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COVID-19: Support for Businesses

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    COVID-19: Support for Businesses

    covid-19 benefits for businesses

    Over the last several weeks there have been various announcements concerning Government support for businesses and individuals during the COVID-19 pandemic. This article will provide a complete guide to the benefits and the support for businesses, pledged by both the federal and provincial governments.

    COVID-19 Federal Government Response

    I.          Federal Government COVID-19 Response

    Avoiding layoffs and rehiring employees

    1. 75% Canada Emergency Wage Subsidy (CEWS)
      • The Canada Emergency Wage Subsidy (CEWS) supports employers that are hardest hit by the pandemic and protect the jobs Canadians depend on.
      • The subsidy covers 75% of an employee’s wages – up to $847 per week – 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 and May.
        • The program will be in place for a 12-week period, from March 15th to June 6th, 2020
        • Employers eligible for the CEWS are entitled to receive a 100% refund for certain employer contributions to Employment Insurance (EI), the Canada Pension Plan (CPP), the Quebec Pension Plan, and the Quebec Parental Insurance Plan paid in respect of employees who are on leave with pay.
        • For employers that are eligible for both the CEWS and the 10% Temporary Wage Subsidy (see below) 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
        • You can learn more about the proposed Canada Emergency Wage Subsidy here: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html
    2. Temporary 10% Wage Subsidy for Employers
      • The Temporary 10% Wage Subsidy is a three-month measure that will allow eligible employers to reduce the amount of payroll deduction required to be remitted to the Canada Revenue Agency (CRA).
      • You are an eligible employer if you are a(n):
        • individual (excluding trusts),
        • partnership,
        • non-profit organization,
        • registered charity, or
        • Canadian-controlled private corporation (including a cooperative corporation) eligible for the small business deduction;
        • have an existing business number and payroll program account with the CRA on March 18, 2020; and
        • pay salary, wages, bonuses, or other remuneration to an eligible employee.
      • Note: Partnerships are only eligible for the subsidy if their members consist exclusively of individuals (excluding trusts), registered charities, or Canadian-controlled private corporations eligible for the small business deduction. You can learn more about the Temporary 10% Wage Subsidy for Employers here: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
    3. Extending the Work-Sharing program
      • The government is extending the maximum duration of the Work-Sharing program from 38 weeks to 76 weeks for employers affected by COVID-19.
      • Work-Sharing (WS) is a program that helps employers and employees avoid layoffs when there is a temporary decrease in business activity beyond the control of the employer. The program provides Employment Insurance (EI) benefits to eligible employees who agree to reduce their normal working hours and share the available work while their employer recovers. Work-Sharing is an agreement between employers, employees and the Government of Canada.
      • The Program allows employers to:
        • retain qualified and experienced workers, and
        • avoid recruiting and training new employees
      • The Program allows employees to:
        • keep their jobs, and
        • maintain their work skills
      • You can apply to the Work-Sharing Program here: https://www.canada.ca/en/employment-social-development/services/work-sharing/apply.html

    Tax Deferrals and Suspension of CRA Activities

    1. The province will be providing more time to pay income taxes
      • The government is allowing all businesses to 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 installments, under Part I of the Income Tax Act.
      • No interest or penalties will accumulate on these amounts during this period. You can see all Income tax filing and payment dates here: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-filing-payment-dates.html
    2. Deferral of Sales Tax Remittance and Customs Duty Payments
      • The government will allow businesses, including self-employed individuals, to defer until June 30, 2020 payments of the Goods and Services Tax / Harmonized Sales Tax (GST/HST), as well as customs duties owing on their imports.
        • Any GST/HST payment that becomes owing from March 27 until the end of May can be deferred until the end of June.
        • For GST and customs duty payments for imported goods, deferral will include amounts owing for March, April and May.
        • These amounts were normally due to be submitted to the Canada Revenue Agency and the Canada Border Services Agency as early as the end of March 2020.
      • You can learn more about the deferral of GST/HST tax remittances here: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-gst-hst.html
    3. Suspending CRA audit activities
      • The Canada Revenue Agency will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.

    Establishing credit and loan facilities for small businesses

    1. Establishing a Business Credit Availability Program
      • The government established a Business Credit Availability Program (BCAP) 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 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 mid-April and interested businesses should work with their current financial institutions. You can learn more about the Business Credit Availability Program (BCAP) here: https://www.canada.ca/en/department-finance/programs/financial-sector-policy/business-credit-availability-program.html
    2. Canada Emergency Business Account (CEBA)
      • 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.
      • To qualify, these organizations will need to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019.
      • Business owners can apply for support from the Canada Emergency Business Account through their banks and credit unions. You can learn more about the Canada Emergency Business Account (CEBA) here: https://ceba-cuec.ca/
    3. Canada Emergency Commercial Rent Assistance (CECRA)
      • The government intends introduce the 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 to be released by the government soon.

    Supporting financial stability

    1. Relief for federally regulated pension plan sponsors
      • The federal government is providing immediate, temporary relief to sponsors of federally regulated, defined benefit pension plans in the form of a moratorium, through the remainder of 2020, on solvency payment requirements for defined benefit plans.
      • This relief will help ensure that employers have the financial resources they need to maintain their operations and their pension plans, and to protect the retirement security of their workers and retirees.
    2. Launching an Insured Mortgage Purchase Program
    3. Bank of Canada actions
      • The Bank has responded by lowering interest rates, intervening to support key financial markets and providing liquidity support for financial institutions. The Bank of Canada has made a second unscheduled cut to its benchmark interest rate, lowering it to 0.25 per cent amid the COVID-19 crisis. The bank also announced the creation of two new programs that it hopes will help ensure the money system is set, so any worthy consumer or business that needs cash can get access to it.
        • The first program is called the Commercial Paper Purchase Program, and it will see the central bank essentially take on a type of debt known as “commercial paper” from companies, to meet their short-term financing needs.
        • The second program will be to buy up Canadian government debt in the form of bonds, to the tune of $5 billion a week.

    COVID-19 Provincial Government Response

    II.          Ontario Government COVID-19 Response

    • The provincial will be providing a five-month interest and penalty-free period for businesses to make payments for the majority of provincially administered taxes;
    • Provincial tax deferrals on the Employer Health Tax (EHT), Tobacco Tax, Fuel Tax, Beer Tax and Mining Tax and other provincially administered taxes until August 31, 2020 with no interest or penalty
    • It will defer the upcoming June 30th quarterly remittance of education property tax to school boards by 90 days. This will provide municipalities with the flexibility to, in turn, provide property tax deferrals of over $1.8 billion to local residents and businesses while ensuring school boards receive their funding;
    • It will also provide financial relief by the Workplace Safety and Insurance Board (WSIB) allowing employers to defer payments for up to six months, which will see premium payments deferred for six months for all businesses in the province;
    • All employers covered by the WSIB’s workplace insurance are automatically eligible for the provisions of the relief package and can defer premium reporting and payments until August 31, 2020. They will not be required to opt in to receive this benefit;
    • Additionally, the WSIB will cease interest accrual on all outstanding premium payments. They will not charge penalties during this six-month deferral period. There will be no negative consequences for businesses who defer premium reporting and payments. The WSIB will continue to fully cover workers at eligible workplaces.
    • Cutting taxes by $355 million for about 57,000 employers through a proposed temporary increase to the Employer Health Tax (EHT) exemption;
    • Helping to support regions that have been lagging in employment growth with a proposed new Corporate Income Tax credit — the Regional Opportunities Investment Tax Credit;
    • Property tax reassessments being conducted this year for the 2021 tax year have been postponed;
    • Provincial Land Tax Payments are deferred from their next due date for 90 days without interest or penalty; and
    • The government of Ontario has indicated that there will be supports for the self-employed; however, there are no details at this time.

    For more information on the various government assistance programs during COVID-19, click here.


    -Baber Rahim, Tax Law Clerk & JD Candidate

    Baber works in our tax department assisting our tax lawyers in preparing Voluntary Disclosure Applications, Taxpayer Relief Applications, and with Appeals, Audits and Objections within the CRA. Baber’s passion for tax law was sparked by an advanced tax law professor at the Goodman School of Business at Brock University, where he received his Bachelor of Accounting (Honours) degree. He subsequently worked for the Canada Revenue Agency (CRA) for several years. After working in the federal public service for a number of years, Baber decided to pursue a career in law and is currently working towards completing his law degree at Western University, while working for Kalfa Law.

    © Kalfa Law 2020

    The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.
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