Below you’ll find information on the supports created by the Federal government to help business through the COVID-19 crisis.
For more information on these supports, visit https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses.
Federal Measures & Subsidies
Canada Emergency Wage Subsidy (CEWS)
The program covers 75% of an employee’s wages – up to $847 per week – for eligible employers. The program will be in place until August 29.
For employers that are eligible for both the CEWS and the Temporary 10% Wage Subsidy for a period, any benefit from the Temporary 10% Wage Subsidy for remuneration paid in a specific period will generally reduce the amount available to be claimed under the CEWS in that same period.
Employers eligible for the CEWS are entitled to receive a 100% refund for certain employer contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan paid in respect of employees who are on leave with pay.
Details currently available on the federal emergency wage subsidy:
- value of 75% of an employee’s annual earnings up to $58,700 or $847 per week.
- available for employers of all sizes and across all sectors who have suffered a drop in gross revenues of at least 15% in March, and 30% in April, May, June, July & August. A business can compare its revenue to the same month last year OR an average of January and February 2020. This will help new and growing firms who may not have qualified based on a comparison to the same month in 2019. The program allows businesses to use either accrual or cash accounting methods.
- An eligible employer’s entitlement to this wage subsidy will be based entirely on the salary or wages actually paid to employees. All employers would be expected to at least make best efforts to top up salaries to 100% of the maximum wages covered.
- Severe penalties for fraud.
- Those organizations that do not qualify for the Canada Emergency Wage Subsidy may continue to qualify for the previously announced wage subsidy of 10 per cent of remuneration paid from March 18 to before June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
Wage Subsidy Calculator
The Federal government has created a calculator for the Canada Emergency Wage Subsidy. Very useful for folks looking to know how much they may be eligible to receive.
The calculator also serves as a “practice run” for the actual application, helping you make sure you’ve got all the info you’ll need to complete the actual application, which is open as of Monday April 27. Visit the calculator and get more info here.
Canada Emergency Response Benefit
What is the Canada Emergency Response Benefit
If you have stopped working because of COVID-19, the Canada Emergency Response Benefit (CERB) may provide you with temporary income support. The CERB provides $500 a week.
Who is eligible
The benefit will be available to workers:
- Residing in Canada, who are at least 15 years old;
- Who have stopped working because of COVID-19 and have not voluntarily quit their job or are eligible for EI regular or sickness benefits;
- Who had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
- Who are or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period. For subsequent benefit periods, they expect to have no employment or self-employment income.
- Who are in receipt of non-eligible dividends (generally, those paid out of corporate income taxed at the small business rate). An individual could count this income towards the $5,000 income requirement to be eligible for CERB.
- When submitting your first claim, you cannot have earned more than $1,000 in employment and/or self-employment income 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 new claim.
More info and apply: https://www.canada.ca/en/services/benefits/ei/cerb-application.html
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.
- The Ontario government is partnering with the federal government to provide urgent relief for small businesses and landlords affected by the COVID-19 outbreak. The province is committing $241 million through the new Ontario-Canada Emergency Commercial Rent Assistance Program (OCECRA). This will help ensure businesses are ready to reopen once emergency measures are lifted.
- This program will lower rent by 75% for small businesses that have been affected by COVID-19.
- 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. In this way, CECRA will provide relief for small businesses paying less than $50,000 per month in gross rent that have either been forced to close due to the pandemic or have had their revenues severely impacted by at least 70 per cent. Canada Mortgage and Housing Corporation (CMHC) will administer the program on behalf the Government of Canada and our provincial and territorial partners.
- The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ 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.
- Businesses paying less than $50,000 per month in rent and who have temporarily ceased operations
- Businesses who have experienced at least a 70% drop in pre-COVID-19 revenues. This support will also be available to non-profit and charitable organizations.
Support for larger businesses will be announced in the coming days.
The CECRA is expected to be operational by mid-May, with commercial property owners lowering the rents of their small business tenant’s payable for the months of April and May, retroactively, and for June.
More information available at CMHC: https://www.cmhc-schl.gc.ca/en/Finance-and-Investing/covid19-cerca-small-business
Extensions on Filing
- Individuals have until June 1, 2020, to submit their income tax return.
- For trusts (having a taxation year ending on December 31, 2019), tax filing is deferred until May 1, 2020.
The Canada Revenue Agency has deferred all payment of any income tax amounts owing on or after Mar. 18 and before Sept. 2020 until after Aug. 31, 2020. No interest or penalties will accumulate on these amounts during this period.
The Canada Revenue Agency and Canada Border Services Agency are also permitting businesses to defer all HST/GST remittances as well as customs duty owing on their imports until June 30, 2020.
Additional Supports for Small Businesses
- Introducing an Emergency Support Benefit delivered through CRA to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment. More details will be announced by the government.
- Boosting Canada Child Benefit payments by $300 per child
- CRA will recognize electronic signatures as having met the signature requirements of the Income Tax Act as a temporary administrative measure.
- Audits: No more post assessment GST/HST or Income Tax audits for the next four weeks.
- Collections: More leniency when speaking to your collections officer.
- The Liaison Officer Service will be available over the phone (details to be announced). Liaison officers can help small business owners understand their tax requirements. Request a Liaison Officer here.
Work Sharing Program
The Work Sharing Program is a three-way agreement that can be negotiated between Service Canada, the employer and the employee to provide EI benefits to workers who agree to reduce their normal working hour as a result of developments beyond the control of their employers. Changes to the program are:
- Extension of the maximum duration from 38 weeks to 76 weeks.
- The 30 day wait period will be waived for only those who have used the work-sharing program in the past.
Note: Applications take a minimum of 30 days to negotiate. If you do not have 30 days than this program is likely not for you.
Supplemental Unemployment Benefit Program
More information of the Supplemental Unemployment Benefit Program available here.
Business Credit Availability Program (BCAP)
The Business Credit Availability Program (BCAP) aims to provide $40 billion of additional support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).
BDC and EDC are working with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation, exports and tourism.
This program includes:
- Loan Guarantee for Small and Medium-Sized Enterprises
EDC guarantees a new one-year term loan or operating line of credit for 80% of its value, up to $6.25M, allowing businesses to deal with payroll and operating cost issues and enabling their financial institution to take on less risk. Available for all Canadian companies, including non-exporting businesses that sell domestically. More info: https://www.edc.ca/en/campaign/bcap-guarantee.html
- Co-Lending Program for Small and Medium-Sized Enterprises
BDC partners with financial institutions to co-lend term loans to businesses for their operational cash flow requirements. Eligible businesses may obtain incremental credit amounts up to $6.25M, 80% of which would be provided by BDC, with the remaining 20% by the financial institution. More info: https://www.bdc.ca/en/pages/special-support.aspx
Canada Emergency Business Account (CEBA)
Provides up to $25B to eligible financial institutions so they can provide interest-free loans to small businesses of up to $40,000. These loans—guaranteed and funded by the Government of Canada—will ensure that small businesses have access to the capital they need to cover their operating costs, at a 0% interest rate. If the loan is completely paid off by Dec. 31, 2022, a quarter of the loan will be forgiven.
Business owners can apply for support from the Canada Emergency Business Account through their banks and credit unions.
Canada Emergency Commercial Rent Assistance (CECRA)
On April 16, the Federal government announced the upcoming Canada Emergency Commercial Rent Assistance (CECRA) program for small businesses that, will seek to provide loans and/or forgivable loans to commercial property owners who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May, and June.
Implementation of the program will require a partnership with provincial and territorial governments who are responsible for property owner-tenant relationships.
More details will be available soon.