Employers have to make some big staffing decisions. Should they lay off good employees or try to keep them on the payroll, knowing full well that it is very costly to hire and train new employees if current employees go elsewhere? It can also be very difficult to balance the well-deserved loyalty to staff with the realities of keeping a business viable going forward.
The federal government has introduced some measures that may help employers in making key staffing decisions:
- The Temporary Wage Subsidy for Employers program is a three-month measure that will allow eligible employers to reduce payroll deductions. This program is available to incorporated companies that are Canadian Controlled Private Corporations, as well as non-profit organizations and registered charities. Your business is an eligible employer if the company pays salaries to individuals who are employed in Canada and have an existing payroll account with the CRA. This subsidy is a three-month measure dating from March 18 to June 19, 2020. The subsidy is equal to 10% of the remuneration paid to employees to a maximum of $1,375 for each employee and up to a maximum of $25,000 per employer. The subsidy is “received” by reducing the payroll remittances by manually calculating subsidy amounts. See this link for more information: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
- A second program, called the Canada Emergency Wage Subsidy (“CEWS”), is meant to help businesses that are hardest hit by the COVID-19 pandemic. This program will be in place for a 24-week period, from March 15 to August 29, 2020, for eligible employers. An eligible employer is one who has suffered a drop in gross revenues of at least 15% for March and 30% for April, May, June, July and August compared to the respective months in 2019. There is also an alternative method for calculating the monthly decrease in revenues for March to August compared to the average revenue during January 2020 and February 2020. In general, the subsidy would apply at a rate of 75% of the salaries, to a maximum of $847 per week per employee. The wage subsidy is also available to non-arm’s-length employees with the same weekly limit, but with a cap based on 75% of “pre-crisis wages.” Eligible employers can apply for this subsidy through the CRA’s “My Business Account” portal. See this link for more information on eligibility: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-who-eligible-employer.html#h-2
- For employers that are eligible for both the CEWS and the Temporary Wage Subsidy, any benefit from the 10% wage subsidy would generally reduce the amount available under the CEWS.
- Employers who are not eligible for the Canada Emergency Wage Subsidy would still be able to grant a leave of absence to employees, who can take advantage of a program called the Canadian Emergency Response Benefit (“CERB”), which provides up to $2,000 per month. See this link for more information: https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra.html
Other initiatives for businesses include:
- Deferral of GST/HST payments until June 30, 2020, and corporate tax payments until September 30, 2020.
- Canada Emergency Business Account (“CEBA”): This account provides an interest-free, government-guaranteed loan of up to $40,000 to help cover operating costs and is to be repaid on or before December 31, 2022, with forgiveness of up to 25% of the loan amount. Loan applications are to be submitted through current financial institutions. Businesses with 2019 payroll between $20,000 and $1,500,000 are eligible for CEBA. Businesses with less than $20,000 in payroll may also qualify if there are sufficient non-deferrable expenses.
- Business Credit Availability Program: Available through current financial institutions, this program helps to provide financing access for viable businesses that would otherwise have restricted financing abilities. See this link for more information: https://www.canada.ca/en/department-finance/programs/financial-sector-policy/business-credit-availability-program.html
- Canada Emergency Commercial Rent Assistance (“CECRA”): The objective is to lower rent by 75% for eligible businesses or non-profit organizations that are paying less than $50,000 in monthly rent and have suffered a 70% decrease in pre-COVID revenues. Qualifying commercial property owners would also receive forgivable loans to cover 50% of the monthly rent payments that are subject to the 75% reduction for eligible tenants during April, May, June, July and August.
Ontario COVID-19 relief measures include:
- Provincial tax deferrals on the Employer Health Tax (EHT) and other provincially administered taxes until August 31, 2020, with no interest or penalty.
- WSIB premium deferrals until August 31, 2020, with no interest or penalty.
- Employer Health Tax (EHT) exemption threshold increased to $1 million for the next year.
- See this link for more information: https://budget.ontario.ca/2020/marchupdate/action-plan.html
We hope that these programs help your organization navigate through rough waters.
We’re here to help you.
Please contact Richard Boulay, CPA, CMA (firstname.lastname@example.org) or any other member of the Ernst & Company CPA team if we can answer any questions for you.