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COVID money as indemnified benefit ‘nonsensical’ | Jennifer Lynch and Margot Mary Davis

Monday, March 01, 2021 @ 1:31 PM | By Jennifer Lynch and Margot Mary Davis

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Jennifer Lynch
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Margot Mary Davis
Due to growing unemployment, the federal government introduced the Canada Emergency Response Benefit (CERB) in March 2020. CERB provided $500 per week to eligible Canadians who were “directly affected by COVID-19” and was available from March 15, 2020, to Oct. 3, 2020.

After the government ended CERB, it implemented the Canada Recovery Benefit (CRB). This benefit provides income support for individuals who are not employed or self-employed for “reasons related to COVID” and not entitled to Employment Insurance (EI) regular benefits.

CRB provides eligible Canadians, including working individuals who had a 50 per cent reduction in their average weekly income compared to the previous year, with $1,000 ($900 after taxes withheld) for 19 two-week periods.

A much-needed relief for many Canadians, CERB and CRB will give rise to novel questions. One particular question is how will the statutory accident benefits schedule (SABS) treat CERB?

Statutory accident benefits cover expenses resulting from Ontario auto accidents and SABS, which is a schedule to Ontario’s Insurance Act, permits injured people to claim for benefits resulting from motor vehicle accidents. All contracts evidenced by a motor vehicle liability policy provide statutory accident benefits. Examples of benefits includes income replacement.

How SABS will treat CERB and CRB is an important question because post-accident employment income and indemnified benefits are deducted in the calculation of income replacement benefits. In contrast, social assistance payments, employment insurance regular benefits and Ontario Disability Support Program benefits are not deducted. Will SABS treat CERB and CRB as social assistance or employment insurance? Alternatively, will SABS treat CERB and CRB as equivalent to Canada Pension Plan disability benefits or long-term disability insurance? As of March 2, 2021, case law is silent on this matter.

Below, we will argue that SABS should not treat CERB and CRB like CPP disability benefits or long-term disability insurance but rather treat CERB like social assistance or EI regular benefits and treat CRB like social assistance. Therefore, CERB and CRB should not be deducted when calculating income replacement benefits.

CERB, CRB vs. disability, CPP, disability

Indemnified benefits include short-term disability insurance and long-term disability insurance and are received for the lost wages due to a motor vehicle accident.

A plaintiff is eligible to receive these benefits because they enter into an insurance contract with an automobile insurance provider and pay a premium. One is eligible for the CPP benefit through contributions to the CPP.

Contrastingly, eligibility for CERB or CRB does not depend upon entering into such a contract and paying a premium. Non-drivers, provided they meet the eligibility criteria, can claim CERB and CRB. Therefore, it would be erroneous to treat the CERB or CRB as such.

CERB as equivalent to social assistance 

Strong arguments exist in favour of the proposition that SABS should treat the CERB and CRB as a benefit similar to social assistance.

Firstly, the Canada Emergency Response Benefit Act specifically refers to CERB payments as “income support payments.” Additionally, CERB payments are a fixed amount unlike EI which is dependant upon the recipient’s former income. An individual making less than $1,000, either through employment or self-employment, per month can claim CERB but someone must have lost their job “through no fault of their own” to claim EI regular benefits. Additionally, the Act bars parties from assigning, charging or attaching CERB.  

It is strikingly similar to social assistance payments.

With respect to CRB, the amount is also fixed, Canada Revenue Agency (CRA) administers it, one can receive it if working reduced hours and the tax is withheld, which pushes towards it also being equivalent to social assistance payments.

Just like other social assistance payments, they should not be deducted in the income replacement benefit entitlement calculation.

CERB as equivalent to employment insurance regular benefits

Some arguments also exist in support of the position that SABS should treat the Canada Emergency Response Benefit as a benefit similar to Employment Insurance regular benefits.

While many people received their CERB benefits from the CRA, Service Canada, which administers EI, also administered CERB. The government of Canada created a webpage that specifically said “Transition from CERB to Employment Insurance (EI).” This supports the contention that CERB benefits should be viewed like EI. Additionally, CERB is taxable as is EI

CRB is not equivalent to EI because the tax is withheld and someone receiving EI is ineligible for it.

Just like EI regular benefits, CERB should not be deducted in the income replacement benefits entitlement calculation.


To conclude, CERB should be treated like employment insurance regular benefits or social assistance and CRB like social assistance payments. It would be nonsensical to treat CERB as an indemnified benefit or equivalent to CPP disability benefits. Therefore, CERB should not be deducted when calculating income replacement benefits.

Jennifer Lynch is an accomplished forensic accountant and business owner. Jennifer is a Chartered Professional Accountant, Certified Management Accountant and a Certified Fraud Examiner who has a reputation for expertise, quality service to clients and professionalism. You can reach her on LinkedIn. Margot Mary Davis is a 2018 Ontario call to the bar. She is interested in policy issues surrounding law like combatting counterfeit goods and developing sui generis policies for orphan drugs. She is also a published author.

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