Covid-19 Economic Response Plan – Summary
GST – One-Time GST Credit
One-time additional GST credit will be paid in May 2020, for those entitled to the GST Credits for the normal July 2109 to April 2020 cycle (based on 2018 income tax returns). The maximum entitlement is as follows:
● $290 for a single individual with 2018 net income below $9,413;
● $443, for a single individual with 2018 net income exceeding $24,712. For those between $9,413 to $24,712 the amount is increased from $290 by 1 cent on each dollar of 2018 income earned.
● $580 for a couple (including cohabitating common-law partner); and
● Extra $153 for each child under the age of 19 and residing with the individual
Similar to the normal GST, the one-time credit begins phasing out at 5 cents for every dollar of family income earned in 2018 over $37,789.
Please note that the one-time GST credit is based on the 2018 personal taxes returns and not the 2019 personal tax returns.
Additional Canada Child Benefit Amount
Bill C-13 provides for a one-time additional CCB maximum amount $300 per child for the month of May 2020.
25% Reduction in RRIF Minimum Amount for 2020
2020 minimum amount for a RRIF will be reduced by 25%.
Temporary three-month wage subsidy for eligible employers equal to 10% of the remuneration paid during the three months to a maximum of $1,375 per employee ($55,000 of annual salary with $13,750 gross salary paid over these three months) and $25,000 per employer.
Eligible employers are any person or partnership that employs at least one individual in Canada, has a CRA payroll number of March 18, 2020 and is any one of the following:
- A Canadian controlled private corporation that has more than $0 small business limit;
- An individual other than a trust;
- A partnership, all the members of which are described in (i) to (iii) or (v);
- A non-profit entity; or
- A registered charity
Beginning March 18, 2020 and ending on June 19, 2020 the employer will manually calculate the subsidy as a reduction to the payroll remittance.
Subsidy only reduced income tax. It does not reduce CPP or EI.
The subsidy is taxable to the employer as expressed by CRA.
On March 27, 2020 the federal government announced that the wage subsidy will increase to 75% and that the details of such subsidy will be detailed the week of March 30th.
Canada Emergency Response Benefit (CERB)
Previous announced Emergency Care Benefit and Emergency Support Benefit have been combined into one new plan called the Emergency Response Benefit.
Applies to Workers, defined as at least 15 years old who is a resident of Canada and for 2019 or in the 12-month period preceding the application has an income level of at least $5,000. A worker may apply for income support payments for any four-week period beginning on March 15, 2020 and ending on October 3, 2020.
A worker who still has employment but is not being paid because their employer asked them not to come to work (due to insufficient business) will qualify as ceased to work.
Currently set at $2,000 a month ($500 per week). A worker must apply for any four-week period between March 15, 2020 to October 3, 2020. Therefore, the worker must reapply every four weeks. The maximum number of weeks a worker can receive Emergency Response Benefit is 16 weeks.
This is apparently a taxable benefit with no withholding taxes, so this may lead to difficulties for recipient down the road regarding taxes payable.
Government Guaranteed Small Business Loans
On March 27, 2020 the federal government announced plans to grant government backed small business loans of up to $40,000, of which repayment of loan by December 2022, will eliminate up to $10,000 of the loan amount. As per the Federal Government, details of such plan will be released the week of March 30th, 2020.
To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.
Contact Dang & Co.
Please contact our office if there are any questions regarding the Covid-19 Economic Response Plan and if we can be of assistance in navigating through the measures and amendments to this Plan.