Government’s COVID-19 relief measures: What businesses need to know
At H&R Block, we know that the COVID-19 pandemic has impacted all Canadian businesses and business owners, large and small. But 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
CEBA is a $25 billion program that offers small businesses and not-for-profit organizations interest-free loans of up to $40,000. Businesses that repay the loan on or before December 31st, 2022 could have up to 25% of the loan forgiven (up to $10,000). Businesses can apply for CEBA through their banks or credit unions.
Canada Emergency Commercial Rent Assistance (CECRA) Program
The federal government has reached an agreement with all provinces and territories to lower rent by 75%, meaning that small businesses would only have to pay 25% of their rent between the months of April – August 2020. This Canada Emergency Commercial Rent Assistance (CECRA) program is available to small businesses who are paying less than $50,000 per month for rent.
Canada Recovery Benefit
A new program is being introduced effective September 27th 2020 for one year, for anyone who is self-employed or who has a ‘gig’-type of employment. The benefit will provide $400 a week for up to 26 weeks.
In order to qualify, you must have been unable to work or have had your earnings reduced because of COVID-19, and you will need to have earned at least $5,000 from employment or self-employment in 2019 or 2020.
It’s important to note that there will be 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).
Canada Recovery Sickness Benefit
A new program is being introduced effective September 27th 2020 for workers who are unable to work because they are sick or must self-isolate, because of COVID-19. In order to qualify, you must have earned at least $5,000 in 2019 or 2020, and you must be self-employed or employed when you apply.
The program will provide $500 per week, for up to two weeks.
Canada Emergency Wage Subsidy (CEWS)
The federal government is paying a portion of employee wages through the CEWS initiative. There are two groups of claim periods: Periods 1-4 (March 15th to July 4th) and Periods 5-9 (July 5th to November 21st).
The program has now entered Periods 5-9, which include July 5th to November 21st, 2020. The qualifications for Periods 5-9 have also changed from the original CEWS requirements. Previously, businesses needed to have seen at least a 30% drop in their revenue. But now, thanks to these changes, all 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.
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 25% subsidy available to them. Here’s a great infographic that the Canada Revenu Agency (CRA) created, to help you better understand CEWS. You can use this calculator to estimate how much your subsidy might be, and apply for the program.
The plan for this program is to extend it until December 19th, 2020, with further details to come. The deadline for application is currently January 31st, 2021.
EDC Business Credit Availability Program (BCAP) Guarantee
Export Development Canada (EDC) is helping Canadian small and medium-sized businesses cover payroll and operating costs, in response to COVID-19, with new loans or lines of credit. The amount of the loan or line of credit your business is eligible for will be determined by your financial institution.
Many Canadian companies are eligible for the EDC BCAP Guarantee regardless of their size, sector, or region. You can check the EDC’s website to find out if you’re eligible for this program, and if you are, you can contact your financial institution to apply.
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.
Deferred Tax Filing Dates
The CRA has deferred the payment of any busines income tax amounts that become owing on or after March 18th, 2020 and before September 30th, 2020 without interest or penalties, until after August 31st 2020. The same applies to balances owing prior to March 18th – these amounts can also be deferred (without additional interest accruing) until September 30th, 2020.
The CRA has deferred GST, HST, and customs duties until June 30th, 2020.
The Québec government has delayed the due date of instalment payments and tax amounts until September 30th, 2020.
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.
Payment to the Registraire des entrprises - delayed
The 2020 annual registration fee, payable to the Registraire des entreprises, is no longer due until September 30th, 2020.
$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.
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.