Your taxes and COVID-19 everything you need to know.
January 17, 2022
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)
- Canada Workers Lockdown Benefit (CWLB)
- Tourism and Hospitality Recovery Program (THRP)
- Hardest Hit Business Recovery Program (HHBRP)
- 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
- 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 a percentage of their eligible expenses based on how they’ve been affected by COVID-19, until October 23rd, 2021. Between August 29 and September 25, 2021, you can claim 40% of your expenses. Between September 25 and October 23, 2021, you can claim 20% of your expenses. 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)
To learn more about the Canada Recovery Benefit (CRB), check out this blog. It is worth noting that the CRB has been replaced with the Canada Workers Lockdown Benefit.
Canada Recovery Sickness Benefit (CRSB)
To learn more about the Canada Recovery Sickness Benefit (CRSB), check out this blog.
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 5 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), and Periods 17-20 (June 5th to September 25th, 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 amount of furloughed employees will be available until August 28th, 2021.
The CEWS initiative will continue to run until at least October 23rd, 2021. The deadline for applications was until August 12th, 2021.
Applicants can now apply for Tourism and Hospitality Recovery Program (THRP), the Hardest-Hit Business Recovery Program (HHBRP), or Canada Recovery Hiring Program (CRHP) in lieu of the CEWS.
Canada Worker Lockdown Benefit (CWLB)
The CWLB is replacing the CRB, all benefits will remain the same. Eligible individuals will still get the same $300 per week, as long as their work was interrupted by a government-imposed public health lockdown.
The CWLB is available from October 24, 2021, until May 7, 2022, to individuals in certain areas of Canada. This benefit will be available to help support individuals whose work is directly affected by government imposed public health lockdown orders. As of December 22, 2021, the CWLB has also been expanded to include provinces and territories that have introduced capacity-limiting restrictions of 50% or more.
In addition to the expanded regulations, the government has also reduced the minimum number of days a lockdown order needs to be in place down to 7 from the previous 14 consecutive days. These new expansion regulations will be in effect from December 19, 2021, until February 12, 2022. After February 12, 2022 the CWLB will revert back to its previous criteria.
For more details about the CWLB including how to apply, who is eligible and more, check out federal government site.
Tourism and Hospitality Recovery Program (THRP)
The THRP is designed to help selected organizations in the tourism and hospitality industry that have been deeply affected by the lockdowns and the COVID-19 pandemic. Business such as hotels, bars and restaurants, travel agencies and others can claim a certain percentage of their revenue loss depending on how much revenue was lost in a certain period.
As of December 22, 2021, the federal government has expanded the eligibility requirements to now include business who have been affected by capacity-limiting restrictions in light of the Omicron variant. Businesses who have been affected by capacity-limiting restrictions of 50% or more can now apply.
In addition, the government has lowered the minimum revenue decline level from 40% revenue decline to 25% revenue decline.
Check out our blog article for all details such as eligibility, how to apply, and more.
Hardest Hit Business Recovery Program (HHBRP)
If your business is outside of the tourism or hospitality industry, there is still support available for you! The HHBRP offers rent and wage subsidies for those who don’t meet the qualifications of the THRP. Depending on which period you apply for will dictate how much of your revenue loss you can claim.
As of December 22, 2021, the federal government is now including additional support which would increase the total amount a eligible business can claim to 75% for the period of December 19, 2021 until February 12, 2022. This temporary increase also expands who can apply to include employers subject to the capacity-limiting restrictions of 50% or more. Check out this blog here for full details including eligibility requirements, how to apply, and more!
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.
$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
Here at H&R Block we understand that it can be a little confusing understanding your taxes and COVID-19, but that’s why we have experts on hand to help. If you have any questions about the impact of these changes on your business, or if you need help filing your business’ taxes and aren’t sure where to start, our Tax Experts are here for you. Come into your favourite H&R Block office or take advantage of one of our other services like Easy Drop Off
or Remote Tax Expert.