Many employers have had to make some difficult operational decisions. It can be very challenging to balance the well-deserved loyalty to staff with the realities of keeping a business viable going forward.
A complete list of relief measures can be found here: https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses. Below we are highlighting some widely used measures from the federal government that may help employers in making key staffing decisions:
- The Temporary Wage Subsidy for Employers program was a three-month measure that will allow eligible employers to reduce payroll deductions. This program was 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 was a three-month measure dating from March 18 to June 19, 2020, it was 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, and it was “received” by reducing the payroll remittances by manually calculating subsidy amounts. Employers taking advantage of the 10% TWS must now complete and submit a self-identification form (PD27) found here: https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/pd27.html. This enables CRA to reconcile the subsidy on your payroll program account and avoid you receiving a discrepancy notice when filing the 2020 T4 forms.
- In addition, refer to 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 started March 15, 2020 and now will run until June 2021 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 and July compared to the respective months in 2019. For August 2020 and onwards, employers will calculate revenue drops based on new criteria. There is also an alternative method for calculating the monthly decrease in revenues by comparing to the average revenue during January 2020 and February 2020. In general, the subsidy initially applied at a rate of up to 75% of the salaries, to a maximum of $847 per week per employee. After July 4, 2020, minimum revenue decreases are no required, but that base subsidy % is reduced, however, a top up subsidy is available based on the degree to which revenues decreased. 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. The deadline for submitting claims is January 31, 2021 or 180 days after the end of the claim period, whichever comes later. See this link for more information: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html
- For employers that are eligible for both the CEWS and the Temporary Wage Subsidy, any benefit claimed for the 10% wage subsidy would reduce the amount available under the CEWS.
Other federal initiatives for businesses include:
- Canada Emergency Business Account (“CEBA”): With the recent expansion of $20,000 funding, this account provides an interest-free, government-guaranteed loan of up to $60,000 to help cover operating costs and is to be repaid on or before December 31, 2022, with forgiveness of up to 33% of the loan amount. Loan applications are to be submitted through 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. The loan, and additional $20,000 funding, must be applied through your bank or credit union, by March 31, 2021. Please refer to this link for more information: https://ceba-cuec.ca
- Business Credit Availability Program: Available through financial institutions, this program helps to provide loan guarantees from EDC for financing access for viable businesses that would otherwise have restricted financing abilities. In addition to the loan guarantee program with EDC, a similar co-lending program with the BDC exists. These are available until June 2021. See this link under “financial support, loans and access to credit” for more information on both programs: https://www.canada.ca/en/department-finance/programs/financial-sector-policy/business-credit-availability-program.html
- Canada Emergency Rent Subsidy (“CERS”): This is a new program following the closing of the CEWS program. The objective is to provide direct and easy-to-access rent and mortgage support to qualifying organizations. Qualifying organizations would receive a subsidy up to 65% of eligible expenses until December 19, 2020. In addition, a “Lockdown Support” supplement of 25% is available to those qualifying organizations that are significantly affected by a mandatory public health order. This rent subsidy and related Lockdown Support are available until June 2021. Refer to the following link for more information: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy.html
Ontario has also introduced one source of relief for qualifying employers by increasing the Employer Health Tax (EHT) exemption threshold to $1 million for 2020 and beyond. See this link for more information: https://www.fin.gov.on.ca/en/bulletins/eht/eht-exemption-2020.html
We hope that these programs help your organization navigate through rough waters.
We’re here to help you.
Please feel free to contact any member of the Ernst & Company CPA team to answer any questions for you.