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Since the beginning of the COVID-19 pandemic, business owners are facing many financial challenges that can result in ceasing their business operation. As a relief, CRA implemented many emergency response programs to help self-employed, small, and large business owners.

Support For Self-Employed

Canada Emergency Response Benefit (CERB):

Self-employed individuals were able to apply for CERB until Sep 26th, 2020. The program paid $2,000 taxable benefit for every qualifying period. You have to meet the regular requirement which are:

  • Be a Canadian resident who is 15 years of age or older
  • Earned $5,000 in employment (even if you are a student) or self-employment* in the 12 months prior to your application.
  • Your income in the 4 weeks’ period you apply for cannot exceed $1,000
  • You have to reapply every 4 weeks
  • You couldn’t combine CERB with any other emergency benefit.

*Self-employment and rental income is net business or net rental income after business and rental deductions.

Canada Recovery Benefit (CRB):

Started on Sep 27th, 2020, self-employed individuals were able to apply for CRB. The program pays $500 per week for every qualifying period and is expected to last until Sep 25th,2021. CRA withhold 10% taxes from every CRB payment so you will receive $450 per week. CRB has similar eligibility requirements as CERB. However, your income does not have to be less than $1,000 during the application period; instead, you would have had a 50% reduction in income compared to the previous year’s income. If your total income of 2020 exceeds the $38,000 threshold, you will have to pay a reimbursement of $0.50 for every dollar you earn above the threshold.

You will receive a T4A with payments from CERB and CRB indicating the benefits received and the taxes withheld on the CRB portion. Report the income on your 2020 income tax and benefit return.

Recovery Caregiver Benefit (CRCB) and Canada Recovery Sickness benefit (CRSB):

  • If you are unable to perform at least 50% of your duty because you are asked by a medical practitioner to self-isolate because you are sick with COVID-19, you can apply for CRSB.
  • If you are unable to perform at least 50% of your job because you are taking care of someone who is sick with COVID-19,
  • or if you are taking care of a child under the age of 12, in your home because they cannot attend school or daycare, you can apply for CECB.

Both benefits (CRCB & CRSB) pay $500 per week ($450 after-tax) and you will have to reapply every week. You cannot combine these benefits with other emergency response benefits.

You will receive a T4A slip reporting different benefits you have received during COVID. Report these amounts on line 13000 of your income tax return:

  • Box 197, Canada Emergency Response Benefit (CERB)
  • Box 200, Provincial/Territorial COVID-19 financial assistance payments
  • Box 202, Canada Recovery Benefit (CRB)
  • Box 203, Canada Recovery Sickness Benefit (CRSB)
  • Box 204, Canada Recovery Caregiving Benefit (CRCB)

Support For Businesses With Payroll Accounts

Canada Emergency Wage Subsidy (CEWS):

If you have experienced a drop in business revenue and have a CRA payroll account, you can apply for CEWS. The subsidy varies depending on how much your revenue decreased in each qualifying period. You can calculate your subsidy rate by using the CRA calculator.

Temporarily Wage Subsidy (TWS):

You were also able to apply for the 10% TWS measure that allowed eligible employers to reduce the amount of payroll deductions they need to remit to the Canada Revenue Agency (CRA) for a 3-month period. You will be responsible to calculate the amount you need to subsidize your employees’ wages. You will be able to claim a maximum of $1,375 per employee up to a maximum of $25,000 per eligible employer.

Employees who received other benefit support such as CERB, CESB, etc., are not considered eligible employees under this program.

Other business support

Canada Emergency Business Account (CEBA):

The program provided an interest–free loan of up to $40,000 to small business and non-profit organizations. If you pay back the loan before Dec 31, 2020, up to 25% ($10,000) will be forgiven. On Oct 26, 2020, the CEBA was extended to an extra $20,000 which 50% of it is forgivable if paid before Dec 31, 2022.

The loan is to help cover the business’s operating costs to avoid closing further businesses. If you have multiple businesses (each having their own business number), you can apply for CEBA for each separately.

Rent Assistance:

The Canada Emergency Commercial Rent Assistance (CECRA) was introduced as a COVID-19 relief measure. The program helps to reduce the rent by at least 75% from April 2020 to September 2020. The tenant pays 25%, the property owner forgives another 25%, and the program pays the other 50%. Note: When filing the business tax return, your rent expenses should be the actual rent paid not what your original contract stated.

Canada Emergency Rent Subsidy (CERS):

Started on September 27, 2020, CRA introduced the CERS to support Canadian businesses, non-profit organizations, and charities that have lost revenue due to the COVID-19 pandemic. The subsidy covers part of your commercial rent or property expenses. The subsidy will be available until June 2021.

The payments will be made directly to qualifying renters and property owners, without requiring the participation of landlords. There are two components in this benefit: base subsidy and lockdown support. If you are eligible for the base subsidy, you may also be eligible for lockdown support if your business location is significantly affected by a public health order for a week or more.

For more details on income support and other benefits as part of the Federal Government’s Economic Response Plan for COVID-19, click here.

See also our COVID-19: Tax Info Centre, from our TurboTax Support team, answering many FAQs on this topic and more.