services phase from March 16 to June 26.  One guiding principal of the Plan includes the “Fair Treatment of Clients”, recognizing that “many citizens and businesses are still facing the impacts of the COVID-19 crisis”.  Functions will be reinstated in stages, culminating with most reinstated by January of 2021. The following are key activities to be commenced.

July – August:

• Launch of pilot CEWS post payment compliance project through the Trust Exam Program and Employer Compliance Audit

• All remaining functions in the Objections Program, the Taxpayer Relief Program and CPP/EI Appeals to the Minister and to the Courts

• All remaining assessment benefit and service branch activities except

  • Discounter audit

  • T183 monitoring

  • Certain validation activities

• Debt Management Call Centres will begin receiving calls (more flexible and longer term payment plans available)

• GST/HST Refund Integrity program.

• Insolvency officers will begin processing insolvency filings and issue Proofs of Claim to trustees.

• Charities - voluntary revocations, no change audits, high risk audits, and support Appeals objection decisions

Starting in September:

• Additional post-payment validation of new programs introduced as a result of COVID-19 (i.e. CERB, CEWS and CESB)

• Debt Management Call Centres will start making calls to pursue debtors.

• Collection officers will re-evaluate debtor situations.  No legal action.

• Expand assistance to vulnerable taxpayers to meet compliance obligations.

• Underground economy (UE) focus through the development of projects and leads, including raising 152(7) assessments for targeted populations (arbitrary assessments).

• T1 Processing review, including educational strategies.

• Automated Dialing and Announcing Device (ADAD) campaigns to remind taxpayers of upcoming filing requirements

• Re-instate GST/HST Delinquent Filer program’s automated compliance process with mail outs, automated assessments, and the holding of refunds for non-compliant registrants

• Business compliance reviews

• GST/HST letter writing/nudge campaigns 

• CPP/EI Rulings (resume all activities)

Starting in October:

• Collections automated strategies reactivated with collection letters.

Starting in January 2021:

• Traditional approach to collections where legal warnings are issued.  Some high risk situations will start in September.

• Full resumption of Small and Medium Enterprise Directorate and GST/HST Programs

• Charities audits

CRA National Business Resumption Plan