CERB, CEWS and CEBA: Top 15 questions from physicians
Updated: December 18, 2020
Over the last few months, MD Financial Management has been hosting webinars across the country to help physicians navigate the financial support measures introduced by the government:
- Canada Emergency Response Benefit
- Canada Emergency Wage Subsidy
- Canada Emergency Business Account
Here are some of the questions we’ve fielded about how the support measures apply to physicians and their teams.
Canada Emergency Response Benefit
The Canada Emergency Response Benefit (CERB) is a taxable payment of $2,000 per four-week period for individuals whose income has been affected by the COVID-19 pandemic.
The CERB was available for 28 weeks from March 15 to September 27, 2020.
1. I’m a surgeon and am taking time off to start a graduate degree. Can I apply for the CERB?
If your loss of income is not due to the COVID-19 pandemic, you do not qualify for the CERB.
2. I’m a surgical assistant and I’m incorporated. Elective surgeries were postponed, and I haven’t worked for more than a month. Can I apply for the CERB?
Yes, you meet the criteria for the CERB since you’ve stopped working due to COVID-19 and lost income as a result. You must have had 14 consecutive days of no income in each four-week period you apply for. However, you can earn up to $1,000 during the month and still qualify for the benefit payment.
3. I receive dividends from my investments and dividends from my corporate account. If I continue to get these dividends, can I still qualify for the CERB?
Dividends don’t count as employment income so they would not be a factor. If your employment income was impacted by COVID-19 (see eligibility details) and you have not earned more than $1,000 in self-employment/employment income during the period, you can qualify for the CERB.
4. Does clerkship count as work since medical students receive a stipend for this?
If your stipend ended with your rotation, you would not qualify for the CERB as you didn’t lose income due to the pandemic.
However, there is a relief measure for students that might help. If you graduated from medical school and because of COVID-19
- you have been unable to work,
- you are unable to find work and can attest that you’re seeking work, or
- you are working but earning less than $1,000 per month,
you may be eligible for the Canada Emergency Student Benefit. This benefit pays $1,250 a month (or $2,000 for those who have a disability or dependants) retroactively from May to August 2020.
Canada Emergency Wage Subsidy
The Canada Emergency Wage Subsidy (CEWS) supports Canadian employers, which could include physicians with employees (incorporated or not) by providing a wage subsidy if they have experienced a decline in revenues. The subsidy has been extended until June 2021. Find full details here.
5. What do I include as revenue for the CEWS application?
The revenue you report is your practice income before overhead. It should also include any other earnings during the period, such as teaching revenue or other contracts. It is all revenues earned and recorded using the business’s normal accounting practices. Either the cash or accrual method of accounting can be used, but if one is used for one period, it must be continued for all other CEWS periods.
6. If I’m incorporated and an employee of the corporation (i.e., paying myself a salary), would I qualify for the CEWS?
Yes, if you keep paying yourself during the pandemic, you would qualify if your corporation has seen a decline in revenues. Apply through the Canada Revenue Agency’s CEWS page.
7. Are there any conflicts between the 10% temporary wage subsidy and the CEWS? Can you apply for both?
The 10% Temporary Wage Subsidy for Employers (TWS) was introduced before the CEWS, and is available retroactively from March 18 up until June 19, 2020. It pays 10% of wages during that period, up to a maximum of $1,375 per employee. The CEWS application now includes a line where you calculate your TWS amount and enter it as part of the CEWS application. If you’re eligible for both subsidies, you can only claim a maximum support of 75% of payroll, not 75% plus 10%.
8. What are arm’s-length employees and non-arm’s-length employees?
Generally, for the CEWS application, revenues earned must be from arms’-length sources. In an arm’s-length relationship, the employer is not related to the employee. In a non-arm’s-length relationship, the employer and employee are generally related through blood (e.g., a mother and son), marriage (including common-law) or adoption.
9. Do you have to rehire all your employees to apply for CEWS? What if they are receiving the CERB?
You don’t need to rehire all your employees to qualify. You can apply for the CEWS for the number you hire back. If you want to bring an employee back to work and they have started receiving employment insurance or the CERB, they will need to switch to the CEWS; they can’t receive both, unless they’ll be earning less than $1,000 a month working for you.
10. I think I made a miscalculation in my CEWS application. I’ve received the wage subsidy but I don’t think I qualify. What happens now?
Beginning June 1, 2020, the Canada Revenue Agency (CRA) will let you request adjustments to the applications you have already submitted.
If it turns out that you were ineligible, you’ll have to repay any CEWS you have already received. By requesting the adjustment online, you’ll ensure that you don’t continue receiving CEWS that you’re not eligible for.
In addition, if the CRA finds that an applicant deliberately entered into transactions to inflate their subsidy or were grossly negligent in their application, they will be required to repay any subsidy amounts they received, plus a penalty equal to 25% of the total value.
11. I am part of a clinic that is a partnership with five independently incorporated MDs. Clinic staff is paid through the clinic, which is not an entity itself. Can we apply for the CEWS for our clinic staff?
For physicians in a group practice, the rules are complex and determining eligibility for the CEWS can be difficult. Find out why in this article. Your tax advisor is in the best position to advise you.
Canada Emergency Business Account
The Canada Emergency Business Account (CEBA) is an interest-free loan. As of December 4, 2020, CEBA loans for eligible businesses increased from $40,000 to $60,000. If you had already received the original $40,000 CEBA loan, you can apply for the $20,000 expansion. All applicants have until March 31, 2021 to apply for the $60,000 CEBA loan or the $20,000 expansion.
If you repay the balance of the loan on or before December 31, 2022, up to $20,000 will be forgiven.
To qualify for the CEBA, there are two streams of eligibility: the payroll stream or the non-deferrable expense stream. For the payroll stream, you must have paid between $20,000 and $1.5 million in payroll in 2019. For the non-deferrable expense stream, your payroll was less than $20,000 but you had $40,000 to $1.5 million in eligible non-deferrable expenses in 2019. These could include costs such as rent, property tax, utilities and insurance.
12. I’m incorporated and pay myself a salary, which is within the payroll range for the CEBA. If I don’t have any other employees, can I qualify for the CEBA?
Yes, you would qualify. You don’t need to have multiple employees to be eligible for the CEBA loan. The other requirements are you must be a business that has been in operation in Canada since at least March 1, 2020. You will need to have a business chequing/operating account with your primary financial institution.
13. Can I get the CEBA if I still have money in my various accounts?
Yes — CEBA eligibility is not based on having lost income due to the pandemic. If you have money in your personal account or your corporate account, or if you’re continuing to deposit money into an investment account, you can still apply for CEBA if you meet the eligibility criteria.
14. Can a medical professional corporation apply for both the CEWS and the CEBA?
Yes, as long as you meet the criteria for both programs, you can get both the wage subsidy and the interest-free loan.
15. What if I’ve applied for the CEWS and CEBA and still need more financial support?
If you need additional financial support, consider credit programs offered by Export Development Canada (EDC) and the Business Development Bank of Canada (BDC). The EDC BCAP is a short-term loan (364 days) while the BDC BCAP is a longer-term loan. Both can help with operating expenses.
Your tax advisor and accountant can help you determine your eligibility based on your specific situation. If you have any questions about tax planning, investing or retirement planning, contact an MD Advisor*.
*MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.
The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.