04/27/20 Updates – Canada Emergency Commercial Rent Assistance program added
04/18/20 Updates – Business Financing (CEBA – payroll limit change)
04/13/20 Updates – Canada Emergency Wage Subsidy (added eligibility specifics), royal assent granted
04/08/20 Updates – Canada Emergency Wage Subsidy (changes to qualification criteria, penalties, CPP and EI refunds), Canada Emergency Business Account (application opening)
04/06/20 Updates – Canada Emergency Wage Subsidy
04/01/20 Updates – Canada Emergency Wage Subsidy
The federal and provincial governments have released numerous initiatives in recent weeks, which are changing on a day-to-day basis. In an effort to keep our clients updated, we are summarizing the key items for our business clients here. This page will be updated with new information, as it becomes available.
Current Understanding Around Wage Subsidies
Both the Temporary Wage Subsidy (10%) and Canada Emergency Wage Subsidy (75%) are available.
If you meet the year-over-year revenue decline criteria of the Canada Emergency Wage Subsidy (75%), you will apply for it.
If you do not meet the year-over-year revenue decline criteria of the Canada Emergency Wage Subsidy (75%), you can still utilize the Temporary Wage Subsidy (10%), as long as you meet the eligibility criteria of that program.
TEMPORARY WAGE SUBSIDY
The Temporary Wage Subsidy received Royal Assent on March 25, 2020. Details of this subsidy are below.
Am I an eligible employer?
Eligible employers include:
- Canadian Controlled Private Corporations (with taxable capital < $15M in an associated group)
- Non-profit organizations
- Registered Charities
- Sole proprietorships
If you are an eligible employer, you must also have:
- Had a payroll account with the CRA as of March 18, 2020, and,
- Pay salaries, wages, bonuses or other remuneration to an employee
How much am I eligible for?
The subsidy is equal to 10% of the remuneration you pay between March 18, 2020 and June 20, 2020, up to:
- $1,375.00 per employee, and,
- $25,000 per employer
*NOTE: associated companies are not required to share the subsidy.
How does it work?
- If you are an eligible employer, you do not have to apply for the subsidy.
- The subsidy is not paid to eligible employers. Rather, it is obtained by short paying the income tax portion of the remittances that you normally withhold from employee paycheques.
- You can begin calculating the eligible amount for any remuneration paid on or after March 18, 2020, and deduct it from your next remittance payment. For example, if you remit your payroll deductions monthly, you can start with reducing your April 15, 2020 remittance.
- There will be no change to your employee’s paycheques as a result of this subsidy.
How do I deduct the eligible amount from my remittance payment?
Clients Using a Payroll Processing Company
Most payroll providers have notified clients on the process to be followed to access this subsidy, with the exception of ADP, from whom we are still waiting on guidance.
Clients Who Process Their Own Remittance Payments
If you process your remittance payments directly to the CRA, we do recommend that you calculate and you track the subsidy by employee and keep a record of your calculations. You will simply reduce your remittance payment by the amount of subsidy you have calculated for the remittance period.
We do have an Excel template available that you can use to make these calculations. If you would like a copy of this template, please e-mail me at firstname.lastname@example.org.
Please be aware that, much to our chagrin, this subsidy will be taxable, meaning that it will be added to your business’ income for 2020. You will want to ensure that you plan for that.
CANADA EMERGENCY WAGE SUBSIDY(CEWS)
The Canada Emergency Wage Subsidy received Royal Assent on April 11, 2020 and is a separate program from the Temporary Wage Subsidy above. Businesses are being encouraged to hire back laid off employees, or not lay off employees.
Businesses, charities and not-for-profits experiencing a revenue reduction, resulting from the COVID-19 pandemic will be eligible
The revenue reduction can be measured in one of two ways:
- Compare 2020 revenue for a given month to that of the same month in 2019 (ex: March 2020 vs. March 2019), or,
- Compare 2020 revenue for a given month to an average of revenue earned in January & February 2020 (ex: March 2020 vs. average of January & February 2020)
The revenue reduction will be 15% for March 2020, and 30% for April 2020 and May 2020
Revenue can be determined using the company’s normal accrual accounting methods, or on a cash basis. However, once you select a method, that method must be applied to all periods.
The table below outlines the revenue reference period and the associated pay dates for which the subsidy can be claimed:
|Reference period for eligibility||Claiming period|
|Period 1||March 2020 over March 2019|
March 2020 over Jan & Feb 2020 (avg.)
|March 15 – April 11|
|Period 2||April 2020 over April 2019 |
April 2020 over Jan & Feb 2020 (avg.)
|April 12 – May 9|
|Period 3||May 2020 over May 2019 |
May 2020 over Jan & Feb 2020 (avg.)
|May 10 – June 6|
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.
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.
A special rule applies to employees that do not deal at arm’s length with the employer (ex: owner-managers). The subsidy amount for such employees is limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of the lesser of $847 per week and 75% of the employee’s pre-crisis weekly remuneration. The subsidy is only available in respect of non-arm’s length employees employed prior to March 15, 2020.
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.
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 – April 11, from April 12 – May 9, or from May 10 – June 6.
It is not mandatory for the business to pay the remaining 25% of the wage, however it is expected that they will make their best effort to do so.
- Those eligible will need to show the revenue decline, show that they have paid the employees for which they are claiming the subsidy, and attest that they are doing everything they can to pay the remaining 25% of wage (details on requirements to come).
- Those eligible will need to apply each month online through the CRA’s My Business Account. Applications are expected to launch late April, or early May. Funds will be available in May 2020.
- There will be severe consequences for those attempting to fraudulently obtain access to these funds. . If an entity tries to manipulate this program for their advantage where will be a 225% penalty and criminal charges up to a maximum of 5 years imprisonment.
- A new 100% refund for certain employer-paid contributions to EI and CPP was also added. 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.
If you do not have direct deposit set up for your business with the CRA, and plan on accessing this subsidy, we highly encourage you to do so as soon as possible. You can do this online via My Business Account here.
CANADA EMERGENCY COMMERCIAL RENT ASSISTANCE (CECRA)
The Canada Emergency Commercial Rent Assistance program was announced by the Prime Minister on April 24, 2020. The program is not yet law and details are subject to change.
The program will provide forgivable loans to qualifying commercial property owners to cover 50% of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.
The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenant’s rent by at least 75% 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% 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% drop in pre-COVID-19 revenues. This support will also be available to non-profit and charitable organizations.
The rent forgiveness program also contains a moratorium on evictions.
The program is expected to be operational in mid-May.
FILING AND PAYMENT DEADLINES
Corporate Income Tax
|Filing date – Current tax year||June 1, 2020 (extended)|
Applies to corporations that would otherwise have a filing due date after March 18 and before June 1, 2020.
|Payment date – Current tax year||September 1, 2020 (extended)|
Applies to balances and instalments under Part 1 of the Income Tax Act due on or after March, 18 and before September 1, 2020.
|Filing date – Current period||No change|
|Payment date – Current period||June 30, 2020 (extended)|
· Monthly filers have to remit amounts collected for the February, March and April 2020 reporting periods;
· Quarterly filers have to remit amounts collected for the January 1, 2020 through March 31, 2020 reporting period; an
· Annual filers, whose GST/HST return or instalment are due in March, April or May 2020, have to remit amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.
|Payment date – all periods||Due dates have not been extended|
|Filing date – Current period||No change|
|Payment date – Current period||August 31, 2020 (extended)|
Businesses that report and pay monthly, quarterly or annual premiums are eligible for the deferral. The deferral applies to payments due on the following dates:
· Monthly: Mar 31, Apr 30, May 31, Jun 30, Jul 31, Aug 31
· Quarterly: Apr 30, Jul 31
· Annual: Apr 30
Full details: https://www.wsib.ca/en/financialrelief
Employer Health Tax (EHT)
|Filing date – Current period||No change|
|Payment date – Current period||EHT exemption now $1 million (increased)|
Retroactive to January 1, 2020, the EHT exemption is increasing from $490,000 to $1 million for the 2020 tax year. The EHT exemption will return to $490,000 on January 1, 2021.
Canada Emergency Business Account
The new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced. Under certain conditions, up to $10,000 of the loan will be forgiven.
To qualify, these organizations will need to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019.
Applications will open on April 9, 2020. You will apply through your business bank’s website.
Loan Guarantee for Small and Medium-Sized Enterprises
EDC is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to SMEs.
Co-Lending Program for Small and Medium-Sized Enterprises
BDC is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program.
These programs will roll out in the three weeks after March 27. Interested businesses should work with their current financial institutions.