COVID-19 | Summary of Business Relief Updates

This virus has certainly taken its toll on people’s health, but it has also had a major impact on financial health for businesses and individuals. The Government of Canada has come out with a number of programs & subsidies to assist with the financial burdens the people and businesses are currently facing and will continue to face over the next few months.

We’ve put together a summary of all the updates so far so that you can find the information you are looking for in one simple, condensed location. This article will cover 75% Wage Subsidy, 10% Wage Subsidy, Tax Payment Deferral, Small Business Loans, Work Sharing Program, and the Canadian Economic Response Benefit (CERB).

 

75% WAGE SUBSIDY

  • Recently announced and not currently accessible, but it is expected to be available online in the next 3 to 6 weeks.  The program will be retroactive to March 15, 2020 when it does become available
  • To be eligible businesses must attest that they have a greater than 30% revenue decline when compared to the same month in the previous year
  • The application for the subsidy will need to be completed each month
  • Available for proprietorships, partnerships, corporations, not-for-profit organizations and charities of all sizes, with no mention of a limit on the number of eligible employees or a maximum subsidy per business
  • The maximum salary per individual that will be subsidized is $58,700, which equates to a benefit to the business of $847 per week
  • Businesses are encouraged to hire back their employees that are previously laid off and put them on payroll
  • Businesses will be responsible for paying the employee’s salary, then apply to have the 75% subsidy refunded to their account
  • Businesses must attest that they are doing their best to pay the remaining 25% of wages not covered by the subsidy
  • Funds are expected to be available through this program in 6 weeks and it is encouraged that businesses sign up for direct deposit with CRA, if they have not already done so, to expedite the subsidy process
  • It was announced that there will be “severe consequences” for anyone that is caught making a fraudulent claim under this program
  • We expect that the subsidy is considered taxable income for the business and must be included in income in the year in which the subsidy was received

 

10% WAGE SUBSIDY

  • This is a 3-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the CRA
  • Available for proprietorships, partnerships, Canadian-controlled private corporations, not-for-profit organizations and charities
  • Must have an existing business number and payroll program account with CRA on March 18, 2020
  • The amount of the subsidy is equal to 10% of the gross pay paid (not earned) from March 18, 2020 to June 19, 2020
  • Limited to a maximum of $1,375 for each eligible employee and $25,000 per employer
  • Associated corporations are not required to share the $25,000 maximum benefit
  • No application is required for the subsidy
  • The 10% can be deducted from the regular payroll remittance
  • If your payroll remittance is not sufficient to offset the 10% in a specific period, you can reduce future payroll remittances
  • Businesses will have up to January 15, 2021 to claim this subsidy through reduced payroll remittances
  • The subsidy is considered taxable income for the business and must be included in income in the year in which the subsidy was received

 

TAX PAYMENT DEFERRAL

  • All corporate and personal taxes that become owing between March 18, 2020 and August 31, 2020 are not due until August 31, 2020
  • Balances will not accrue interest during the deferral period
  • GST balances that become due on or after March 27, 2020 and before June 30, 2020 can be deferred until June 30, 2020
  • Deferrals include instalment payments for corporate and personal tax

 

SMALL BUSINESS LOANS

  • Available through the BDC
  • Up to a maximum of $40,000, interest free for a one year period
  • To qualify for the loan you need to demonstrate that you paid between $50,000 and $1M in payroll in 2019
  • If you repay the balance of the loan on or before December 31, 2022, 25% (up to $10,000) of the loan will be forgiven

 

WORK SHARING PROGRAM

  • This is an agreement between employers, employees and the Government of Canada
  • Agreement is for a minimum of 6 weeks and can extend up to 76 weeks
  • Requires you to have at least two people performing the same duties
  • Must have between 10% and 60% reduction in hours
  • All members of the work-sharing agreement must reduce their hours by the same percentage so they are sharing a position
  • EI program would supplement the employee’s lost wages
  • Wages received from the employer in the work-sharing agreement would not reduce their EI benefits

For additional eligibility criteria visit: https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html

 

CANADIAN ECONOMIC RESPONSE BENEFIT (CERB) 

  • Up to $2,000 per month for a 4-week period for up to 16 weeks
  • New “EI” program available if you meet all the following conditions:
    •  Canadian residents 
    • At least 15 years old
    • Stopped working because of COVID-19
    • Had income of at least $5,000 in 2019 or in 12 months prior to their application
    • Are expected to be without employment for at least 14 consecutive days
    • Note that this includes self-employed individuals and contractors (not just employees)
  •  Expected to be available through CRA MyAccount starting April 6 with staggered registration periods based on your month of birth:
    •  January – March – Apr 6 (Mondays thereafter)
    • April – June – Apr 7 (Tuesdays thereafter)
    • July – September – Apr 8 (Wednesdays thereafter)
    • October – December – Apr 9 (Thursdays thereafter)
    • Anyone can apply on Fridays, Saturdays and Sundays regardless of birth month
  • Your registration date will not affect when you receive your first payment.
  • If you are still receiving some income from employment you are required to apply for EI benefits through the regular EI program
  • If you are eligible for regular EI benefits, but have lost your employment as a result of COVID-19 you will still be eligible for regular EI benefits once the 16-week period for CERB has expired

We will continue to keep you updated as new information becomes available. Stay safe out there.

 

To register for a CRA MyAccount visit: https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html

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