Boosted Lockdown Benefits for Canadian Workers
The Expanded Canada Worker Lockdown Benefit: An Overview
COVID-19 has brought about new strains that continue to plague Canada and other parts of the globe, leading to an imposition of fresh lockdowns by local governments in Canada. Unfortunately, this has caused many Canadians to be unable to work, leading to a loss of income. In response to this, the Canadian Federal government has expanded the Canada Worker Lockdown Benefit, which provides income support of $300 per week to eligible workers who have lost 50% or more of their income as a result of a COVID-19-related public health lockdown. The benefit mechanism and its tax implications will be further discussed below.
Eligible Regions for the Canada Worker Lockdown Benefit
The expanded Canada Worker Lockdown Benefit is limited to designated lockdown regions, which can be found on the following link: https://www.canada.ca/en/services/benefits/covid19-emergency-benefits/designated-lockdown-regions.html
Eligible Periods for the Canada Worker Lockdown Benefit
Despite its announcement on December 22, 2021, the payment for the new expanded Canada Worker Lockdown Benefit applies retroactively from December 19, 2021.
Eligibility Criteria for the Canada Worker Lockdown Benefit
To qualify for the expanded Canada Worker Lockdown Benefit, you must satisfy the following requirements:
- You must have earned at least $5,000 in 2020, 2021, or in the 12 months leading up to the day you apply for the benefit.
- You must have filed a 2020 tax return.
- Your work or service area must have been designated as a COVID-19 lockdown region during the application period.
- You must have lost your job and are unemployed, unable to continue your work, or had a reduction of at least 50% in your average weekly income compared to the previous year as a result of a designated COVID-19 lockdown in your region during the application period.
It is essential to note that if you were self-employed before the lockdown, this would not render you disqualified from the expanded Canada Worker Lockdown Benefit. Self-employed workers' eligibility created a controversy and confusion in 2020 when the government initially took the position that such individuals were not eligible for CERB.
It is also important to note that the $5,000 income requirement has a detailed breakdown that includes employment income, net self-employment income, benefits from EI, or similar QPIP. It explicitly excludes certain payments such as disability benefits, student loans, bursaries or scholarships, social assistance or family support payments, Canada Pension Plan (CPP), Québec Pension Plan (QPP), or other pension income, Old Age Security (OAS) payments, and Canada Emergency Student Benefit (CESB).
Pro Tax Tips – What to Do if the CRA Denies Your Claims for Canada Worker Lockdown Benefit
Similar to CERB, the Canadian government administers the expanded Canada Worker Lockdown Benefit through the Canada Revenue Agency (CRA). Such applications are assessed by the CRA, which might question applicants' eligibility and reject unsatisfactory applications.
In the event that you receive an increased Canada Worker Lockdown Benefit and are subsequently discovered to be ineligible by the CRA, the agency can execute an evaluation similar to other tax reassessments. If you disagree with the evaluation, you have the option to appeal it through CRA’s internal objection process. Alternatively, you may choose to repay the amount owed.
The CRA has introduced supplementary regulations that relate to the timeline for the return of funds. If you repay the amount prior to December 31, 2022, it will not be considered in your 2022 tax assessments. Conversely, if repayment is made after December 31, 2022, it will be included in your 2022 income tax assessments. If you are late in settling your financial obligations, compound interest on the balance may accrue.
Additionally, the CRA reserves the right to enforce penalties and initiate criminal proceedings against individuals who submit intentionally fraudulent claims. The agency is authorized by law to make preliminary assumptions of tax fraud or gross negligence during the imposition of penalties on Canadian taxpayers. If the CRA intends to reassess or has already reassessed you for tax fraud concerning the expanded Canada Worker Lockdown Benefit, seek guidance from our seasoned Toronto tax attorneys.
Disclaimer:This article is purely informational. It is only accurate at the time of publication and may be obsolete. It cannot and should not be used as a substitute for legal advice, nor should it be relied upon. Each tax situation is unique and varies from the instances mentioned in the article. Please consult a legal professional for specific inquiries.
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