UPDATED!!!! April 9th, 2020
If your business needs financial support:
Canada Emergency Wage Subsidy: Designed to keep (or recall) employees on payroll, this program will subsidize a portion of your payroll cost
- For employers that have suffered a 15% reduction in revenue due to Covid-19 in March 2020 and/or a 30% reduction in revenue for the months of April and May 2020.
- For FAQs on calculating this benefit see: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html
Student Jobs: The federal Student-Job program will now reimburse up to 100% of minimum wage for eligible student jobs. It is not clear if the government will re-open the application process for this program (which closed Feb 28), or only boost funding to those that already applied.
** Please see entire updated publication below
In addition to the extreme risk to the lives of some Canadians, Covid-19 may have a potentially devastating impact on many businesses and their employees. In an attempt to help businesses and the people they employ, the Government has announced a series of programs designed to mitigate the financial consequences.
As a business owner, you may be facing a complete shutdown, layoffs, and the difficult task of keeping the business alive until normalcy returns. One of your primary concerns is the financial survival of your own family and that of your key people so that a business “restart” is possible.
To help you with those decisions, we offer a summary of Government programs, including the recent announcement of the 75% Wage Subsidy.
If you have a loss of personal income (owner or employee):
Apply for Employment Insurance(EI) or the Canada Emergency Response Benefit(CERB).
Employment Insurance: If you have been paying EI premiums via payroll deduction, you can apply for EI. There are a series of qualifications, including number of weeks worked, amount collected in the recent past, reason for termination, etc. Generally business owners with 40% ownership or more are excluded. If you qualify:
- The basic rate for EI benefits is 55% of the maximum yearly insurable annual earnings of $54,200.
- There is a weekly maximum of $573. (this works out to an average of $2,483 per month if you qualify for the maximum).
- This benefit is payable from 14 to 45 weeks depending on your region.
- Apply online for benefits here: https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit/apply.html
The Government has received an unprecedented number of EI submissions and, although it is an on-line process, they are not equipped to approve this volume of applications expediently. This is one of the reasons they introduced the CERB.
Canada Emergency Response Benefit: Anyone who does not qualify for EI, or does not want to wait for approval of EI, and has suffered a loss of income because of Covid-19 can apply for CERB (Canada Emergency Response Benefit).
- You may not qualify for EI, because you are a business owner, aren’t working due to a quarantine order, are caring for a loved-one with Covid-19, or you are still working but not being paid, etc.
- A taxable benefit of $2,000 a month will begin within 10 days of application. The Government is using the Canada Revenue Agency payment system which is better equipped to handle the volume of requests, compared to EI.
- Benefits are payable for 4 months.
- You cannot collect both CERB and EI benefits. However, it may be possible to collect them in sequence, if you reach the maximum benefit period payable by either program
- Apply through CRA: starting April 6.
If your business needs financial support:
Canada Emergency Wage Subsidy: Designed to keep(or recall) employees on payroll, this program will subsidize a portion of your payroll cost.
- For employers that have suffered a 30% reduction in revenue due to Covid-19. This is measured by comparing each month’s 2020 revenue to the same month in 2019. Employers must apply on a monthly basis.
- Subsidy will be available for three qualifying months – Mar, Apr, June.
- Pays up to 75% of payroll as a wage subsidy (excluding severance amounts)
- This subsidy is applicable to the first $58,700 of an employee’s salary – which means up to $847 per week.
- For owners and anyone related to the owner, the subsidy will not be paid on any increase in pre-crisis income. The Government has promised more information shortly on the definition of earnings for people in this category.
- The government expects employers to make every effort possible to continue the other 25%, though it has not indicated that this is mandatory
- Employers will apply through their My Business Account – CRA portal
- Funds are expected to be flowing in approximately 6 weeks with the portal available 3 weeks from now
- If you are already taking the Temporary Wage Subsidy(described below) the Government will reduce your 75% payment proportionally.
Temporary Wage Subsidy for Employers: This program will assist with your payroll costs if you are a qualifying small business with no drop in revenue required.
- “small business” includes sole proprietors, partnerships, non-profit and Canadian Controlled Private Corporations(generally those eligible for the small business tax limit)
- Provides 10% of your payroll cost up to a maximum of $1,375 per employee and $25,000 in aggregate.
- You need not apply. If you qualify, take the deduction from your income tax and payroll remittances. You can start with your next payroll remittance(for many April 15).
For FAQs on calculating this benefit see: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html
Work-Sharing: A pre-existing program that allows employees to receive a percentage of EI benefits while continuing to receive wages from the employer if they agree to job-share due to a business slowdown. While the government did announce that the duration of this program would be extended for Covid-19, there is a fairly extensive application process that will make it less practical than the wage subsidies for most business.
Business Credit Availability Program: Working through the Business Development Bank of Canada(BDC) and Export Development Corporation(EDC), two crown corporations, the Government is providing increased access to business credit. If your primary lending institution is not able to offer credit under its own lending programs, it has access to guarantees through these two agencies. Contact your existing primary-lending institution to inquire about these programs:
Interest-free loans: The new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profit organizations, to help cover their operating costs during a period where their revenues have been temporarily reduced. To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.
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.
More time to pay income taxes: all businesses can defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
Defer HST/GST: payments may be deferred as well as duties and taxes owed on imports, until June to help businesses use that money to cover immediate needs instead.
Please note: We have made every attempt to provide accurate information based on the Government of Canada’s pronouncements to date. As you can appreciate some of the details may be updated or amended. We recommend that you follow the link for the particular program you are interested in at: https://www.canada.ca/en/department-finance/economic-response-plan.html