Apr 2, 2020
COVID-19: Federal Government Relief Programs
The Canadian federal government has set up several relief programs to assist businesses and their employees during the COVID-19 crisis. Below is an outline of these programs and eligibility requirements:
Canada Emergency Business Account
The Canada Emergency Business Account provides for interest-free loans of up to $40,000 to small businesses and not-for-profits through their financial institutions.
- Up to 25% or $10,000 of the loan will be forgiven if repaid by December 31, 2022
- No principal repayments are required until December 31, 2022
- The business must have paid between $50,000 to $1 million in total payroll in 2019
- Funds must be used for operating costs that cannot be deferred (i.e. payroll, rent, utilities, insurance and property tax)
- Industry Canada defines a “small business” as a business with fewer than 100 employees
- Applicants must go through their existing financial institutions for more information and to assess eligibility requirements
Canada Emergency Wage Subsidy
The Canada Emergency Wage Subsidy is offered to employers and applied at a rate of 75% on the first $58,700 earned by employees.
- Program will be in place for a 12-week period, retroactive to March 15 and ending June 6, 2020
- Subsidy of up to $847/week per employee
- To be eligible, the business must have suffered a drop of at least 30% in gross revenues due to COVID-19 in March, April or May, when compared to the same month in 2019
- Companies will need to reapply for the subsidy each month
- The 30% eligibility requirement will be determined based on year-over-year revenue from the corresponding month from 2019
Temporary Wage Subsidy
For businesses that do not qualify for the Canada Emergency Wage Subsidy, you may still qualify for the Temporary Wage Subsidy of 10%.
- This subsidy is for 10% of remuneration paid from March 18 to before June 20, 2020
- To be eligible, you must be an individual, partnership, Canadian controlled private corporations eligible for the small business deduction, non-profit organizations and registered charities
- The wage subsidy is up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer
- For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10% wage subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period
New Loan Guarantee Through Export Development Canada (“EDC”)
EDC is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to businesses.
- Small and medium enterprises (“SME”) (1-499 employees) are eligible
- EDC encourages companies to work with their current financial institutions for this program
New Co-lending Program Through the Business Development Bank of Canada (“BDC”)
BDC is working with financial institutions to co-lend term loans to SMEs for operational cash flow requirements.
- Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program
- BDC encourages companies to work with their current financial institutions for this program
Deferral of Payments of GST/HST and Import Duties
All businesses (including self-employed individuals) may defer their payments of the Goods and Services Tax/Harmonized Sales Tax (“GST” and “HST”), as well as customs duties owing on their imports until June 30, 2020.
Deferral will apply to GST/HST remittances for:
- the February, March and April 2020 reporting periods for monthly filers
- the January 1, 2020 through March 31, 2020 reporting period for quarterly filers
- for annual filers, the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year
For GST and customs duty payments for imported goods, deferral will include amounts owing for March, April and May.
Other Tax Deadline Extensions
Filing deadline for tax returns for trusts, partnerships and NR4 (non-resident) information has been extended to May 1, 2020.
Filing deadline for Canadian registered charities which are required to file their annual Form T3010 Registered Charity Information Return between March 18, 2020 and December 31, 2020, has been extended to December 31, 2020. Read more on this here.
In addition, 2019 tax payment obligations will be deferred until August 31, 2020.
For legal advice on issues arising from COVID-19, please contact your Torkin Manes lawyer. For more information about dealing with COVID-19, please visit our COVID-19 Resource Center.