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Canada: Enhanced Entitlements for Workers under the Budget Implementation Act, 2018, No 1

Bill C-74, the Budget Implementation Act, 2018, No 1, is omnibus legislation to implement certain provisions of the federal budget that was tabled on February 27, 2018. The Bill received Royal Assent on June 21, 2018 and will amend several pieces of legislation to, among other things, enhance federal employment benefits.

Permanent Implementation of the “Working While on Claim” Project

Under Bill C-74, the Working While on Claim pilot project will become permanent as of August 12, 2018. The Working While on Claim project was initially launched in August 2016 and allowed Employment Insurance (“EI”) claimants to earn additional income if they performed part-time or occasional work while in receipt of specified EI benefits.

The Bill amends the Employment Insurance Act to allow claimants to keep 50 cents of EI benefits for every dollar that he/she earns in wages, up to a maximum of 90% of the claimant’s previous weekly earnings. Above the 90% threshold, a claimant’s earnings would be deducted dollar for dollar from the EI benefit. This entitlement applies to regular, sickness, fishing, maternity, parental, compassionate care, or family caregiver benefits under the Employment Insurance Act.

Benefit Raises under the Canada Pension Plan

Bill C-74 also provides gradual raises to certain benefits under the Canada Pension Plan (“CPP”). These raises will come into effect starting 2019 and will include the changes outlined below.

  • Age-based restrictions on the survivor’s pension will be eliminated. Accordingly, a survivor’s pension may be paid to the survivor of a deceased CPP contributor who made base contributions for at least the minimum qualifying period.
  • Retirement benefits will be increased for parents who take time off work to care for young children and for persons with severe and prolonged disabilities. These individuals will be credited with an amount linked to their previous earnings for periods of time spent outside of the workforce or periods of time with low earnings.
  • A top-up disability benefit will also be provided to retirement pension beneficiaries who are under the age of 65 and disabled.
  • The maximum value of the CPP death benefit will be increased. Under the enhanced benefit, the estate or successor of a CPP contributor may receive $2500 as a death benefit if the contributor’s death occurs after December 31, 2018.

Creation of the Canada Workers Benefit

Effective January 1, 2019, Bill C-74 will amend the Income Tax Act to create the Canada Workers Benefit. This Benefit is a refundable tax credit that will supplement the earnings of low-income workers.

The amount of the Benefit will be equal to 26% of each dollar of earned income in excess of $3000. An individual without a spouse or dependants can receive a maximum benefit of $1355, while an individual with a spouse and/or dependent child can receive a maximum benefit of $2335. The Benefit will be reduced by 12% of adjusted net income in excess of $12,820 for an individual without a spouse or dependants. For an individual with a spouse and/or dependent child, the Benefit will be reduced by 12% of adjusted net income in excess of $17,025.

The Canada Revenue Agency will automatically determine whether a taxpayer is eligible for the Benefit, even if the taxpayer does not claim the Benefit on his/her tax return. This measure aims to improve access to the Canada Workers Benefit.

As the amendments under Bill C-74 come into force, Canadian employers should especially monitor changes to EI and CPP to ensure that their payroll departments are up-to-date with legislative requirements.