COVID-19 | UPDATE ON BUSINESS RELIEF SUMMARY

In light of COVID-19, 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 (Click here for more details).

These updates are constantly changing and JMH is here to make to make sure it all adds up for you! Please review the following list for a number of recent updates.

 

Canada Emergency Wage Subsidy (CEWS) – 75% Wage Subsidy

  • Expected to be available for businesses May 6, 2020
  • To be eligible businesses must attest that they have a greater than 15% decline in revenues for March 2020, and greater than 30% decline in revenues in subsequent months when compared to their chosen “reference period”
  • Reference period can be the same month from the previous year or the average of January & February 2020

Note: The reference period chosen in the first application must be utilized for all subsequent applications

  • 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
  • Available for non-arm’s length salaries (ex. Shareholders) based on their “pre-crisis remuneration”
    • Pre-crisis remunderation is defined as the weekly remuneration paid between January 1 and March 15, excluding any 7 day period in which the employee did not receive remuneration
  • There is a futher subsidy which will cover 100% of the employer portion of the EI and CPP for those employees that are on payroll, but not working

Note: This is in addition to the $58,700 limit and the application will be made concurrently     with the CEWS application

  • Businesses must attest that they are doing their best to pay the remaining 25% of wages not covered by the subsidy
  • The government provided details on the “severe consequences” for abusing the program:
    • An individual with financial oversight will be required to personally attest the application
    • If amounts are received in error, the full amount will have to be repaid
    • Intentional manipulation or incorrect reporting will result in a penalty of up to 225% of the benefit received and five years in prison
  • 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
  • The government will implement an approach to limit duplication of the CEWS and CERB, individuals that are rehired will be able to cancel their CERB and repay the amounts received

The below link is the most comprehensive that we have seen on the 75% wage subsidy (CEWS).   It has a lot of detail and some examples.  It may answer some additional questions that you have.

https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html

 

Temporary 10% Wage Subsidy

  • Available from March 18, 2020 to June 19, 2020
  • 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
  • Business 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
  • Claiming the 10% wage subsidy does not exclude a business from applying for CEWS, however any subsidy claimed through this program will reduce the benefit available from CEWS

 

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 2020 can be deferred until June 30, 2020
  • Deferrals include instalment payments for corporate and personal tax

 

Canada Emergency Business Account (CEBA)

  • Available through the business’ primary bank
  • Up to a maximum of $40,000, interest free until December 31, 2022
  • To qualify for the loan you need to demonstrate that you paid between $20,000 and $1M in payroll in 2019
  • You are required to attest to using the funds for non-deferable expenditures, such as rent, payroll, utilites, insurance, property tax and regularly scheduled debt service.  This specifically excludes prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.
  • The loan is not available to holding companies
  • You will be required to participate in post-funding surveys conducted by the Government of Canada or any of its agents
  • 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

  • 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 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)
  • You can continue to earn up to $1,000 per month while collecting CERB
  • 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
  • The program has been extended to seasonal workers and other workers who have recently exhausted their regular EI benefits and are unable to find a job due to COVID-19

 

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

 

New & Upcoming Programs (Not Yet Implemented)

Canada Emergency Commercial Rent Assistance (CECRA)

  • Loans and/or forgivable loans to commercial property owners who in turn will lower or forgo the rent of small businesses for the month of April, May and June
  • Provincial government program

Salary top-up for low-income essential workers

  • Aimed towards those who would earn less than $2,500/month on a full time basis but are deemed essential in the fight against COVID-19

Canada Summer Jobs Program

  • Increased the subsidy for employees through the program, employed by private businesses, to 100%
  • Extended the employment end date to February 28, 2021 and application to part-time positions
  • Considering reopening applications to essential businesses
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