COVID-19 Economic Response Plan

The following article discusses COVID-19 financial compensation measures that were put in place by the Federal and Provincial Government as of May 20th, 2020. These measures continue to change as the COVID-19 crisis continues. We will continue to post updates on our website. To fully benefit from the compensation it is recommended that you review this information with your Accountant or Book keeper.

Federal Government Support for Businesses
There are multiple grants and funding supports available through both Provincial and Federal governments.

Canadian Emergency Wage Subsidy (CEWS)
This subsidy offers up to 75 per cent for Existing Employees for Sales Decreases of 30 per cent

Federal Government has introduced a 75 per cent Wage Subsidy to all qualifying businesses in order to prevent mass lay-offs. To be eligible for the CEWS, an employer must experience a drop of at least 15 per cent in gross revenues due to COVID-19 in March, and a 30 per cent decrease in gross revenues in April, May, June, July and August. The decrease in sales is compared to the same month in 2019 or the average of January and February 2020 sales. Companies need to experience a sales decrease for each individual month in order to qualify for the subsidy for that particular month. If your company does not qualify for CEWS for a particular month you can claim the 10 per cent Wage Subsidy for that month.

The CEWS will be in place for 24 weeks and is retroactive to March 15, 2020 and ends on August 29, 2020. The CEWS covers 75 per cent of Gross T4 Wages to a maximum of $847.00 per week per employee. The Wage Subsidy covers the first $58,700.00 as a person’s earnings. Based on $58,700.00 in earnings an employer would be earning $1,128.84/week and 75 per cent of which is $847.00. In order for an employee to qualify for CEWS they need to find been on staff by January 1st, 2020. Also the funding does not apply to workers employed through Employment Agencies.

Wage Subsidy: up to 10 per cent available to All Other Businesses
The 10 per cent Wage Subsidy is opened to all other businesses that do not qualify for the 75 per cent Wage Subsidy even if your sales have increased as a result of COVID-19. Any Employees that do not qualify for CEWS may qualify for the 10 per cent Wage Subsidy. The subsidy will be equal to 10 per cent of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. The 10 per cent Wage Subsidy applies to the period of March 18, 2020 to June 19, 2020.

Canadian Emergency Relief Benefit (CERB)
CERB is a $2,000 per month benefit available to any individual that is earning less than $1,000 per month. This includes the self-employed, sub-contractors and individuals that received Dividend Income and/or RRSP income in 2019. To qualify for CERB you need to have earned at $5,000 in T4 income in 2019.

Canada Emergency Business Account (CEBA):
CEBA provides a $40,000 interest free loan to businesses in need of financial assistance due to COVID-19. CEBA is available to businesses with T4 Payroll of between $20,000 and $1.5 million in 2019. The qualifying T4 payroll information required can be found on your T4 Summary that is filed at the end of February. For companies that repay the balance of the loan by the end of 2022, up to $10,000 of the loan will be forgiven.

Over 195,000 CEBA loans have been approved to date. If your company is in need of assistance and have not applied for the CEBA you can still apply any time. The CEBA application link can be found on your business bank’s website or on-line account. Keep your T4 Summary handy as you will require information contained in the summary to apply. Banks are stating approvals will take at least 5 business days.

To read more on the Federal Government announcements and get more details please see the following link:

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

Please note all Government funding is taxable at the end of the year.

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.