COVID-19 Updates to Canada's Economic Response Plan

The Government of Canada is continually making changes to the COVID-19 Economic Response Plan in an effort to provide Canadian individuals and businesses with financial support and tax deferrals as a result of the COVID-19 outbreak.

The following updates have been announced in the last few days:

Individuals:

• Individuals who are at least 15 years old, stopped working due to COVID-19, had income of at least $5,000 in 2019 or last 12 months, and who are or expect to be without income for at least 14 consecutive days in the initial four-week period will be able to apply for the Canada Emergency Response Benefit (CERB) with Canada Revenue Agency (CRA) beginning on Monday, April 6, 2020
• Income must include any combination of employment income, self-employment income, employment insurance benefits or other benefits in respect of pregnancy or parental leave
• There are two ways to apply
  • Online with “CRA My Account” or
  • Over the phone using the designated automated phone service (1-800-959-2019)
• Each payment covers a 4 week period and you will have to re-apply if your situation continues
• To help manage the volume of applications, CRA has suggested using the following guidelines to apply for the CERB: 

Refer to the link below for additional details and what you can do ahead so you are ready to apply: https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra.html.

Businesses:

• Corporations with a filing date between March 18, 2020 and June 1, 2020 will now have until June 1, 2020 to file their tax returns
• Deferral of Goods and Services Tax/Harmonized Sales Tax (GST/HST) remittances and instalments due on or after March 27, 2020 to May 31, 2020 are extended to June 30, 2020 for all businesses including self-employed individuals
• Deferral of custom duty payments to June 30, 2020

Refer to CRA’s website for a complete summary of the filing extensions and payment due dates currently in place: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-filing-payment-dates.html

As well as to CRA’s website for frequently asked questions on the deferral of Goods and Services Tax/Harmonized Sales Tax remittances and instalments: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-gst-hst.html

The Canada Emergency Wage Subsidy

In order to encourage employers to retain and re-hire employees that were laid off as a result of COVID-19, the government is proposing a taxable 75% wage subsidy to all eligible employers for a 12 week period, retroactive to March 15, 2020.

• Eligible employers include individuals, corporations, partnerships, non-profit organizations and registered charities, regardless of size
• To qualify, eligible employers must demonstrate that their monthly revenues for the months of March to May 2020 are at least 30% lower than the revenues of the corresponding month in 2019
• Employers will be required to review each month in the claiming period independently of the other and will be required to re-apply for the subsidy every month
• Eligible employers would receive 75% of the remuneration paid between March 15, 2020 and June 6, 2020 to a maximum of $847 per week (i.e. a subsidy of up to 100% of the first 75% of pre-crisis wages or salaries of existing employees who are paid up to $58,700 per year). In addition, eligible employers would be eligible for a subsidy of up to 75% of salaries and wages paid to new arm’s length employees  
• Employers are expected to make best efforts to top-up employees’ salaries to bring them to pre-crisis levels
• Eligible employers will be able to apply through their CRA “My Business Account” or a web-based application. Additional details on the application process and timing, and definition of pre-crisis are still to follow
• The government has indicated that there will be severe penalties for those caught abusing the subsidy
• Any benefit received by an employer from the 10% Temporary Wage Subsidy announced on March 18^th would reduce the amount available under the Canada Emergency Wage Subsidy
• An employer would not be eligible to claim the Canada Emergency Wage Subsidy for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the CERB
• The table below outlines each claiming period and the period in which it has a decline in revenue of 30% or more:

• In the event, the eligible employer does not meet the 30% revenue drop for any eligible period; the 10% temporary wage subsidy could still be available. Please refer to our March 26, 2020 release for details on this measure available here: http://www.srcllp.com/covid19update_3.html

New Loan Programs for Businesses

The following programs are in place to ensure that eligible businesses have access to capital to assist with the management of their operational cash flow requirements:

• Canada Emergency Business Account will allow small businesses and not-for-profits to access up to $40,000 in interest free loans
  • Businesses will need to contact their financial institution to apply for these loans
  • To qualify, businesses will need to prove that they paid between $50,000 to $1 million in total payroll for 2019
  • Up to 25% (i.e. $10,000) will be forgiven if the loan is repaid on or before December 31, 2022
• New Loan Guarantee for Small and Medium Enterprises (SMEs) – Export Development Canada (EDC) will guarantee new operating credit that will be extended to SMEs through their financial institutions up to $6.25 million. Additional details still to come.
• New Co-Lending Program for SMEs – The Business Development of Canada together with financial institutions will co-lend term loans to SMEs up to $6.25 million. Additional details still to come.

Do not hesitate to contact us if you have any questions. We are here to assist you in any way possible.

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.