COVID-19 Tax Considerations 

(Canada and U.S.)

There are several factors to be considered as a result of the COVID-19 outbreak, that will have potential impact upon individual or business tax situations.  Residents and non-residents to Canada or the U.S. who have made use of one or more of the benefit or subsidy programs or intend to claim expenses will require a review for each individual circumstance. 

 

Canada Revenue Agency 

For Individuals 

Employment Insurance (EI) – Changes 

Canada Recovery Benefit (CRB) 

Canada Recovery Caregiving Benefit (CRCB) 

Canada Recovery Sickness Benefit (CRSB) 

 

For Businesses 

Canada Emergency Wage Subsidy (CEWS) 

Canada Emergency Rent Subsidy (CERS) 

Canada Emergency Business Account (CEBA) 

 

Past Programs 

Canada Emergency Response Benefit (CERB) 

Canada Emergency Student Benefit (CESB) 

 

Internal Revenue Service​

For Individuals 

Economic Impact Payments – Round 1 

Economic Impact Payments – Round 2 

 

For Businesses 

Families First Coronavirus Response Act 

 

Canada Revenue Agency 

 

For Individuals 

Employment Insurance (EI) – Changes 

Applicable period: As of September 27, 2020  

Summary of program: several temporary adjustments were made to the EI program which is in effect for 1 year.

 

They include the following:  

  • A minimum unemployment rate of 13.1% applies to all regions across Canada starting August 9, 2020 (or higher depending on the region’s regular rate) 

  • To qualify, only 120 insured hours are needed. A one-time credit of 300 insured hours will be provided to meet the required 420 insured hours of work 

  • If the Canada Emergency Response Benefit (CERB) was received, the 52-week period to accumulate insured hours will be extended 

  • A medical certificate is not required for EI claims beginning March 15, 2020 onwards 

 

Benefit Amount: At least $500 per week before taxes will be received 

 

Income Tax Considerations: EI payments are considered taxable income for the taxpayer. Depending on the taxpayer’s net income for the year, they may be required to repay some of the EI benefits received. 

 

Link for more information: https://www.canada.ca/en/services/benefits/ei.html 

Canada Recovery Benefit (CRB) 

Applicable period: Up to 13 eligible periods (26 weeks) between September 27, 2020 and September 25, 2021 

 

Summary of program: The Canada Recovery Benefit (CRB) provides income support to employed and self-employed individuals who have been directly affected by COVID-19 and are not eligible for Employment Insurance benefits. 

Benefit Amount: $1,000 ($900 after taxes withheld) per 2 week period 

Income Tax Considerations: The benefit will be included in the recipient’s income for tax purposes in the year received. There will be a 10% tax withholding at source and a T4A tax slip will be received. 

 

Link for more information: https://www.canada.ca/en/revenue-agency/services/benefits/recovery-benefit.html 
 

Canada Recovery Caregiving Benefit (CRCB) 

Applicable period: up to 26 weeks between September 27, 2020 and September 25, 2021 

Summary of program: The Canada Recovery Caregiving Benefit (CRCB) provides income support to employed and self-employed individuals who are unable to work while they care for a family member who requires supervised care or for their child under 12 years old.  

Benefit Amount: The household can receive $500 ($450 after taxes withheld) for each 1 week period 

 

Income Tax Considerations: The benefit will be included in the recipient’s income for tax purposes in the year received. There will be a 10% tax withholding at source and a T4A tax slip will be received. 

 

Link for more information: https://www.canada.ca/en/revenue-agency/services/benefits/recovery-caregiving-benefit.html 
 

Canada Recovery Sickness Benefit (CRSB) 

Applicable period: Up to 26 weeks between September 27, 2020 and September 25, 2021 

Benefit Amount: The household can receive $500 ($450 after taxes withheld) for each 1 week period 

 

Summary of program: The Canada Recovery Sickness Benefit (CRSB) provides income support to employed and self-employed individuals who are sick or need to self-isolate due to COVID-19 and are unable to work.   

 

Income Tax Considerations: The benefit will be included in the recipient’s income for tax purposes in the year received. There will be a 10% tax withholding at source and a T4A tax slip will be received. 

Link for more information: https://www.canada.ca/en/revenue-agency/services/benefits/recovery-sickness-benefit.html 

For Businesses 

Canada Emergency Wage Subsidy (CEWS) 

Applicable periods:  

Period 1: March 15 to April 11, 2020 - Applications due January 31, 2021 

Period 2: April 12 to May 9, 2020 - Applications due January 31, 2021 

Period 3: May 10 to June 6, 2020 - Applications due January 31, 2021 

Period 4: June 7 to July 4, 2020 - Applications due January 31, 2021 

Period 5: July 5 to August 1, 2020 - Applications due January 31, 2021 

Period 6: August 2 to August 29, 2020 – Applications due February 25, 2021 

Period 7: August 30 to September 26, 2020 – Applications due March 25, 2021 

Period 9: September 27 to October 24, 2020 – Applications due April 22, 2021 

Period 10: October 25 to November 21, 2020 – Applications due May 20, 2021 

Period 11: December 20 to January 16, 2021 – Applications due July 15, 2021 

Period 12: January 17 to February 13, 2021 – Applications due TBA 

Period 13: February 14 to March 13, 2021 – Applications due TBA 

 

Summary of program: The Canada Emergency Wage Subsidy (CEWS) has been an ongoing program that has assisted eligible employers in covering the costs of employee salaries. To be eligible for the subsidy, businesses must experience a certain reduction in revenues. Below is an overview: 

Periods 1 to 4: To be eligible, eligible employers must have had a drop in gross revenues of at least 15% in March, and 30% in April, May and June. Eligible employers will receive a subsidy equal to the least of 75% of the pre-crisis remuneration, the eligible remuneration paid to the employee or $847. 
 
Periods 5 and 7: The subsidy rate will differ depending on the drop in gross revenues over a certain period. The maximum subsidy rate is 60% in periods 5 and 6. For period 7, the rate drops to 50%. There must be a revenue drop of at least 50% or more when comparing the qualifying periods.   A top-up rate of 25% may be allowed for businesses who have experienced a 70% or higher base revenue drop over the last 3 months prior to the claim period. 

Period 8 to 10: The subsidy rate will differ depending on the drop in gross revenues over a certain period. The maximum subsidy rate is 40% for periods 8 to 10. There must be a revenue drop of at least 50% or more when comparing the qualifying periods.  A top-up rate of 25% may be allowed for businesses who have experienced a 70% or higher base revenue drop over the last 3 months prior to the claim period. 

Period 11 to 13: The subsidy rate will differ depending on the drop in gross revenues over a certain period. The maximum subsidy rate is 40% for periods 11 to 13. There must be a revenue drop of at least 50% or more when comparing the qualifying periods.  A top-up rate of 35% may be allowed for businesses who have experienced a 70% or higher base revenue drop in the same period used to calculate the base subsidy rate. 

Income Tax Considerations: The subsidies received will reduce the related salary expenses which will increase the overall income for the year. 

Link for more information: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html 

Canada Emergency Rent Subsidy (CERS) 

Applicable periods: September 27, 2020 until June 2021 

Summary of program: The Canada Emergency Rent Subsidy (CERS) provides payments to qualifying renters and property owners. This includes Canadian businesses, non-profit organizations, or charities who have seen a drop in revenue due to the COVID-19 pandemic. 
 
Benefit Amount: Up to $75,000 of qualifying expenses per period 

Income Tax Considerations: The subsidies received will reduce the related rent and utilities expense which will increase the overall income for the year. 

Link for more information: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy.html 

 

Canada Emergency Business Account (CEBA) 

Applicable periods: Applications open from March 1, 2020 to March 31, 2021 

Summary of Program and Loan Amount: Initial interest-free loan of up to $40,000.  Second interest-free loan of $20,000 was made available as of December 4th, 2020. The loan is meant to assist businesses with their operation expenses. If both the first loan and second loan are repaid by December 31, 2022: 25% of the first loan (which is $10,0000) will be forgiven; and 50% fo the second loan (which is also $10,000) will be forgiven; for a total forgiveness of $20,000.  

Both the first and second loans will remain interest-free until December 31, 2022.  If the loans are not repaid on or before that date, they will be converted into interest-bearing, 3-year term loans on January 1, 2023

 

Income Tax Considerations:  The forgivable portions of both the first and second loans, totaling $20,000, must be taken into income when the loans are received.  If it is determined that the first and second loans will not be repaid in full, then the corporation will be entitled to deductions in 2022 relation to the forgivable amounts included as income in 2020 or 2021. 

The loans are available from more than 220 financial institutions across Canada.  

Please contact your financial institution for more information on how to apply.  
 

Past Programs 

Canada Emergency Response Benefit 

Applicable Period: March 15 to October 3, 2020 

Summary of Program: The Canada Emergency Response Benefit provided income for individuals who had lost their job due to COVID-19 or were sick and self-isolating and unable to work. New programs have now been introduced.  

Benefit Amount: $500 per week for a maximum of 28 weeks. 

Income Tax Considerations: The benefit will be included in the recipient’s income for tax purposes in the year received. There was no tax withholding at source and a T4A tax slip will be received. 

Link for more information: https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra.html 
 

Canada Emergency Student Benefit (CESB) 

Applicable Period:  May 10 to August 29, 2020 

Summary of Program: The Canada Emergency Student Benefit (CESB) was a benefit provided to post-secondary students, and recent post-secondary and high school graduates who experienced difficulty in finding work due to COVID-19.  

Benefit Amount: $1,250 for a 4-week period for a maximum of 16 weeks 

Income Tax Considerations: The benefit will be included in the recipient’s income for tax purposes in the year received. There was no tax withholding at source and a T4A tax slip will be received. 

Link for more information: https://www.canada.ca/en/revenue-agency/services/benefits/emergency-student-benefit.html 

 

Internal Revenue Service

 

For Individuals 

Economic Impact Payments – Round 1 

Applicable Period:  Announced March 2020 

Summary of Program: The Treasury Department and the Internal Revenue Service announced the economic impact payments to all eligible individuals as a response to financial hardships due to COVID-19. To be eligible for an advance payment, U.S. taxpayers must have filed a tax return for 2019 or 2018. Also, to receive the full payment, the adjusted gross income must not be more than $75,000 for individuals and $150,000 for jointly filed returns. However, if they have not received the payments, a Recovery Rebate Credit can be claimed on their 2020 tax return, based on 2020 AGI.  Payments are reduced by $5 for each $100 above the threshold. The payments were automatic and nothing further had to be done by the taxpayers. If an individual has not yet claimed the first round of payments, they may still do so by filing their 2020 tax return. Non-resident aliens in 2020 are not eligible. 

Benefit Amount: $1,200 per individual or $2,400 if Married Filing Jointly plus $500 per qualifying child 

 

Income Tax Considerations: The payments are not considered income will not be taxable 

 

Link for more information: https://www.irs.gov/coronavirus/economic-impact-payments 
 

Economic Impact Payments – Round 2 

Applicable Period:  December 2020 and early 2021 

Summary of Program: If taxpayers were eligible for the first round of Economic Impact Payments, they will likely be eligible for the second round of payments. To receive the full payment, the adjusted gross income must not be more than $75,000 for individuals, $112,500 for Heads of Household, and $150,000 for jointly filed returns. However, if they have not received the payments, a Recovery Rebate Credit can be claimed on their 2020 tax return, based on 2020 AGI. Payments are reduced by $5 for each $100 above the threshold. The payments are automatic and nothing further has to be done by the taxpayers, except file their 2020 tax returns if they have not received their payments. Non-resident aliens in 2020 are not eligible. 

 

Benefit Amount: $600 per individual or $1,200 if Married Filing Jointly plus $600 per qualifying child under the age of 17 

Income Tax Considerations: The payments are not considered income will not be taxable 

Link for more information: https://www.irs.gov/coronavirus/economic-impact-payments 

For Businesses 

Families First Coronavirus Response Act 

Applicable Period: April 1, 2020 – March 31, 2021 

Summary of Program: The program provides support for employers who pay qualifying wages for employees who have been under quarantine or isolation relate to COVID-19, advised by a health provider to self-quarantine or is experiencing symptoms of COVID-19 and has sought out a medical diagnosis. This program is for private employers with fewer than 500 employees.

 

Benefit Amount for Paid Sick Leave: Capped tax credit of $511 per day or $5,110 (over a 2-week period) in aggregate per employee.  

Benefit Amount for Paid Family Leave: Capped tax credit of $200 per day or $10,000 (over a 10-week period) in aggregate per employee. 

Income Tax Considerations: The payments will be in the form of a refundable tax credit when Form 941 is filed. 

 

Link for more information: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave 

1

Get our fresh newsletter delivered to your inbox every month!

Global Tax Network Newsletters

GTN 2016 - 2017

GTN 2015

Click below to see the GTN 2015 monthly newsletters:

October 2015 Newsletter

September 2015 Newsletter

August 2015 Newsletter