COVID-19 Relief Measures
UPDATED AS OF APRIL 27, 2020
Financing Options for Businesses
As a part of COVID-19 relief measures, the Federal Government is offering the following:
1) Small Business Loans
BDC provides up to $100,000 in small business loans. There is an easy online application process through the website.
They are currently experiencing a high volume of applications and therefore, it is recommended that you apply soon to avoid further delay.
2) Canada Emergency Business Account
The Federal Government announced that interest free loans of up to $40,000 will be made available to small to mid-sized businesses through commercial banks. The loans will be interest free for one year, and $10,000 may be forgivable if the business repays the loan by the end of 2022.
To qualify, these organizations will need to demonstrate they paid between $20,000 to $1 million in total payroll in 2019.
- Contact your banker for more details
- Update your accounting records to your latest fiscal year end, and be prepared to have interim financial reporting information available to March 31, 2020
- Review details here: https://www.canada.ca/en/department-finance/economic-response-plan.html#canada_emergency_business_account
3) Business Credit Availability Program (BCAP)
The BCAP will allow the Business Development Bank of Canada (“BDC”) and Export Development to provide more than $10 billion of additional support to small and mid-sized businesses. Many of our clients are concerned about their working capital and funding requirements during the pandemic. We have been advising our clients to reach out to BDC to see if they may qualify for a loan. Relief measures include:
a. Working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months for qualifying businesses;
b. Postponement of payments for up to 6 months, free of charge, for existing BDC clients with total BDC loan commitment of $1 million or less; and
c. Reduced rates on new eligible loans.
Support for Canadian Businesses
1) Canada Emergency Wage Subsidy (CEWS)
The federal government announced up to 75% wage subsidy for qualifying businesses, for up to 3 months, retroactive to March 15, 2020. This will help businesses to keep and return workers to the payroll. Note that businesses must choose to benefit from only one subsidy, either the CEWS or the Temporary Wage Subsidy (“TWS”) described in the next section below. An employer which qualifies for both will have a reduction in the CEWS by the amount granted by the TWS, which is a subsidy of up to 10% of the remuneration. An application under both programs may be beneficial for cash flow purposes since the TWS subsidy is a reduction of remittances owed, whereas the CEWS is a subsidy paid retroactively.
Key notes, as of date of release:
- It applies to private businesses which are not funded by the government (including sole proprietors, corporations and partnerships), as well as non-profits and charities. Partners in partnerships must consist of eligible employers. Public and foreign owned corporations also qualify for the subsidy;
- Most Non-Profit Organizations and public sector entities do not qualify.
- Eligible remuneration for purposes of the CEWS and TWS includes:
- Salary, wages and other remuneration for which employers are required to withhold and remit amounts to the CRA but does not include severance pay, stock option benefits, or taxable use of business assets (ie. Corporate owned vehicles) paid to an eligible employee. An “eligible employee” is an individual employed in Canada. Eligibility for the CEWS will be limited to employees that have not been without remuneration for 14 or more consecutive dates in the qualifying period;
- The wage subsidy will apply to all non-arm’s length employees who are on payroll before March 15, 2020.
- For employees that do not deal at arm’s length (ie. Certain family members), the subsidy amount is limited to eligible remuneration paid in any period between March 15 and June 6, 2020, to a maximum benefit of $847 per week or 75% of weekly pre-crisis remuneration.
- To qualify for the subsidy, the entity must have a CRA payroll remittance number that was in effect on March 15, 2020;
- A business must demonstrate a reduction of revenues of at least 15% of their revenue in March 2020 and 30% for April, or May in comparison to “eligible periods” (discussed below) due to COVID-19.
- For comparative purposes, revenue means gross revenue from arm’s length sources calculated using the employer’s normal accounting period, and excludes revenues from extraordinary items or amounts on account of capital.
- The reduction in revenue calculation may be made under an accrual or cash basis. Once a calculation method is determined, it must be used for the duration of the program.
- The monthly decline for each month of March to May 2020 will be determined with reference to the same month in 2019, The decline will be used to determine eligibility for each “claim period” in the following table:
Claim Period Reference Period for Eligibility March 15 to April 11 March 2020 to March 2019 or Average of January and February 2020 (“Claim period 1”) April 12 to May 9 April 2020 to April 2019 or Average of January and February 2020 (Deemed met if 15% or greater in Claim Period 1.) May 10 to June 6 May 2020 to May 2019 or Average of January and February 2020 (Deemed met if 30% of greater in Claim Period 2)
- Where the above referenced period would disqualify the employer from eligibility, employers have the option of comparing their March, April or May revenues with their revenues for the average of January and February 2020. Once a calculation method is determined, it must be used for the duration of the program.
- Wage subsidy up to 75% of salaries, on first $58,700 per employee. ($847 per week, per employee).
- The following rules apply with respect to the computation of revenue:
- Where a group of eligible entities normally prepares consolidated financial statements, each member may determine its qualifying revenue separately; however, every member must be consistent in their method of calculation;
- Eligible entities that comprise an affiliated group may jointly elect to have the qualifying revenue of the group determined on a consolidated basis. If the election is made, the consolidated qualifying revenue must be used for each member of the affiliated group;
- If all the interests in an eligible entity are owned by participants in a joint venture, the qualifying revenues of the joint venture may be used (rather than the qualifying revenues of the eligible entity) where more than 90% of the qualifying revenue of the eligible entity is in respect of the joint venture;
- If > 90% of an entity’s revenue is from one or more particular non-arm’s length persons or partnerships, the eligible entity and each particular person or partnership can jointly elect to calculate the eligible entity’s decline in revenue based on each particular person’s decline in revenue.
- Employers eligible for the CEWS will be eligible for an additional 100% refund of certain employer portions of Employment Insurance and Canada Pension Plan;
- Every effort must be made to top up the remaining 25%.
- No restriction for number of employees or size of company.
- Serious consequences for modifying reporting to take advantage of subsidy.
- Businesses are required to reapply for the subsidy for each month.
- Businesses must pay for wages and administer payroll as usual (net of payroll withholding taxes, CPP and EI) and will apply for the subsidy retroactively;
- Documentation must be retained to support your claim and made available upon CRA request. CRA has indicated that the documentation should include an analysis of the nature of the remuneration.
- The Government of Canada has opened applications for the Canada Emergency Wage Subsidy program, a 75% temporary wage subsidy for businesses impacted by COVID-19. The first payments are expected to be processed on May 7th;.
- Employers can apply for the CEWS through My Business Account or through the CRA’s online application portal, and their representatives can apply through Represent a Client.
- Wage subsidy forms must be made before October 2020;
- The CRA has provided an online calculator available on the following link: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-calculate-subsidy-amount.html
- Some important clarity worth highlighting by the CRA in their FAQ section include the following:
- An eligible employer has no obligation to prove their decline in revenue is related to COVID-19;
- Eligible employers are able to retroactively pay employees they high back in respect of a claim period;
- The entire remuneration paid to an eligible employee can be offset by the subsidy where the eligible remuneration is equal to or less than the 75% of the baseline remuneration;
- If an employer is eligible for the CEWS and the 10% Temporary Wage Subsidy (see below), the entire amount eligible to be claimed under the TWS must be deducted from the amount calculated under the CEWS.
- Apply in one of three ways:
- My Business Account with CRA. https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html;
- Through your representative (CRA Represent a Client – Level 2 or 3 authorization required)
- Online application form
- Carefully read full details of the program: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html
2) Temporary Wage Subsidy (TWS)
If you do not qualify for the CEWS, The Temporary Wage Subsidy for Employers is a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the CRA. This is available to all eligible small businesses (defined as non-profits or Canadian-controlled private corporations (CCPC) with less than $15 million of taxable capital). Businesses do not need to show a decline in revenue to be eligible for this program.
Key notes, as of date of release:
- The subsidy is equal to 10% of the remuneration you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer.
- No need to apply for this subsidy. It is to be calculated and administered when submitting your typical payroll remittance. Talk to your payroll provider.
- If an employer receives CEWS and do not meet eligibility requirements, the employer will be required to repay the amounts. Penalties may include fines or imprisonment, with a penalty equal to 25% of the value of the subsidy claimed.
- Any amounts received under TWS will generally reduce the CEWS.
3) Income Tax Payments for all Taxpayers (including Corporations)
The CRA will allow taxpayers to defer their taxes until after August 31, 2020. The payment of any income tax amounts that become owing on or after March 19, 2020 and before September 2020 will be due September 1, 2020. This relief will apply to income tax balances due, as well as instalments, and no interest or penalties will accumulate on these amounts during this period. It is unclear at this time whether the CRA is intending to waive late-filing penalties. As such, it is recommended that all taxpayers continue to file all other returns by their tax filing deadlines until further notice.
4) Federal Government Announces Broad Tax Deadline Extensions
The Federal Government announced additional extensions to many tax-related deadlines. Most federal tax filing deadlines have been extended to June 1, 2020, including the March 31 deadline for T1134 forms and T2s. The filing deadline for the T5013 partnership return and other information that individuals will need to complete their T1 returns (such as T3 Trust Returns and NR4 Statement of Amounts Paid or Credited to Non-Residents) have been extended to May 1, 2020. The deadline for most T1 returns remains June 1, 2020. Note that some returns and payments will still be due at the usual time.
5) Deferral of GST/HST and Customs Duties on Imports
Businesses, including self-employed individuals, may defer all Goods and Services/Harmonized Sales Tax (GST/HST) and customs duties owed for imports until June 30, 2020. It is unclear whether GST/HST returns will have to be filed while the deferral is in effect.
6) Income Tax Objections
For any objection request due March 18 or later, the deadline is extended until June 30, 2020.
7) Deferral of B.C. Provincial Tax Payments
Effective immediately, B.C. is extending filing and payment deadlines for the following taxes until September 30, 2020:
- Employer Health Tax;
- Sales taxes
- Provincial sales tax (including municipal and regional district tax);
- Carbon tax;
- Motor fuel tax; and
- Tobacco tax
8) Delayed PST Budget 2020 Tax Changes
The following tax changes will be postponed until further notice:
- Eliminating the PST exemption for carbonated beverages that contain sugar, natural sweeteners or artificial sweeteners
- Expanded registration requirements for Canadian sellers of goods, along with Canadian and foreign sellers of software and telecommunication services
9) Delayed Carbon Tax Increase
Carbon tax rates will remain at their current levels until further notice.
10) Reduced School Tax Rates for Businesses
School tax rates for commercial properties (Classes 4, 5, and 6) will be reduced by 50%.
11) Relief from BC Hydro Electricity Bills
Small businesses that needed to close due to COVID-19 may be eligible for relief from their business’ electricity charges for a period of up to three months: https://app.bchydro.com/accounts-billing/bill-payment/ways-to-pay/covid-19-relief-fund.html?WT.mc_id=rd_covid19relief
12) Canada Summer Job Subsidy (recently proposed)
Announced that businesses may be eligible for a 100% subsidy on minimum wage paid for student workers. They have also extended the end date for employment to February 28, 2021. Further details of the program are expected to follow on the link below:
13) Small Business BC COVID-19 Support Service
A new B.C. COVID-19 Support Service will serve as a single point of contact for businesses throughout the province of B.C. looking for information on resources available during the COVID-19 pandemic. French, Punjabi, Chinese and Korean translations will be available with this service. Advisors will be available from Monday to Friday, 8am to 6pm (PST) at 1-833-254-4357 and inquiries can also be emailed to firstname.lastname@example.org, or raised in a live-chat feature available on the dedicated website https://covid.smallbusinessbc.ca
14) Canada Emergency Commercial Rent Assistance (CECRA)
The federal government has reached an agreement in principle with all provinces and territories to implement the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses. This program will lower rent by 75 per cent for small businesses that have been affected by COVID-19. The government is also providing further details on the program:
- The program will provide forgivable loans to qualifying commercial property owners to cover 50 per cent of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April (retroactive), May, and June.
- The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 per cent for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25 per cent of the rent.
- Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70 per cent drop in pre-COVID-19 revenues. This support will also be available to non-profit and charitable organizations.
- This program is expected to be operational by mid-May.
Support for Canadian Workers and Students
1) Canada Emergency Response Benefit (CERB)
The CERB replaces previously announced EI programs and is intended to be simpler and more accessible to Canadians.
To support workers and help businesses retain their employees, the CERB is a non-taxable benefit of $2,000 per month payable to workers who lose their income as a result of the COVID-19 pandemic, for a period of up to four months, payable to workers who lose their income as a result of the COVID-19 pandemic.
- Employees that earned a wage;
- Self-employed individuals who would not otherwise be eligible for Employment Insurance (EI); and
- Workers who are still employed, but are not receiving income because of disruptions to their work due to COVID-19.
Individuals eligible for the CERB are those individuals above that:
- Reside in Canada for tax purposes;
- Are at least 15 years old;
- Who have stopped working because of reasons related to COVID-19 or are eligible for Employment Insurance regular or sickness benefits or have exhausted their Employment Insurance regular benefits between December 29, 2019 and October 3, 2020; and
- Who had employment and/or self-employment income of at least $5,000 in 2019 or in 12 months prior to the date of their application. This includes non-eligible dividends received provided you meet the conditions above
When submitting your first claim, you cannot have earned more than $1,000 in employment and/or self-employment income (also includes non-eligible dividends) for 14 or more consecutive days within the four-week benefit period of your claim. When submitting subsequent claims, you cannot have earned more than $1,000 in employment and/or self-employment income for the entire four-week benefit period of your claim.
Applications are currently live, with the goal of the CERB payments being received within 10 days from the date of application. The CERB will be paid every four weeks and will be available retroactively from March 15 to October 3, 2020.
- Sign up for CRA My Account https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html
- Familiarize yourself with the current rules and application process: https://www.canada.ca/en/services/benefits/ei/cerb-application.html
2) B.C. Emergency Benefit for Workers
The B.C. Emergency Benefit for Workers will provide a one-time $1,000 payment to people who lost their income because of COVID-19. Those eligible to receive federal Employment Insurance or the CERB are eligible. Applications for the payment will be open soon.
The application can be made online starting May 1, 2020.
3) Goods and Services Tax
A one-time special payment will be paid by early May 2020 through the Goods and Services Tax Credit (GSTC). This will double the maximum GSTC payment amounts for the 2019-2020 benefit year. The average amount received for those eligible will be up to $400 for single individuals, and $600 for couples.
4) Canada Child Benefit (CCB)
The maximum CCB will increase by $300 per child for the 2019-2020 benefit year.
5) Registered Retirement Income Funds (RRIFs)
For 2020, the required minimum withdrawals from RRIFs will be reduced by 25% in recognition of volatile market conditions and impact to retirement plans.
6) Climate Action Tax Credit
Provides a one-time enhancement to the climate action tax credit for low-income to moderate families, paid in July 2020. An adult will receive up to $218 (increase from $43.50) and a child will receive $64.00 (increased from $12.75).
7) Renters, Homeowners, and People Experiencing Homelessness
Legislation still requires that tenants pay rent in full and on time. However, the pandemic temporarily suspends a landlord’s ability to end a tenancy if a tenant does not pay the rent in full and on time. Note however, that a tenant who has not paid rent could face eviction once the pandemic is over.
Funding for housing supports will be increased to ensure people can maintain their housing in the event of job or income loss. The new rental supplement will offer up to $500/month toward their rent and will be available to low-to-moderate income renters who are facing financial hardship as a result of the COVID-19 crisis, but do not qualify for existing rental assistance programs. The supplement will be paid directly to landlords..
8) B.C. Student Loans
Starting March 30, 2020, B.C. student loan payments are automatically frozen for six months.
9) Monthly Bills:
- BC Hydro: Customers may defer bill payments or arrange for flexible payment plans with no penalty through the COVID 19 Customer Assistance Program.
- Info: https://www.bchydro.com/news/press_centre/news_releases/2020/bill-relief-covid-19.html
- Customers experiencing job loss, illness or lost wages due to COVID-19 can access grants up to $600 to pay their BC Hydro bills through the Customer Crisis Fund. https://app.bchydro.com/accounts-billing/bill-payment/ways-to-pay/customer-crisis-fund.html
- ICBC: Customers on a monthly payment plan facing financial challenges due to COVID-19 may defer payment for up to 90 days with no penalty.
10) Income and Disability Assistance
If you are not receiving Employment Insurance or CERB and are on:
- Income Assistance
- Disability Assistance
- Comforts allowance or
- BC Senior’s Supplement
You will automatically receive a $300 supplement on your cheques issued in April, May or June.
If you are on Disability Assistance and receiving a BC Bus Pass:
- You will automatically receive the $52 Transportation Supplement on your cheque starting in April; and
- No action is required
11) Streamlined Services through Employment and Social Development Canada
For information pertaining to streamlined services and other matters relating to Employment and Social Development Canada, visit the link:
12) US Income and tax deadline update
Tax Deadline updates: On March 21, 2020, the US Treasury Department and the Internal Revenue Service (the “IRS”) automatically extended the income tax filing deadline and income tax payments from April 15, 2020 to July 15, 2020. This includes the 2019 tax return balances due as well as the first quarter estimated payments for 2020. No interest or penalties will accrue on taxes paid by July 15, 2020.
With this announcement there is no requirement to file an extension for federal returns due April 15, 2020. Further filing extensions until October 15, 2020 will still be available. This will be applicable to filings for the following Taxpayers:
- Estates with a calendar year end; and
Although the individual states are not bound by this announcement, it is expected they will also follow and provide extensions.
13) Employment Insurance Work Sharing Programs (in force from March 15 2020 to March 14, 2021)
The Employment Insurance Work Sharing Program provides benefits to workers to agree to reduce their normal working hours and share the available work due to new circumstances beyond the employer’s control. This program has been modified for the for the following:
- To increase the eligibility period for shared work agreements to 76 weeks;
- Waive the mandatory waiting period between agreements;
- Relax the eligibility requirements; and
- Simplify the application process
The program allows employers to temporarily reduce an employee’s work schedule between a minimum of 10% (one half day) and a maximum of 60% (three days) for the duration of the program. The employee must agree to reduce their normal working hours and share the available work.
For more information on eligibility requirements and the application process, visit the following link below:
14) Temporary Salary Top-Up for Low-Income Essential Workers
A temporary salary top-up will be available to low-income workers that earn less than $2,500 per month on a full time basis, that the provinces or territories have deemed essential. More details to come soon.
The BC government is providing assistance to parents requiring specific assistance with child-care, and rules that daycares must adhere to regarding charging fees, saving spots, and providing access.
If you are an essential service worker you can also apply for temporary emergency child care.
16) Canada Emergency Student Benefit (CESB) and Canada Student Service Grant (CSSG)
The CESB will provide $1,250 per month for eligible students from May to August 2020, and $1,750 for students with dependents with permanent disabilities.
For students that choose to do national service and serve their communities, the CSSG will provide up to $5,000 for their education.
More details are expected to be released soon.