Updates to Canada's COVID-19 financial relief measures and Ontario Budget
Please see below for new updates and changes to the Government of Canada’s COVID-19 financial relief measures, as well as key developments announced in the Ontario Budget released earlier this month.
New Canada Emergency Rent Subsidy (CERS):
- On November 19, 2020, Bill C-9 related to the Federal government’s CERS program received Royal Assent. The CRA will launch the CERS on Monday, November 23, 2020 to provide direct rent relief to businesses, non-profits and charities that continue to be impacted by the COVID-19 pandemic. CERS would be retroactive to September 27, 2020, until June 2021, for qualifying organizations affected by COVID-19. CERS replaces the Canada Emergency Commercial Rent Assistance program (CECRA). More details regarding eligibility requirements and the application process will be announced soon.
- CERS supports organizations that have suffered revenue decreases of at least 70%, by providing a sliding scale of support for up to 65% of eligible expenses until December 19, 2020. There will be an additional CERS top-up of 25% of eligible expenses for organizations shut down by a mandatory public health order issued by a qualifying public health authority. The subsidy rates decrease as the reduction in revenue of an entity decreases to provide greatest support to the entities impacted most.
- Eligible expenses include commercial rent, property taxes, property insurance, and interest on commercial mortgages for qualifying property. Any GST/HST paid do not form part of the eligible expense.
- Eligible expenses would be limited to those paid under written agreements entered into before October 9, 2020 (and continuations of those agreements), and would be limited to expenses related to real property located in Canada. Expenses which relate to residential property used by the taxpayer (such as a home or cottage) would not be eligible, and payments made between non-arm’s-length entities would also not be eligible.
- Eligible expenses would be capped at $75,000 per location for each qualifying period and subject to an overall cap of $300,000 that would be shared among affiliated entities.
- SRC LLP has a CERS-designated team to assist with the review of CERS eligibility criteria, drop-in-revenue tests, and eligible expenses for your business. We are available to assist with the complex program calculations and application process. Please reach out to us for assistance in preparing these CERS claims.
New Details for Expansion of Canada Emergency Business Account (CEBA):
- As of October 26, 2020, eligible Canadian businesses that currently operate through a personal bank account will be able to apply for CEBA as long as they have an active business chequing/operating account with the financial institution at the time of applying. Previously, if a Company did not have a business bank account on March 1, 2020, they were not permitted to apply for the CEBA program. With this change, eligible businesses can now apply for CEBA after opening a busines chequing/operating account with their primary financial institution, even if it was not in existence on March 1, 2020, as long as it is active before applying for CEBA.
- All applicants now have until December 31, 2020 to apply for the CEBA loan.
- The CEBA was expanded to enable businesses and not-for-profits eligible for CEBA loans to access an interest-free loan of up to an additional $20,000 over and above the original CEBA loan of $40,000. This would effectively increase CEBA loans to $60,000 from $40,000 for eligible businesses and increase the forgivable portion to $20,000 if the balance of the loan is repaid before December 31, 2022.
- To qualify for the additional financing, organizations will be required to attest to the impact of COVID-19 on the loss of revenue for the business.
- Additional details regarding the launch date for the additional financing is expected in the coming weeks.
- Please reach out to your financial institution for details about applying for a CEBA loan.
Personal Tax Rates:
- Ontario personal income tax rates have not changed for 2021 (rates remain consistent with 2020 personal income tax rates).
Support for Families:
- To help offset some additional at-home education costs due to COVID-19, parents will once again receive a one-time payment of $200 per child under the age of 12 and $250 for each child or youth with special needs age 21 and under.
Proposal for new Seniors’ Home Safety Tax Credit (SHSTC):
- To help protect seniors and allow them to stay safely in their homes longer, the province of Ontario is proposing a new Seniors’ Home Safety Tax Credit for the 2021 taxation year. This credit would provide a 25% credit on eligible renovations that are paid or become payable in 2021 of up to $10,000 (resulting in a maximum $2,500 credit), regardless of the income level or taxes payable of the senior for 2021. Examples of eligible renovations would be installing wheelchair ramps, non-slip flooring and additional light fixtures.
- Family members who have a senior living with them would also be eligible for this credit.
- Eligible claimants must retain receipts and claim the SHSTC in their 2021 personal tax returns.
Employer Health Tax (EHT):
- The province of Ontario is proposing to make the EHT exemption increase from payroll of $490,000 to $1 million permanent. This means that entities with payroll under $1 million would be exempt from calculating or paying EHT.
- The Ontario budget proposes to move the next scheduled inflationary adjustment of the EHT exemption to January 1, 2029 (from the originally scheduled January 1, 2024).
- The Ontario budget also proposes to increase the payroll threshold of monthly EHT instalments to $1.2 million from $600,000, starting in 2021.
Reduction of business property tax rates:
- The provincial government of Ontario is proposing to lower high provincial business property tax rates to a rate of 0.88 percent for commercial and industrial properties, beginning in 2021.
- The 2020 Budget outlines a plan to reduce the cost of Ontario’s commercial and industrial Starting on January 1, 2021, several contracts with non-hydro renewable energy producers will be entered, with a portion of the costs of these contracts funded by the Province such that the cost to medium and large commercial and industrial businesses is subsidized.
Do not hesitate to contact us if you have any questions regarding how any of the above impacts you, your family, or your Company.
NOTE: Due to the rapidly evolving changes with respect to the Government’s Economic Response Plan to Covid-19, please understand that any posts written in the past may not be reflective of the current applicable obligations, rights and benefits of individuals and businesses.