CEWS vs. CERB: A Comparison of COVID-19 Emergency Benefits

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Ottawa rolled out the Canada Emergency Wage Subsidy (CEWS) on April 27, 2020, just over a month after the initial announcement of the COVID-19 emergency response package for Canadians. The new form of financial aid will assist businesses in rehiring staff in preparation for reopening the economy. The CEWS is supposed to prevent job losses and assist employers with a smooth transition into normal operations.

However, many Canadians found themselves laid off work or furloughed at the start of the pandemic and have already qualified for the Canadian Emergency Response Benefit (CERB). Since Canadians can’t receive both benefits, there may be some confusion as to eligibility or repayment of funds. Here is a comparison of the CEWS versus the CERB, who qualifies, and what happens when you make the switch.

An overview of the CEWS

Canadian employers affected by COVID-19 may now be eligible for the CEWS. The benefit is a subsidy of 75% of employee wages, up to $847 per week, up to a maximum of 24 weeks.

The subsidy is available to eligible employers, who have experienced the required reduction in revenue, and have had a Canada Revenue Agency (CRA) payroll account on March 15, 2020. Employers must submit a separate application for each CEWS claim period. They can do so through their CRA My Business Account, a representative or in a Web Forms application.

After applying, employers can expect the CEWS payment within 10 business days. They can then direct the funds to their employees through regular payroll and are encouraged to pay the remaining 25% of employees’ wages if they are able.

Although many businesses are starting to reopen, given they follow social distancing guidelines and safety measures, many others are still closed or operating at a reduced capacity. Therefore, it will be up to the individual companies as to when they can start distributing the CEWS to employees.

To date, over 215,000 CEWS applications have been processed and approved, supporting over two million employees getting back onto the payroll.

A summary of the CERB

Individuals who have been affected by COVID-19 may be eligible for the CERB. Qualified applicants will receive $500 a week for up to 16 weeks.

The benefit is available to individuals who have experienced reduced hours or job loss due to the pandemic and meet the eligibility requirements. Individuals can apply for the CERB through either Service Canada or the CRA, as of March 15, 2020, until October 3, 2020. Applicants have to reapply after each four-week benefit period to receive the funds.

Applicants should receive their payment within three business days through direct deposit, otherwise 10 business days by mail.

As of May 19, 2020, over eight million unique CERB applications have been submitted, with over 14 million applications processed and over $38 million benefits paid.

Comparing government benefits

Here is a comparison of the government financial aid benefits available to Canadians.

The CEWS vs. the CERB

Benefit details CEWS CERB
Benefit period March 15, 2020, to August 29, 2020 March 15, 2020, to October 3, 2020
Benefit amount The subsidy is 75% of employee wages, up to $847 per week, for up to 24 weeks. Applicants can receive $500 a week for up to 16 weeks.
Eligibility requirements To receive the wage subsidy, you must:

  • Be an eligible employer
  • Have an eligible reduction in revenue
  • Have had a CRA payroll account on March 15, 2020
To receive the CERB benefit, you must:

  • Reside in Canada
  • Be at least 15 years of age
  • Have stopped working for reasons related to COVID-19, or are eligible for EI or sickness benefits
  • Have had an income of at least $5,000 in the last 12 months
  • Have not made more than $1,000 from other employment for 14 consecutive days within the four-week benefit period
  • Have not quit your job voluntarily
Tax implications The CEWS is a taxable benefit. However, your employer should withhold applicable income taxes and deductions, as they would on a regular paycheque. The CERB is taxable. Currently, the government isn’t withholding tax at source, which means those receiving the CERB may owe money back April 2021.

Note the benefit period for the CEWS is retroactive to March 15. Therefore, Canadians could qualify for both benefits starting on the same date. However, applicants aren’t eligible for payments from both programs at the same time.

Related read: Financial Relief for Students in Canada

While applicants may, for a period, receive funds from both programs due to the payment process, they will have to pay one of them back.

What happens if you’re receiving the CERB when you become eligible for the CEWS?

One of the main objectives of the CEWS is to rehire Canadians, moving them off the CERB and back on the regular payroll. Once on the job, employees will no longer be eligible for the CERB unless they are making below the $1,000 threshold.

That means employees should no longer apply for the CERB. However, if hired within the four-week benefit period, applicants would get an overlap of payments. In this scenario, you may owe some of the money back. If rehired, employees may have to repay the benefits they already received, as the CEWS is retroactive to the start date of the CERB.

How do you return the CERB once you start to get the CEWS?

Depending on individual circumstances, you may have to return a portion or all the benefits you already received through the CERB. Although the CRA will notify applicants of the amounts owing, it is your individual responsibility to return the benefit.

You have three options to return or repay the CERB.

  • Online: You can return the CERB using CRA My Account.
  • Online banking: Through your financial institution, you can return the CERB as if you were paying a bill. Add a payee and choose “CRA (revenue) – tax instalment” and enter your Social Insurance Number (SIN) as the CRA account number.
  • By mail: If you have the original CERB cheque, you can mail it back with an explanation as to why along with your SIN or Temporary Tax Number (TTN). If you don’t have the original cheque, you can mail your own made out to “Receiver General for Canada.” You’ll need to indicate it is for “Repayment of CERB” and include the eligibility period as well as your SIN or TTN.

Remember, the CERB is taxable, so it is vital to return the CERB before December 31, 2020. Returning the CERB within this timeframe will ensure the CRA won’t improperly issue a T4A for the payments.

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