Covid 19 Assistance for Small Business

There are numerous Government Assistance Programs for COVID-19, and more are emerging daily.

COVID-19 is the first of it’s kind, and our government as well as other services are learning as they go.

Updates are happening frequently, sometimes even several times daily and in an effort to keep our clients informed, we have created this page and will update it frequently as new information becomes available.

Current CRA Information and updates can be found here

 

Provincial and City Initiatives can be found below

Assistance for Individuals

The Government has recognized the financial hardship that is inevitable for a multitude of Canadians and has introduced several assistance programs as follows:

Applying for EI Benefits

Employment Insurance for COVID-19You need to have worked a specified number of hours in the past 52 weeks to qualify, have an ROE from your employer, and have lost your job due to the pandemic. Application is easy and can be done online
Afterwards, you can apply to have the one-week waiting period waived by calling the government’s toll-free number at 1-833-381-2725, or teletypewriter at 1-800-529-3742.

Canada Emergency Response Benefit

Those that do not qualify for regular EI Benefits will be able to apply for the Canada Emergency Response Benefit;
This taxable benefit will be available to individuals that have lost their jobs due to the COVID-19 Pandemic
The benefit will provide payments of up to $2,000 per month for up to 4 months.
There is no harm in applying, even if you have a small amount of other income;  you will have to declare the other income, however, you may still qualify for some additional funds
Any Canadian who has ceased working for a 14-day period due to COVID-19 is eligible. That includes wage earners, contract workers, or self-employed individuals; those who’ve had to stay home without pay to self-isolate or care for loved ones; and anyone else who hasn’t been permanently laid off but has stopped receiving pay cheques.

Increase to Canada Child Benefit

For over 3.5 million families with children, who may also require additional support, the Government is proposing to increase the maximum annual Canada Child Benefit (CCB) payment amounts, only for the 2019-20 benefit year, by $300 per child. The overall increase for families receiving CCB will be approximately $550 on average; these families will receive an extra $300 per child as part of their May payment.

Personal Tax Filing Deadline

The Personal Tax Filing Deadline has been extended to June 1st.. HOWEVER, if you want to take advantage of the extra GST credit, Trillium Benefits and the Child Tax Benefit increases, you need to file as soon as possible.

Credit for Home Education of Children

 

There is a one-time credit for parents with school aged kids (0-12 yrs) – $200 per kid ($250 for those with identified special needs 0-21 yrs) to support with education from home needs.

here is a link direct to apply for the credit  https://www.iaccess.gov.on.ca/FamilyAppWeb/public/index.xhtml

Canada Emergency Student Benefit

 

  • the proposed Canada Emergency Student Benefit, which would provide support to students and new graduates who are not eligible for the Canada Emergency Response Benefit. This benefit would provide $1,250 per month for eligible students or $1,750 per month for eligible students with dependents or disabilities. The benefit would be available from May to August 2020.
  • the new Canada Student Service Grant, which will help students gain valuable work experience and skills while they help their communities during the COVID‑19 pandemic. For students who choose to do national service and serve their communities, the new Canada Student Service Grant will provide up to $5,000 for their education in the fall.

Mortgage and Financing Assistance

 

Canada’s large banks have confirmed that support will include up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit products.

Assistance for Small Business and Self-Employed

IMPORTANT NOTE:

In keeping with regular taxation rules, ANY SUBSIDY RECEIVED FROM THE GOVERNMENT by small business during this pandemic will be TAXABLE INCOME.

 

Small Business Rent Relief

 

Prime Minister Justin Trudeau has announced that an agreement has been reached with all provinces and territories to implement the promised rent assistance program for businesses. It will lower rent by 75 per cent for small businesses that have been impacted by COVID-19.

The businesses eligible for this rent relief are those that have to pay less than $50,000 per month in rent, have had to temporarily cease operations, or have experienced at least a 70 per cent drop in pre-COVID-19 revenues. The program is also being made available to non-profits and charities.

We’ll post more details as they become available.

Tax Filing Assistance and Deadlines

 
 
 
The Canada Revenue Agency will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020.
 
This relief would apply to tax balances due, as well as installments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
 
The Canada Revenue Agency will not contact any small or medium businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks.
 

The deadline for businesses to file their returns is unchanged. Those who are able to, should continue to file their GST/HST returns on time, reporting their net tax for the reporting period to help facilitate tax compliance and administration. However, recognizing the difficult circumstances faced by businesses, the CRA won’t impose penalties where a return is filed late provided that it is filed by June 30th.”

Employer Wage Subsidy

The new Canada Emergency Wage Subsidy (CEWS) provides a 75% wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020.

Eligible Employers

Eligible employers includes:

  • individuals
  • taxable corporations
  • partnerships consisting of eligible employers, non‑profit organizations and registered charities. Those that see a drop of at least 15% of their revenue in March 2020 and 30% for the following months (see Eligible Periods).
  • Registered Charities and Not-For-Profits.

Eligible Revenue Reduction

To be eligible for the subsidy, your revenues must have decreased in comparison with the corresponding month in 2019 or the average revenue for January / February of 2020

For March 15 – April 11, 2020 your business needs to see an overall revenue reduction of 15% or more

For April 12 – May 11, 2020 your business needs to see an overall revenue reduction of 30% or more

For May 12 – June 11, 2020 your business needs to see an overall revenue reduction of 30% or more

Calculating Revenues

An employer’s revenue for this purpose is its revenue in Canada earned from arm’s-length sources. Revenue is calculated using the employer’s normal accounting method, and  exclude revenues from extraordinary items and amounts on account of capital.
Employers are allowed to calculate their revenues under the accrual method or the cash method, but not a combination of both. Employers select an accounting method when first applying for the CEWS and require to use that method for the entire duration of the program.

For registered charities and non-profit organizations, the calculation includes most forms of revenue, excluding revenues from non-arm’s length persons. These organizations are allowed to choose whether or not to include revenue from government sources as part of the calculation. Once chosen, the same approach applies throughout the program period.

Special rules for the computation of revenue are provided to take into account certain non-arm’s length transactions, such as where an employer sells all of its output to a related company that in turn earns arm’s length revenue. As well, affiliated groups are able to compute revenue on a consolidated basis.

Amount of Subsidy

The subsidy amount for a given employee on eligible remuneration paid for the period between March 15 and June 6, 2020 is the greater of:

  • 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
  • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration, whichever is less.

In effect, employers may be eligible for a subsidy of up to 100% of the first 75% of pre-crisis wages or salaries of existing employees. These employers are expected where possible to maintain existing employees’ pre-crisis employment earnings.
The pre-crisis remuneration for a given employee is based on the average weekly remuneration paid between January 1 and March 15 inclusively, excluding any seven-day periods in respect of which the employee did not receive remuneration.
Employers are also  eligible for a subsidy of up to 75% of salaries and wages paid to new employees.

Eligible remuneration may include salary, wages, and other remuneration like taxable benefits. These are amounts for which employers are generally required to withhold or deduct amounts to remit to the Receiver General on account of the employee’s income tax obligation. However, it does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle.

Use the online CRA Calculator HERE to calculate your subsidy

Get a copy of the Calculation Spreadsheet HERE

There is no overall limit on the subsidy amount that an eligible employer may claim.

Employers are expected to make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.

Refund for Certain Payroll Contributions

CRA expanded the CEWS by introducing a new 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. This refund covers 100% of employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay and for which the employer is eligible to claim for the CEWS for those employees.

In general, an employee is considered to be on leave with pay throughout a week if that employee is remunerated by the employer for that week but does not perform any work for the employer in that week. This refund is not be available for eligible employees that are on leave with pay for only a portion of a week.

This refund is not  subject to the weekly maximum benefit per employee of $847 that an eligible employer may claim in respect of the CEWS. There is no overall limit on the refund amount that an eligible employer may claim.

For greater certainty, employers are required to continue to collect and remit employer and employee contributions to each program as usual. Eligible employers  apply for a refund, as described above, at the same time that they apply for the CEWS.

Eligible employees

An eligible employee is an individual who is employed in Canada.

Eligibility for the CEWS of an employee’s remuneration is available to employees other than those who have been without remuneration for 14 or more consecutive days in the eligibility period, i.e., from March 15 to April 11, from April 12 to May 9, or from May 10 to June 6.

How to Apply

Eligible employers will be able to apply for the CEWS through the Canada Revenue Agency’s My Business Account portal. Employers will need to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to employees. More details about the application process will be made available shortly.

Alternately, if LEDGERS are your accountants, we can apply on your behalf.  Just let us know you would like this service (Note: we must be authorized on your CRA Account to provide this service)

Interaction with 10% Wage Subsidy

For employers that are eligible for both the CEWS and the 10% wage subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period generally reduces the amount available to be claimed under the CEWS in that same period.

Interaction with the Work-Sharing Program

For employers and employees that are participating in a Work-Sharing program, EI benefits received by employees through the Work-Sharing program reduce the benefit that their employer is entitled to receive under the CEWS.

Government Assistance

The usual treatment of tax credits and other benefits provided by the government applies. As a consequence, the wage subsidy received by an employer is considered government assistance and is included in the employer’s taxable income.

Assistance received under either wage subsidy  reduces the amount of remuneration expenses eligible for other federal tax credits calculated on the same remuneration.

Summer Jobs Subsidy

 

The Summer Jobs Subsidy Program is being modified as follows:

 

  • receive an increased wage subsidy, so that private and public sector employers can also receive up to 100 per cent of the provincial or territorial minimum hourly wage for each employee;
  • extend the end date for employment to February 28, 2021;
  • adapt their projects and job activities;
  • hire staff on a part-time basis.

More information on the Summer Jobs Program can be found here

BDC Small Business Loans

 

Effective March 18, 2020, new relief measures for qualified businesses include:

  • Working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months for qualifying businesses;
  • 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;
  • Reduced rates on new eligible loans;
  • Businesses seeking support through BCAP should first contact their financial institutions for an assessment of their situation.
  • Financial institutions will refer to EDC and BDC their existing clients whose needs extend beyond what is available through the private sector alone.\

Get the loan application form here

Emergency Business Account

 

Full details will be forthcoming shortly, however, here is what we currently know:

  • The Government will lend small business up to $40,000
  • To qualify, your payroll must be between $5,000 and $1,000,000 per annum
  • No payments will be required until December 2022
  • If paid in full by December 2022, the Government will forgive $10,000 of the loan
  • No interest will be accrued or owed if you pay the balance in full before the due date.
  • If not paid in full by the due date, can be converted into a 3-year term loan at 5% Interest.
  • Online applications will be available shortly (Around April 6) and we’ll post the links here.

Application Links

Provincial and City Initiatives

Alberta

Each Province, Territory and most major cities in Canada have introduced their own initiatives to assist with the economic fallout of the COVID-19 Pandemic.

Government Assistance Programs for COVID-19:

The links below will connect you to their respective sites and initiatives:

British Columbia

Manitoba

New Brunswick

Province of New Brunswick – Government Assistance Programs for COVID-19

New Brunswick Workers Emergency Income Benefit

A one-time income benefit of $900 is available for workers or self-employed people residing in New Brunswick who have lost their job due to the state of emergency. The benefit will help to bridge the gap between when a person lost their job or closed their business on or after March 15, 2020, to when the national benefit takes effect. The benefit will end on April 30, 2020.

Fredericton

Saint John

Sussex

Newfoundland & Labrador

Northwest Territories

Nova Scotia

Nunavut

Ontario

Prince Edward Island

Quebec

Saskatchewan

Yukon