Justin Trudeau in his daily address has been highlighting frequently The Canada Emergency Response Benefit (“CERB”) and the Canada Emergency Wage Subsidy (“CEWS”) as unprecedented measures to help those suffering from lost income due to COVID-19. However dentists that are eligible for both want to know which one will pay more?
Eligibility
CERB:
The benefit will be available to workers:
- Residing in Canada, who are at least 15 years old;
- Who have stopped working because of COVID-19 and have not voluntarily quit their job;
- Who had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
- Who are or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period. For subsequent benefit periods, they expect to have no employment income.
CEWS:
Eligible employers would include individuals, taxable corporations, and partnerships.
This subsidy would be available to eligible employers that see a drop of at least 30 per cent of their revenue in March, April and/or May 2020 compared to the same period in 2019. In applying for the subsidy, employers would be required to attest to the decline in revenue.
Calculating Payout
CERB:
The Payout is $2,000 every four weeks for up to 16 weeks (maximum benefit of $8,000).
The benefit is taxable although tax will not be deducted at source. You will be expected to report the benefit as income when you file your income tax for the 2020 tax year.
CEWS:
The subsidy amount on eligible remuneration paid between March 15 and June 6, 2020 would be:
Arm’s Length Employee
The greater of:
- 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.
Non-Arm’s Length Employee (I.e. owner and family members)
- the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration
Looking at the dentists salary only, if he/she was earning at least $1,130 per week of pre-crisis salary ($58,725 annually) the dentist will be entitled to the maximum $847 weekly benefit paid to the corporation if you continue with wages ($3,388 every 4 weeks).
Therefore many dentists will be able to get $3,388 every 4 weeks under CEWS versus $2,000 under CERB.
Dentists Performing Emergency Procedures
As the CERB eligibility requires you to be without income for 14 consecutive days in the 4 week payout period, it means Dentists that perform some emergency work procedures may end up becoming ineligible to apply for the CERB. This is an additional reason dentists may prefer to choose CEWS as it would allow them to continue to work in a small capacity.
One large caveat of course is at the time of this article the CEWS has not been actually brought into legislation yet. Therefore details could very easily change. Could the benefit also be extended to match the same 16 week time period as CERB to make the CEWS even more beneficial?
While there is still ultimate uncertainty surrounding CEWS until it is passed into law what is certain is that if you apply for CERB now you run the risk of losing out on the opportunity to take advantage of the more lucrative CEWS for yourself once legislated. Therefore it may be prudent to hold off on rushing into that CERB application April 6th.
