COVID-19 Updates & Resources

Businesses

As Canada struggles with the COVID-19 pandemic, the federal government has implemented a number of measures to assist businesses improve their cash flow such that they can survive over the coming months. They can be sorted into three primary categories: payroll support, financing, and deferrals of tax payments. While sole proprietors are eligible for many of these measures, some additional measures will be discussed in the Individuals section.

EI Work-Sharing (WS)

Updated: April 8, 2020

  • The EI Work-sharing Program is different from the wage subsidies in that it enables the employees and employer to agree to reduce working hours by 10% to 60%. This reduces the employer’s payroll costs, while the employees receive EI payments directly for the reduction in their hours. While the Work-sharing Program can be used in combination with a subsidy, the government has specifically noted that receipts under the 75% subsidy will be eroded by the EI received by the employee. The legislation implementing the 10% subsidy does not provide for any similar reduction.
  • The Work-sharing Program, which provides EI benefits to workers who agree to reduce their normal working hours (from a 10% to 60% reduction) as a result of developments beyond the control of their employers, is not a new program. However, it has been broadened as a consequence of COVID-19.
  • In general, the employer must have experienced a recent decline in business activity of at least 10% to be eligible for the program, which means that many businesses who are experiencing a downturn due to COVID-19 should be eligible. Effective March 15, 2020, the maximum duration of such agreements was extended from 38 weeks to 76 weeks, eligibility requirements were eased, and the application process has been streamlined.
  • Eligibility
    • Employers and employees must agree to participate in work-sharing and apply together. The employer must:
      • be a year-round business in Canada in operation for at least 1 year;
      • be a private business or a publicly held company; and
      • have at least 2 employees in the work-sharing unit.
  • Also note that eligibility was also extended to:
    • Government Business Enterprises, and
    • not-for-profit employers experiencing a shortage of work due to a reduction of business activity and/or a reduction in revenue levels due to COVID-19.
  • Employees must:
    • be year-round, permanent, full-time or part-time employees needed to carry out the day-to-day functions of the business (“core staff”),
    • be eligible to receive EI benefits, and
    • agree to reduce their normal working hours by the same percentage and to share the available work.
  • Employee eligibility was also extended to:
    • employees considered essential to the recovery and viability of the business, which would include, for example:
      • technical employees engaged in product development;
      • outside sales agents; and
      • marketing agents.
  • Employee earnings
    • The employer pays the wages to employees for the hours they worked, as per normal, and then notifies the government through a utilization report of the work hours that employees missed. The employees are paid directly from EI for the percentage of their benefit rate that corresponds with the percentage of the work hours they missed.
    • For example, if the employee missed 50% of their normal weekly hours due to work-sharing, they would receive 50% of their benefit rate from EI. Their benefit rate will not be equivalent to their normal wages, as it is generally 55% of their average weekly earnings to a maximum of $573 per week (for 2020).
    • Also, the employer must maintain all existing employee benefits.
  • Application process
    • A simplified process and set of forms have been introduced. Employers must complete these forms:
      • EMP5100 – Application for a Work-Sharing Agreement
      • EMP5101 – Attachment A: Work-Sharing Unit Attachment
    • Previously, a recovery plan was required, however, it was replaced by a single line of text within the application. Also, the requirement that the application be submitted at least 30 days prior to the commencement of the program has been eliminated.
    • Finally, weekly utilization reports must be submitted to ensure the appropriate EI benefits are calculated and paid.
  • For full details on the program and application process, go to: https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus/employers-factsheet.html

Additional info:

Canada Revenue Agency (CRA): Work-Sharing Program – Temporary Special Measures

Canada Revenue Agency (CRA): Coronavirus Disease (COVID-19) – Employment and Social Development Canada

Hugh Neilson: The Other “Wage Subsidy”​ (March 26, 2020)

Wage Subsidy Programs (75% and 10%)

Updated: April 8, 2020

  • There are generally two wage subsidy programs available:
    1. 75% Canada Emergency Wage Subsidy (75% WS); and
    2. 10% Temporary Wage Subsidy (10% WS)
  • In general, the 75% WS is available to a wide variety of entities whose revenue has dropped by at least 30%. The 10% WS is available only to smaller businesses, but does not require a revenue decline. In cases where employers are entitled to both, amounts received under the 10% WS will reduce the amounts receivable under the 75% WS.

Canada Emergency Wage Subsidy (75%)

Updated: April 21, 2020

  • Registration will commence on Monday, April 27 and be first processed on Monday, May 4 in bulk.
  • Payments are targeted to begin on Tuesday, May 5.
  • 3,000 auditors have been assigned to manually review certain claims. They will review based on the size of the claims, or the size of employers. For example, 100% of claims made by large employers are expected to be reviewed. Most will be automatically processed. Reviews are intended to be completed in 72 hours.

Updated: April 8, 2020

  • On March 27, 2020 the government announced a 75% wage subsidy program for eligible employers for up to 12 weeks, retroactive to March 15, 2020. Unlike the 10% WS, the 75% WS is not limited to smaller businesses. However, a significant reduction of revenue is generally required to be eligible. The 75% WS also differs from the 10% WS in that it will be paid in cash to the employer.
  • Eligible employers
    • Eligible employers include individuals, taxable corporations (large and small), partnerships consisting of eligible employers, as well as non‑profit organizations and registered charities. Unlike the 10% WS, individuals were not noted as “other than trusts”, however it was not specifically stated that trusts would qualify, leaving the eligibility of trusts which have employees uncertain. Public bodies would not be eligible (including municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals).
  • 30% revenue decrease
    • This subsidy would be available to eligible employers that see a drop of at least 30% of their revenue. However, only a 15% drop is required in respect of March as only some sales during that month were generally affected. The employer will be required to formally attest that the required decline in revenue occurred. An employer’s revenue for this purpose would be its revenue from its business carried on in Canada earned from arm’s-length sources. Revenue would be measured either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received), but the selected method would be required to be used for the entire duration of the program.
  • The taxpayer would have two options for comparing revenues. Option 1 is to compare the 2019 to 2020 revenue for the calendar month in which the period began. Option 2 is to compare the applicable month’s revenue to the average revenue earned in January and February 2020. The selected method would be required to be used for the entire duration of the program. The wage subsidy received by the employer in a given month would not be considered revenue for purposes of these calculations.
  • Non-profit entities and charities will have the option to include or exclude government funding in calculating revenue, but again, the selected method must be used for all applicable months.
  • The table below outlines each claim period and the month for which a decline in revenue would be required:
  Claiming period Reference period for eligibility
Period 1 March 15 to April 11 March 2020 over:

·       March 2019 or

·       Average of January and February 2020

Period 2 April 12 to May 9 April 2020 over:

·       April 2019 or

·       Average of January and February 2020

Period 3 May 10 to June 6 May 2020 over:

·       May 2019 or

·       Average of January and February 2020

  • Subsidy amounts
    • The subsidy for most employees on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:
      • 75% of remuneration paid, up to a maximum of $847 per week; and
      • the full remuneration paid, up to a maximum of $847 per week or 75% of the employee’s pre-crisis weekly remuneration, whichever is less.
  • “Pre-crisis remuneration” will be the average weekly remuneration paid to the employee between January 1 and March 15, excluding any seven-day periods in respect of which the employee received no remuneration (so if an employee was hired on February 1, the lack of any remuneration in January would not reduce their pre-crisis remuneration).
  • In effect, employers may be eligible for a subsidy equal to 75% of the employee’s pre-crisis wages or salaries, to a maximum of $847 per week, provided the employee is paid at least that amount during the subsidy period. Employers would be expected to make “best efforts” to maintain existing employees’ pre-crisis employment earnings, however the documents acknowledge that some employers will be unable to top wages up to pre-crisis levels.
  • Eligible remuneration may include salary, wages, taxable benefits and other remuneration for which employers would generally be required to withhold or deduct amounts. However, it does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle.
  • There will be no overall limit on the subsidy amount that an eligible employer may claim.
  • New employees
    • For new employees, the subsidy will be 75% of salaries and wages paid, not exceeding $847 per week.
  • Business owners and their family
    • The subsidy amount for these and other non-arm’s length employees will be limited to the eligible remuneration paid up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration.
    • In other words, if there was no pre-crisis weekly remuneration, no 75% WS would be available for these employees, regardless of whether wages were paid after March 15, 2020.
  • Application process
    • Application will be available through CRA’s My Business Account portal as well as a web-based application. https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html). Employers would have to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to employees.
    • On April 8, 2020, the Prime Minister announced that they are aiming to get the program ready within 3 weeks. The original target was 3-6 weeks from the April 1, 2020 announcement date.
  • CPP, EI, QPP
    • Employers eligible for the 75% WS will be entitled to receive a 100% refund for certain employer-paid contributions to EI, the CPP, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. This refund would recover the entire amount of employer-paid contributions in respect of remuneration paid to furloughed employees (no work whatsoever is done in the relevant week) in a period where the employer is eligible for the 75% WS in respect of that employee.
    • This refund would not be subject to the weekly maximum benefit per employee of $847. There would be no overall limit on the refund amount that an eligible employer may claim.
  • Repayments/penalties
    • Repayments will be required where the employer does not meet the eligibility requirements and pay their employees accordingly. In addition, anti‑abuse rules will be proposed to ensure that the subsidy is not inappropriately obtained and that employees are paid the amounts they are owed. Penalties may apply in cases of abusive or fraudulent claims. The government is considering the creation of new offences that will apply to individuals, employers or business administrators who provide false or misleading information to obtain access to this benefit or who misuse any funds obtained under the program. These more severe penalties may include fines or even imprisonment.
  • Interaction with the 10% Temporary Wage Subsidy
    • For employers that are eligible for both the 75% WS and 10% WS for a period, any benefit from the 10% WS would generally reduce the amount available to be claimed under the 75% WS in that same period. Therefore, reducing income tax withholdings on employee payroll remittances will allow businesses to benefit from a portion of the 75% WS earlier.
  • Interaction with the Canada Emergency Response Benefit
    • The Government has indicated that the 75% WS is not intended to be available for periods when the employee has also collected the Canada Emergency Response Benefit. Adjustments to how these programs interact are being considered to encourage recently laid off workers to be re-hired.
  • Interaction with the Work-sharing Program
    • For employers and employees that are participating in a Work-sharing Program, EI benefits received by employees through the program will reduce the 75% WS that their employer is entitled to receive.

Additional info:

Canada Revenue Agency (CRA): Canada Emergency Wage Subsidy (CEWS)

Canada Revenue Agency (CRA): Frequently Asked Questions – Canada Emergency Wage Subsidy (CEWS)

Canada Revenue Agency (CRA): Emergency Wage Subsidy Application Guide

Baker Tilly: Canada Emergency Wage Subsidy – Subsidize up to 100% of Payroll Costs (April 27, 2020)

Video Tax News (VTN): Watch! 75% Canada Emergency Wage Subsidy (CEWS) – FAQ Update (COVID-10 – Video #17) (April 24, 2020)

Video Tax News (VTN): Watch! 75% Wage Subsidy – Selected Issues with Peter Weissman FCPA, FCA, TEP (COVID-19 – Video #15) (April 15, 2020)

Moodys: Bill C-14 – The 75% Canada Emergency Wage Subsidy (April 13, 2020)

Video Tax News (VTN): Watch! 75% Canada Emergency Wage Subsidy Update – April 11 Legislation (COVID-19 – Video #14) (April 11, 2020)

Moodys: Commentary & FAQs: Canada Emergency Wage Subsidy (April 8, 2020)

Video Tax News (VTN): Watch! Updates on 75% Wage Subsidy and Benefits for Individuals (COVID-19 – Video #12) (April 8, 2020)

Canada Revenue Agency (CRA): Government Provides Further Flexibility for Employers to Access the Canada Emergency Wage Subsidy (April 8, 2020)

Joseph Devaney: Dividends Only – Are Owner-Managers Out of Luck for COVID-19 Support? (April 2, 2020)

Video Tax News (VTN): Watch! 75% Canada Emergency Wage Subsidy (COVID-19 – Video #9b) (April 1, 2020)

Video Tax News (VTN): Watch! 75% Canada Emergency Wage Subsidy (COVID-19 – Video #9a) (April 1, 2020)

Tax Templates Inc.: Watch: Canada Emergency Wage Subsidy (75%) – Introduction and Scope (April 14, 2020)

Tax Templates Inc.: Download: Free Wage Subsidy Calculator Tools

Canada Revenue Agency (CRA): Additional Details on the Canada Emergency Wage Subsidy (April 8, 2020) (Archived)

Canada Revenue Agency (CRA): Government Announces Details of the Canada Emergency Wage Subsidy to Help Businesses Keep Canadians in Their Jobs (April 1, 2020)

Canada Revenue Agency (CRA): The Canada Emergency Wage Subsidy (April 1, 2020) (Archived)

Temporary Wage Subsidy for Employers (10%)

Updated: April 8, 2020

  • A business may benefit immediately from a 10% subsidy by reducing their remittances of income tax withheld from their employees’ remuneration.
  • Eligibility
    • In order to be eligible, the employer must meet three criteria:
      • employ one or more individuals in Canada (“eligible employees”);
      • was registered, with a business number and a payroll remittance account, on March 18, 2020; and
      • be any of the following:
      • most Canadian-controlled private corporations (CCPCs), based on eligibility for the small business deduction (see below);
      • an individual (other than a trust);
      • a partnership, all members of which are entities described in (i), (ii), (iii) or (v);
      • a non-profit organization (exempt from income tax); or
      • a registered charity.
  • To be eligible, a CCPC must have had a business limit, for purposes of the small business deduction greater than nil for its most recent tax year ended prior to March 18, 2020 (or, if it had no taxation year ended before that date, would have had a business limit greater than nil if its taxation year ended on March 17, 2020).
  • For this purpose, the reduction to the business limit caused by the passive income grind (which commences when passive income exceeds $50,000) is not considered. However, a CCPC which had no business limit for other reasons (for example, its taxable capital, in combination with other associated corporations, exceeded $15 million; it was a member of an associated group of corporations and was not assigned any portion of the business limit; or it assigned its entire business limit to one or more other CCPCs under the specified corporate income rules) would not qualify for the subsidy.
  • A portion of remuneration (e.g. wages, salaries) paid to employees from March 18, 2020 to June 19, 2020, inclusive, will be recoverable by the employer. The legislation affords the government the ability to change several amounts that determine the availability of the subsidy. Items in italics are amounts that have been announced to date.
  • The subsidy will be equal to the least of three amounts, as follows:
    • a fixed maximum for each employer of $25,000. CRA has indicated that this amount is per employer and is not required to be shared between related or associated employers;
    • a fixed percentage, being 10% of remuneration paid to eligible employees during the period from March 18, 2020 to June 19, 2020; or
    • the number of eligible employees employed during the period from March 18, 2020 to June 19, 2020, multiplied by a fixed amount, $1,375.
  • Therefore, to get the maximum benefit of $25,000, the employer must have more than 18 employees with total wages no less than $250,000 during the period.
  • Application process
    • There is no formal application process. Source deduction remittances for income tax, but not for CPP or EI, can be reduced for the available subsidy, providing an immediate cash flow benefit to the employer. Presumably, there will be an eventual requirement to account for the subsidy claimed, possibly when T4 slips are prepared and filed in early 2021.
  • The legislation does not prevent salaries to the owners (or related persons) from being eligible for the subsidy. Note, however, that a proprietor or partner is not an employee of their unincorporated business, so no subsidy would be available for their work.

Additional info:

Canada Revenue Agency (CRA): Frequently Asked Questions – Temporary Wage Subsidy for Employers

Video Tax News (VTN): Watch! Temporary Wage Subsidy – Legislative Updates (COVID-19 – Video #6) (March 25, 2020)

QuickBooks Online Payroll: Instructions: Temporary Wage Subsidy for Employers (April 3, 2020)

Tax Templates Inc.: Watch: Temporary Wage Subsidy for Employers (10%) (March 26, 2020)

Tax Templates Inc.: Download: Free Wage Subsidy Calculator Tools

Corporate Income Tax Return and Payment Deferral

Updated: April 8, 2020

  • Deadlines for payment of corporate income tax payable under Part I of the Income Tax Act that become due on or after March 18, 2020 (also including instalments) and before September 2020 are deferred to September 1, 2020. No interest will accumulate on these amounts during this period.
  • Taxpayers may defer a number of other administrative tax actions required under the Income Tax Act that are due after March 18, 2020, until June 1, 2020. These include filing of income tax returns, forms, elections, designations, and responses to information requests. This includes corporate income tax returns.

Additional info:

Canada Revenue Agency (CRA): Income Tax Filing and Payment Dates: CRA and COVID-19

GST, HST, Duties and Taxes on Imports

Updated: April 8, 2020

  • A GST/HST remittance deferral is offered which would extend until June 30, 2020 the time for:
    • monthly filers to remit amounts collected for the February, March and April 2020 reporting periods;
    • quarterly filers to remit amounts collected for the January 1, 2020 through March 31, 2020 reporting period; and
    • annual filers, whose GST/HST return or instalment are due in March, April or May 2020, to remit amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.
  • In other words, any GST/HST which would otherwise become payable at the end of March, April or May will instead be payable by June 30, 2020.
  • Finally, in respect of customs duty and sales tax for importers, the payment deadlines for statements of accounts for March, April, and May are being deferred to June 30, 2020.

Additional info:

Canada Revenue Agency (CRA): Deferral of GST/HST Tax Remittances (COVID-19 Measures)

Workplace Safety and Insurance Board (WSIB) Financial Relief Package

Updated: March 31, 2020

  • The financial relief package allows businesses to defer premium reporting and payments until August 31, 2020. Businesses who report and pay monthly, quarterly or annually based on their insurable earnings are eligible for this deferral.
  • All businesses covered by the WSIB’s workplace insurance are automatically eligible for the financial package. No action is required from businesses to receive the financial relief.
  • You do not have to participate in the financial relief package. You can continue to report and pay on a monthly, quarterly or annual basis. You can also report now and defer payment until later.
  • You can continue to report using online services or contacting them at employeraccounts@wsib.on.ca.
  • The following payments are eligible for deferral:
    • Monthly –  March 31, April 30, May 31, June 30, July 31 and August 31
    • Quarterly – April 30 and July 31
    • Annual – April 30
  • No interest will accrue on outstanding premium payments for Schedule 1 businesses and no penalties will be charged during this six-month deferral period. Schedule 2 account balances will not accrue debit interest as part of the financial relief package.

Additional info:

  • The best way to manage your account is through online services or email at  employeraccounts@wsib.on.ca. If you need urgent assistance with your account, please call 1-800-387-0750, Monday to Friday 7:30 a.m. to 5 p.m.

Employer Health Tax (EHT) Exemption Increase

Updated: March 31, 2020

  • On March 25, 2020, the Ontario government announced it is increasing the Employer Health Tax (EHT) exemption for 2020 from $490,000 to $1 million due to the special circumstances caused by the coronavirus (COVID-19) in Ontario.
  • Retroactive to January 1, 2020, the EHT exemption is increasing from $490,000 to $1 million for the 2020 tax year. The EHT exemption will return to $490,000 on January 1, 2021.
  • This change will provide quick relief to employers that pay the EHT.
  • Employers, including associated groups of employers, with total Ontario remuneration over $5 million are not eligible for the increase exemption, just as they are not eligible for the exemption currently.
  • You will begin making your instalment payments after your payroll has exceeded the new $1 million exemption level.
  • If your business no longer needs to make instalment payments as a result of the increased exemption amount, you do not need to contact or notify the Ministry of Finance.
  • If your business is still required to make EHT instalment payments, you can also benefit from additional new relief measures announced in the March 2020 Economic and Fiscal Update.
  • The annual return form is not changing. Only the amount for the exemption claimed will change.
  • If you have already filed a final or special return for 2020, the Ministry will be reviewing all 2020 EHT returns that have already been filed and correcting the returns for the new exemption level.
  • If you have not paid any EHT yet for 2020 and you will not owe any EHT for 2020 because of the new exemption amount (and you are not an associated employer), you do not need to file an EHT return for 2020.
  • If your business no longer needs to file an EHT return as a result of the increased exemption amount, you do not need to contact or notify the Ministry of Finance.
  • If your business is still required to file an EHT return, you can also benefit from additional new relief measures announced in the March 2020 Economic and Fiscal Update.
  • This exemption increase will provide tax relief for businesses around the province so that they can focus on supporting the well-being of their employees and their continued operations during this time of uncertainty.

Additional info:

  • Only the exemption amount is changing; eligibility for the tax exemption, tax rates and everything else remains the same. For more information on the EHT exemption, visit https://www.fin.gov.on.ca/en/guides/eht/foremployers.html
  • If you overpay your EHT during the 2020 tax year because of the increased EHT exemption level, you will be able to make adjustments by decreasing an instalment prior to December 2020 or by making a refund claim.
  • You may also carry forward your payments to the next year. This will be done automatically unless you request a refund by contacting the ministry.
  • Beginning April 1, 2020, penalties and interest will not apply to Ontario businesses that miss any filing or remittance deadline under select provincial taxes, including EHT. Learn more.
  • The government is also temporarily suspending audit interactions with most Ontario business and representatives for the month of April 2020.

Ministry of Finance: Employer Health Tax (EHT) Exemption Increase for 2020 – Tax Bulletin

Canada Emergency Business Account (CEBA)

Updated: April 8, 2020

  • This provides interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover operating costs during a period where revenues have been temporarily reduced. To qualify, organizations will need to demonstrate they paid between $50,000 and $1 million in total payroll in 2019. 25% of the loan will be forgiven where the loan is repaid by December 31, 2022. Applications through the borrower’s financial institution should be available on April 9, 2020.
  • Interested businesses should work with their current financial institutions.

Additional info:

Canada Revenue Agency (CRA): Additional Support for Canadian Businesses from the Economic Impact of COVID-19

Business Credit Availability Program (BCAP)

Updated: April 8, 2020

  • Loan guarantee for small and medium-sized enterprises
    • EDC is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to small and medium enterprises.
  • Co-lending program for small and medium-sized enterprises
    • BDC is working with financial institutions to co-lend term loans to small and medium enterprises for their operational cash flow requirements. Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program.
  • Interested businesses should work with their current financial institutions.

Additional info:

Business Development of Canada (BDC): Support for Entrepreneurs Impacted by the Coronavirus COVID-19

Export Development Canada (EDC): How EDC is Helping Canadians During COVID-19

Canada Emergency Commercial Rent Assistance (CECRA)

Updated: April 29, 2020

New information on the Canada Emergency Commercial Rent Assistance (CECRA) program has been released.

To qualify for CECRA for small businesses, the property owner must meet the following requirements:

  • Own property that generates rental revenue from commercial real property located in Canada;
  • Be the property owner of the commercial real property where the impacted small business tenants are located;
  • Have a mortgage loan secured by the commercial real property, occupied by one or more small business tenants*;
  • Have entered or will enter into a rent reduction agreement for the period of April, May, and June 2020, that will reduce impacted small business tenant’s rent by at least 75%;
  • Provide a rent reduction agreement with impacted tenants including a moratorium on eviction for the period of April, May and June 2020; and
  • Declared rental income on your tax return (personal or corporate) for tax years 2018 and/or 2019.

* For those property owners who do not have a mortgage, an alternative mechanism will be implemented. Further information will be outlined in the near future.

What is an impacted small business tenant?

Impacted small business tenants are businesses who:

  • Pay no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement);
  • Generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level); and
  • Have temporarily ceased operations (i.e. generating no revenues), or has experienced at least a 70% decline in pre-COVID-19 revenues.**

** To measure revenue loss, small businesses can compare revenues in April, May and June of 2020 to that of the same month of 2019. They can also use an average of their revenues earned in January and February of 2020.

Updated: April 24, 2020

  • Small businesses with monthly rents of less than $50,000 will be eligible for a 75% reduction for April, May and June. 50% will be covered by the federal government. The remaining 25% will be covered by the lessor.
  • The program will provide forgivable loans to qualifying commercial property owners to cover 50% of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May and June.
  • The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75% for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25% of the rent.
  • Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID-19 revenues.
  • More details are to come in mid-May.

Additional info:

Canada Mortgage and Housing Corporation (CMHC): CECRA for Small Businesses

Prime Minister Announces Partnerships with Provinces and Territories to Deliver the Canada Emergency Commercial Rent Assistance for Small Businesses (April 24, 2020)

Individuals

A number of measures have been offered to individuals based on the number of individuals in their family, employment/business status, and income levels. These can be divided into the following categories: one-time payments, tax deferrals, employment insurance sickness benefits, the Canada Emergency Response Benefit and other supports.

Employment Insurance (EI)

Updated: April 8, 2020

  • EI sickness benefits provide up to 15 weeks of income replacement and is available to eligible claimants who are unable to work because of illness, injury or quarantine. The government has enhanced access to this benefit by:
    • Waiving the one-week waiting period for new claimants who are quarantined that claim EI sickness benefits, effective March 15, 2020; and
    • Waiving the requirement to provide a medical certificate.
  • Note that sickness and regular EI benefits will be rolled into the Canada Emergency Response Benefit discussed below.

Additional info:

Canada Revenue Agency (CRA): EI Regular Benefits: Overview

Canada Revenue Agency (CRA): EI Sickness Benefits: What These Benefits Offer

Canada Emergency Response Benefit Act (CERB)

Updated: April 8, 2020

  • The CERB will provide a taxable benefit for up to four months for workers who lose their income as a result of the COVID-19 pandemic but are not eligible for traditional EI. It will also cover sickness and regular EI claims made for periods commencing on or after March 15, 2020.
  • Amounts
    • These income support payments can be made for a maximum of 16 weeks. $2,000 would be provided per 4-week period. The first 4-week period goes from March 15 to April 11, 2020. The CERB is taxable although tax will not be deducted at source. It must be reported as income for the 2020 tax year. CRA has indicated an information slip will be issued.
  • Eligibility
    • To receive the CERB, the applicant must be an “eligible worker”, meaning they must:
      • be at least 15 years of age;
      • be resident in Canada;
      • have stopped working because of COVID-19 or be eligible for EI regular or sickness benefits;
      • be or expect to be without employment or self-employment income for at least 14 consecutive days in the four-week period; and
    • for 2019 or in the 12-month period preceding the day on which they make an application, have had a total income of at least $5,000 from:
      • employment;
      • self-employment;
      • certain EI benefits (maternity and parental benefits); and
      • allowances, money or other benefits paid to the person under a provincial plan because of pregnancy or in respect of the care by the person of one or more of their new-born children or one or more children placed with them for the purpose of adoption.
  • On April 6, 2020, the date applications for the CERB commenced, the government announced that non-eligible dividends would also count towards the $5,000 prior income eligibility requirement. Therefore, owner-managers or their family members compensated only by non-eligible dividends may be eligible for the CERB provided that the other requirements are met. Further, the minimum $5,000 income does not have to be earned in Canada, but the taxpayer needs to reside in Canada.
  • The worker, whether employed or self-employed, must cease to work for reasons related to COVID-19 for at least 14 consecutive days within the four-week period (required to commence on a Sunday) in respect of which they apply for the payment. Specific examples of people who would be eligible were:
    • 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 are still employed but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work; and
    • wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for EI.
  • For the period of work cessation, the applicant cannot receive income from the sources listed above and cannot receive any other EI benefits. Further, workers that quit voluntarily are not eligible.
  • On April 7, 2020, the Prime Minister acknowledged that access to the CERB needed to be fine-tuned, including consideration of eligibility to those whose income was markedly reduced, but not eliminated.
  • Workers who are not Canadian citizens or permanent residents – including temporary foreign workers and international students – may be eligible to receive CERB if they meet the other eligibility requirements.
  • Interaction with the EI system
    • If an individual became eligible for EI prior to March 15th, the claim will be processed under the pre-existing EI rules. If the individual applied for EI regular or sickness benefits on March 15, 2020 or later, the claim will be automatically processed through the CERB. The CERB will pay $500 per week, regardless of what the individual may have been eligible to receive through EI. If still eligible for EI after the completion of CERB payments, individuals can receive normal EI benefits.
    • If the individual was eligible for EI benefits that started before March 15, 2020, and these benefits end before October 3, 2020, the individual may then apply for the CERB if they meet the eligibility requirements, including having stopped work because of reasons related to COVID-19. EI benefits and the CERB cannot be paid for the same period.
  • Application process
    • Applications commenced on April 6, 2020, and can be made through My Account or by using a dedicated automated phone line (1-800-959-2019 or 1-800-959-2041). Applicants need to provide their contact information and Social Insurance Number, and confirm that they meet the eligibility requirements. Individuals who have never filed a Canadian tax return must apply through CRA’s General Enquiries Line, 1-800-959-8281. Additional documentation to verify eligibility may be required at a future date. Payments by direct deposit can be expected within three business days after application.
    • For the first week of applications, CRA requested that applications be made on specific days of the week, based on month of birth, in order to minimize delays.

Additional info:

Canada Revenue Agency (CRA): Questions and Answers on the Canada Emergency Response Benefit

Canada Revenue Agency (CRA): Apply for Canada Emergency Response Benefit (CERB) with CRA

Canada Revenue Agency (CRA): Benefits, Credits and Support Payments: CRA and COVID-19

Canada Revenue Agency (CRA): Government Introduces Canada Emergency Response Benefit to Help Workers and Businesses (March 25 2020)

Video Tax News (VTN): Watch! Emergency Response Benefit – Launch & Dividend Clarification (COVID-10 – Video #11) (April 6, 2019)

Video Tax News (VTN): Watch! The Canadian Emergency Response Benefit (COVID-19 – Video #10) (April 1,  2020)

Video Tax News (VTN): Watch! Emergency Response Benefit – Legislative Updates (COVID-19 – Video #5) (March 25, 2020)

GST Credit (GSTC)

Updated: April 8, 2020

  • A one-time special payment through the Goods and Services Tax Credit (GSTC) was to be made on April 9, 2020. This will double the maximum annual GSTC and result in an average payment for those benefitting by close to $400 for single individuals and close to $600 for couples. Some individuals or families whose “adjusted income” was too high to qualify for any quarterly GSTC payments will be eligible for this one-time payment. No application was required to receive the benefit.

Enhanced Canada Child Benefit (CCB)

Updated: April 8, 2020

  • An additional Canada Child Benefit payment amount of $300 per child will be added to the May 2020 benefit cheque. Some families with children under age 18 who do not receive monthly benefits will be eligible for a one-time benefit in May.

Canada Mortgage & Housing Protection Program

Updated: April 8, 2020

  • The government has stated that Canada’s large banks have confirmed that support will include up to a 6-month payment deferral for mortgages and the opportunity for relief on other credit products. Banks have affirmed their commitment to working with customers to provide flexible solutions, on a case-by-case basis, for managing through hardships caused by recent developments. This may include situations such as pay disruption, childcare disruption, or illness. Further, some banks have begun to offer reduced credit card interest rates.

Additional info:

Canada Mortgage and Housing Corporation (CMHC): Dealing with Mortgage Payment Difficulties

Canada Mortgage and Housing Corporation (CMHC): COVID-19: Understanding Mortgage Payment Deferral

Personal Income Tax Return and Payment Deferral

Updated: April 8, 2020

  • Payment deadlines for income tax amounts that become due on or after March 18, 2020 and before September 2020 are deferred to September 1, 2020. This includes the June 15, 2020 instalment. No interest will accumulate on these amounts during this period.

Additional info:

Canada Revenue Agency (CRA): Income Tax Filing and Payment Dates: CRA and COVID-19

Additional Information

Employment Insurance – Record of Employment

Updated: March 27, 2020

  • For employers with employees directly affected by COVID-19.
    • When the employee is sick or quarantined, use code D (Illness or injury) as the reason for separation (block 16). Do not add comments.
    • When the employee is no longer working due to a shortage of work because the business has closed or decreased operations due to coronavirus (COVID-19), use code A (Shortage of work). Do not add comments.
    • When the employee refuses to come to work but is not sick or quarantined, use code E (Quit) or code N (Leave of absence), as appropriate. Avoid adding comments unless absolutely necessary

Caveat: The information in this publication is current as of the time it was written. This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Deuzeman CPA to discuss these matters in the context of your particular circumstances. Deuzeman CPA does not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.