COVID-19 and CERP

The following article discusses COVID-19 financial compensation measures that were put in place by the Federal and Provincial Government and Banks as of March 25, 2020. These measures may have changed and additional financial compensation may have been added since this date. To fully maximize the compensation it is recommended that you review this information with your accountant or bookkeeper.

Federal Government Support for Businesses

Wage subsidy for existing employees:
To support businesses that are facing revenue losses and to prevent lay-offs, the government is providing small businesses a temporary wage subsidy for a period of three months. The subsidy is applies to all remuneration paid to T4 employees between March 18th and June 20th, 2020. Businesses will be able to benefit immediately from this support by reducing the tax portion of their Payroll Tax Remittance paid to the Federal Government every month. The subsidy will be equal to 10 per cent of gross wages paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.

For more information on the Wage Subsidy Program see:

https://www.canada.ca/en/employment-social-development/services/work-sharing.html

https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html

Employee EI compensation for reduced work hours:
The EI Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers such as COVID-19. Under the EI Work Sharing Program employees agree to work a reduced number of hours per week and are compensation by EI for those reduced hours. The Federal Government is extending the eligibility to 76 weeks, easing eligibility requirements, and streamlining the application process.

For more information on the EI Work Sharing Program see:
https://www.canada.ca/en/employment-social-development/services/worksharing.html

Business Credit Availability Program (BCAP)
This program ensures businesses have access to credit: BCAP allows the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses. Relief measures include:

• Providing Working capital loans of up to $2 million
• Flexible repayment terms, such as postponement of principal payments for up to 6 months,
• Reduced rates on new eligible loans

In order to qualify contact your bank and they will need to make a referral to BDC or EDC.

BDC Contact information:
https://www.bdc.ca/en/contact_us/pages/default.aspx

EDC Contact information:
https://www.edc.ca/en/contact-us.html

Tax-filing flexibility:
The Canada Revenue Agency will allow all businesses to defer until after August 31, 2020, the payment of any income tax amounts that were owed as of March 18, 2020 and before September 2020. This relief would apply to tax balances due, as well as instalments.

Penalties and Interest Relief on Corporate Tax, HST and Payroll Tax:
Penalties and Interest Relief applies to any penalties and interest charges that your company receives on HST, Payroll and Corporate Taxes late payments due to extraordinary business circumstances such as COVID-19.

To learn more go to:
https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/cancel-waive-penalties-interest.html

Provincial Government Support for Businesses
Provincial governments also provide deferred payments for workplace insurance (WSIB) and property tax. To find out the deferral period have a look at your City’s website or call or email your City Counsellor to find out details. In the City of Toronto there is a grace period without penalties for 60 days as of March 16, 2020.

Federal Government Support to Canadians
The CRA will allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to tax balances due, as well as instalments. No interest or penalties will accumulate on these amounts during this period.

CERB: Support for the unemployed with no EI
The new Canada Emergency Response Benefit (CERB) will provide a taxable benefit of $2,000 a month for up to 4 months to:

• Workers who must stop working due to COVID-19 and do not have access to paid leave or other income support.
• Workers who are sick, quarantined, or taking care of someone who is sick with COVID-19.
• Working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures.
• Workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work.
• Wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.

To read the entire Federal and Provincial Government announcements, please see the following links:

canada.ca/en/department-finance/economic-response-plan.html

https://budget.ontario.ca/2020/marchupdate/action-plan.html

Bonny Koabel CPA, CGA, is President of AKR Consulting Canada – a Mississauga, Ontario firm specializing in Government Grants, Subsidies, Tax Credits, Refunds and Rebates since 2003.