Government's COVID-19 relief measures: What businesses need to know.
April 23, 2021
At H&R Block, we know that the COVID-19 pandemic has impacted all Canadian businesses and business owners, large and small. We’re here to help get you and your business back on its feet. Here’s a list of what you’ll find in this article:
- Canada Emergency Business Account (CEBA) Interest-free Loans
- Canada Emergency Rent Subsidy (CERS)
- Canada Recovery Benefit (CRB)
- Canada Recovery Sickness Benefit (CRSB)
- Canada Emergency Wage Subsidy (CEWS)
- Insurance and Pension Plan Refunds
- Temporary Wage Subsidy for Employers (TWS)
- Regional Relief and Recovery Fund (RRRF)
- Temporary Concerted Action Program for Businesses (PACTE)
- Caisse de dépôt funding
- Payment to the Registraire des entrprises
- Ontario Small Businesses Support Grant
- Indigenous businesses
- How H&R Block Can Help
Canada Emergency Business Account (CEBA) Interest-free Loans
The CEBA has been expanded to offer small businesses and not-for-profit organizations an additional interest-free loan of up to $20,000 on top of the $40,000 already available. Businesses can have 50% of their new loan forgiven if they repay on or before December 31st, 2022. This is in addition to having up to 25% (up to $10,000) of their original loan forgiven if it is repaid by the same date.
The portion of your CEBA loan that’s forgiven is considered business income. However, you can choose to report this income on your return the year you received the loan, or the year you used it to pay for your business expenses. For example, you might report this income on next year’s return if that’s when you’re also deducting your expenses, to lower your total taxable income.
Canada Emergency Rent Subsidy (CERS)
The Canada Emergency Rent Subsidy (CERS) replaced the Canada Emergency Commercial Rent Assistance (CECRA) Program, and no longer requires your landlord to participate.
The CERS provides rent and mortgage support directly to businesses and other organizations, offering up to 65% of their eligible expenses based on how they’ve been affected by COVID-19, until June 5th, 2021. Organizations that are temporarily closed because of a local public health decision can qualify for an additional 25% of their expenses. This support can also be claimed retroactively for prior periods.
You’ll need to report the subsidy you received as business income on your return, but this will be offset by the amount you claim for your business expenses, meaning the amounts might balance out and it might not impact the total taxes you owe.
Canada Recovery Benefit (CRB)
This benefit is for employed or self-employed Canadians who don’t qualify for Employment Insurance (EI) benefits. The benefit will provide $500 a week for up to 26 weeks.
In order to qualify, you must have been unable to work or have had your earnings reduced by at least 50% because of COVID-19, and you will need to have earned at least $5,000 from employment, self-employment, or benefits in 2019, 2020, or in the 12 months before applying.
It’s important to note that there’s a clawback from this benefit on any tax returns that are filed with a net income over $38,000 – the clawback will be 50 cents for every dollar over and above that $38,000 net income threshold (excluding income from the Canada Recovery Benefit itself). This benefit is also subject to 10% tax withholding, meaning 10% will be sent to the Canada Revenue Agency (CRA) before you receive it, so that you don’t need to pay back the taxable amount all at once when you prepare your yearly return.
Canada Recovery Sickness Benefit (CRSB)
This benefit is for workers who are at least 15 years old and unable to work at least 50% of their scheduled work week because they’re sick or must self-isolate due to COVID-19. In order to qualify, you must have earned at least $5,000 in 2019, 2020, or in the 12 months before applying and you must be self-employed or employed when you apply.
The program provides $500 per week, for up to 2 weeks.
It’s important to note that this benefit is subject to 10% tax withholding, meaning 10% will be sent to the CRA before you receive it, so that you don’t need to pay back the taxable amount all at once when you prepare your yearly return.
Canada Emergency Wage Subsidy (CEWS)
The federal government is paying a portion of employee wages through the CEWS initiative. Employers who have seen any amount of revenue drop due to COVID-19 are eligible to apply, including to help cover employees who were unpaid for 14 days of more.
There are 4 groups of claim periods: Periods 1-4 (March 15th to July 4th, 2020), Periods 5-9 (July 5th to November 21st, 2020), Periods 10-13 (November 22nd, 2020 to March 13th, 2021), and Periods 14-16 (March 14th to June 5th, 2021).
It’s important to note that the amount each business could receive will vary, based on how much their business revenues declined. For example, also under the updated CEWS program, companies who have experienced more than a 50% drop in revenue now have an additional 35% subsidy available to them. You can use this calculator to estimate how much your subsidy might be, and apply for the program.
For the periods between March 13th, 2021 to June 5th, 2021, the weekly wage subsidy for furloughed employees will be the least of these amounts:
- $500, or
- 55% of their pre-crisis wage, up to a maximum of $595.
Keep in mind that employees aren’t considered “furloughed” if they’re on vacation leave, maternity leave, sick leave, or a sabbatical.
The CEWS initiative will continue to run until at least June 5th, 2021. The deadline for applications is currently August 12th, 2021.
Insurance and Pension Plan Refunds
As part of the original CEWS program, employers can also get a 100% refund of their contributions to Employment Insurance, Canada and Québec Pension Plans, and the Québec Parental Insurance Plan, during the time when employees were paid while off work.
What if I’m not eligible?
If your business isn’t eligible for CEWS, it might be eligible for the Temporary Wage Subsidy for Employers (TWS) program.
Temporary Wage Subsidy for Employers (TWS)
The TWS program provides business with a subsidy equal to 10% of their total payroll between March 18th to June 19th 2020, up to a maximum of $1,375 for each eligible employee. As an employer, the maximum total available is $25,000.
Unlike many of the other financial assistance measures, you don’t need to apply for TWS. Instead, you need to calculate your own subsidy amount manually before you send your payroll remittance to the CRA, and then report your TWS amount to the CRA.
Some businesses might be eligible for both CEWS and TWS. This article explains how the two programs work together.
Regional Relief and Recovery Fund (RRRF)
The RRRF program is made up of $962 million, allocated to Canada’s 6 Regional Development Agencies (RDAs). These RDAs can re-distribute this money as they see fit, in the form of loans or Community Futures Development Corporations programs to help small businesses across Canada. Some RDA programs might supplement government COVID-19 relief, and some might help businesses who were denied government COVID-19 relief programs. Learn more about how this fund might apply to you.
Temporary Concerted Action Program for Businesses (PACTE)
The Temporary Concerted Action Program for Businesses (PACTE) enables eligible Québec small businesses, including non-profit organizations, to benefit from a loan guarantee of at least $50,000 (to make up for cash flow shortages).
Programme actions concertées pour le maintien en emploi (PACME)
The PACME initiative was launched by the Québec government to help companies implement teleworking measures, or help companies develop the skills of their employees who are now staying at home. Eligible companies can be reimbursed up to 100% of their eligible expenses (up to a maximum of $100,000) for things such as trainer’s fees, equipment purchases, or human resources activities.
Caisse de dépôt funding
The Caisse de dépôt et placement du Québec (CDPQ) has made $4 billion available to Québec businesses whose operations have been disrupted by COVID-19. If a company is looking for more than $5 million in financial support, was profitable before the COVID-19 pandemic started, and has a promising growth outlook in their industry, they might be eligible for some of the funding.
Ontario Small Business Support Grant
Applications for the Ontario Small Business Support Grant opened on January 1, 2021. A second payment was announced in March 2021.
Small businesses who needed to close or significantly restrict their services because of the province-wide shutdown that began on December 26, 2020 can apply for up to $20,000 to help cover lost revenue.
To be eligible, a small business must:
- Have fewer than 100 employees; and
- Have experienced a revenue decline of at least 20% when comparing April 2020 to April 2019 (new businesses that were established after April 2019 can select a different time frame).
Essential businesses and businesses that were already closed prior to October 10, 2020 can’t apply for this grant.
You can apply for the Ontario Small Business Support Grant online.
$306.8 million has been made available as short-term, interest-free loans and non-repayable contributions for First Nations, Inuit, and Métis businesses, and to the Aboriginal financial institutions who empower these businesses. An additional $133 million will also be available to support Indigenous businesses and micro-businesses as they move towards recovery.
As of December 6th, 2020, GST/HST isn’t charged on face masks or shields. These supplies will be exempt from the GST/HST tax until public health officials declare they’re no longer needed to combat the COVID-19 pandemic.
How H&R Block Can Help
If you have any questions about the impact of these changes to your business, or if you need help filing your business’ taxes but aren’t sure where to start, H&R Block Tax Experts are here to help. Find out more about all about the ways that H&R Block is providing service to our clients during the COVID-19 crisis.