Response to COVID-19: For Businesses
As the COVID-19 pandemic continues, it’s growing impact has been felt by businesses around the world. The government has quickly introduced many new measures to support businesses through these challenging times by providing financial support to those affected by the outbreak. To help you understand the programs and determine which measures are applicable to your business, we have provided a summary of resources below. If you require any assistance or have questions with determining the eligibility of your business, please feel free to contact us. Our professionals can provide you with the expertise to help navigate your business through this process.
Please explore our resources to stay informed during this difficult time.
Benefits for Businesses
10% Temporary Wage Subsidy:
The 10% temporary wage subsidy is a three-month program put in place by the federal government to provide eligible employers the opportunity to reduce their payroll remittance to the CRA by receiving a 10% subsidy. An eligible employer is defined as the following:
● An individual (excluding trusts)
● A partnership
● A non-profit organization
● A registered charity
● A Canadian-controlled private corporation (including a cooperative corporation)
● Has a business limit in the prior year
● Has an existing business number with the CRA
● Has a payroll program account with the CRA
● Pays a salary, wages, bonuses, or other remuneration
An eligible employee is an individual who is employed in Canada. An employer can claim a maximum of $1,375 per eligible employee. In total the employer cannot claim more than $25,000 under this program.
Employers are still required to remit CPP and EI payments and can only reduce the payroll tax remittances to collect the 10% subsidy. As a result, there is no application to be filled out and is fairly straightforward.
If the income taxes you are remitting in the period are not sufficient to offset the value of the subsidy, you can reduce future payroll remittances for the difference. This includes reducing remittances that may fall outside of the application period for the wage subsidy (after June 19th).
The CRA automatically assumes you have reduced your source deductions from your payroll remittances. If you did not reduce the payroll remittance during the periods for the subsidy, the CRA will require you to complete a self-identification form that will be made available in the coming months in order to inform them to credit your payroll program for the total subsidy amount you were entitled to. Any amounts claimed under this program will reduce your overall Canada Emergency Wage Subsidy (CEWS) claim.
Additional details on the 10% Temporary Wage Subsidy (available by the Canada Revenue Agency) can be found by clicking here.
Canada Emergency Wage Subsidy (CEWS):
The Canada Emergency Wage Subsidy (CEWS) is a program that offers a 75% wage subsidy, up to a maximum payment of $847 per week, for each employee that is eligible under the program. This subsidy has been made available from March 15th to August 29th, 2020 and has predetermined claim periods.
In order to quality for this subsidy, eligible employers must meet the following conditions:
● Be an eligible employer
● Experienced an eligible reduction in revenue
● Had a CRA payroll account on March 15th
The following in depicted in the chart below. An eligible reduction in revenue has been defined by the government as businesses that have seen a reduction of 15% in baseline revenue during eligibility period 1 (please see below) and 30% for each subsequent period (eligibility period 2 and 3). Baseline revenues can be determined as the revenue you earned in the corresponding month in 2019, or the average of the revenue you earned in January and February of 2020. Once you have selected a method for calculating your baseline revenues, it cannot be changed to determine baseline revenue for subsequent periods - you must be consistent. Once you have determined you have meet the required reduction in revenue for a particular claim period, you automatically will qualify for the qualifying period (known as the deeming rule). As a result, the employer does not have to make this determination again for that next claim period.
As an additional incentive to re-hire staff, this program will offer an additional 100% of the employer portion of Canadian Pension Plan (CPP) and Employment Insurance (EI) premiums for employees that are on leave with pay. You cannot claim the employer portion of CPP and EI for employee’s that are currently working during this time.
When re-hiring an employee, consideration needs to be made to ensure the employee was not without pay for 14 or more consecutive days during the claim period otherwise the subsidy may not be available for that employee.
Eligible employees who are re-hired, that may have received or continue to receive benefits under the CERB, are responsible to determine their continued eligibility and whether repayments will be required.
Please note that there are special rules for non-arm’s length employees, such as owners of the business, which limit the subsidy or may preclude them from being eligible under the program with certain circumstances.
The CEWS and the 10% Temporary Wage Subsidy program is intended to provide total subsidy up to 75%. In the event you qualify for both programs, the 10% Temporary Wage Subsidy must be reduced from your total CEWS claim, whether you have taken advantage of it or not. If you did not apply or take the 10% subsidy and deduct them from your source deductions, the CRA will require you to complete a self-identification form that will be made available in the coming months. This will inform them to credit your payroll program for the total subsidy amount you were entitled to.
A detailed application guide and extensive FAQ is available through the CRA website that provides guidance for you during this time.
Both programs are subject to the usual treatment for government assistance. As a result, the wage subsidy received by eligible employers would be included in the employer’s taxable income. The assistance received under either wage subsidy program would reduce the amount of payroll expense eligible for other federal tax credits.
Financing Programs Available to Businesses
The government - in partnership with organizations such as Business Development Bank of Canada (BDC), Export Development Canada, Canadian Mortgage and Housing Corporation (CMHC) etc. - have made available many financing programs to provide businesses with capital to help them continue operations during the global pandemic.
Please click on the links below for information regarding the programs available. If you require any assistance in the preparation of these applications, please feel free to contact us. As program eligibility is continually changing, it is a good idea to keep up with new announcements to determine if you qualify under new amendments to the programs. Additional links:
Business Credit Availability Program (BCAP)
Canada Emergency Business Account (CEBA)
Large Employer Emergency Financing Facility (LEEFF)
Canada Emergency Commercial Rent Assistance (CECRA)
Regional Relief and Recovery Fund (RRRF)
Assisting innovative and early-stage businesses
Disclaimer: The above summaries and information are key highlights into some of the support programs available. The information provided above can change based on your specific situation and a professional should be consulted when making complex determinations. These programs continue to evolve during this uncertain time so please contact us so we can have a professional reach out to you.
We hope this material assisted you in understanding the new measures implemented by the government to help those affected by the outbreak. If you require any help in navigating through the measures above, please feel free to contact us. We are always here to help!