Updated April 27, 2020
Derrold Norgaard
We are not going to tell you all the details relating to the medical issues of Covid 19, or what steps the BC Ministry of Health is currently recommending – we will leave that for the experts.
No matter what is happening, all businesses and individuals are impacted. We are going to simply outline the key points of the many different announcements over the last few days, relating to the financial stimulus to be granted to your small businesses, and to you and your family to help you through this time.
Remember if you are sick, call 811 or follow the guidance of your provincial health authorities. Our staff wish you and your family all the best during these difficult days.
New Highlights
- CEWS URL for online calculator
- CERB expansion of eligibility requirements and clarification of eligibility when receiving other types of income.
- Introduction to Canada Emergency Rent Assistance program
- Introduction of the Canada Emergency Student Benefit
- Updates to BC Hydro credit for individuals and businesses
HELPING SMALL BUSINESSES
The Federal and BC Governments are helping small business employers in a number of manners, such as wage subsidies, interest rate reductions on mortgages, and a business loan fund, and special EI changes.
Canada Emergency Wage Subsidy – Updates
- The Canada Emergency Wage Subsidy provides up to a 75 per cent wage subsidy for eligible employers for up to 12 weeks, retroactive to March 15, 2020.
Eligible Employers:
- This will be available for businesses of all sizes, non-profits, and charities who have experienced a drop in revenue of at least 30 per cent, with no cap in the number of employees.
- Newly announced on April 8th, for the month of March, businesses will only have to show a decline in revenues of 15 per cent to be eligible for the subsidy.
How Eligibility it Calculated
- Revenue under this program will be calculated using the employer’s revenue from its business carried on in Canada from arm’s length sources. Revenues from extraordinary items and amounts on the account of capital should be excluded. An employer’s normal accounting method should be used.
- Eligibility would generally be determined by the change in an eligible employer’s monthly revenues, year-over-year, for the calendar month in which the period began. Businesses can also choose to use the month of January or February 2020 as a reference period to show a loss in revenue, rather than compare to 2019 figures.
- Charities and non-profits can choose to include the government subsidy or not when calculating loss of revenue.
Eligible Renumeration
- Eligible remuneration may include salary, wages, and other remuneration. These are amounts for which employers would generally be required to withhold or deduct amounts to remit to the Receiver General on account of the employee’s income tax obligation. However, it does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle.
- A special rule will apply to employees that do not deal at arm’s length with the employer. The subsidy amount for such employees will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration.
Amount of Subsidy
- The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:
- 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less
- These employers would be expected where possible to maintain existing employees’ precrisis employment earnings. Employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.
- Employers will also be eligible for a subsidy of up to 75 per cent of salaries and wages paid to new employees.
- There would be no overall limit on the subsidy amount that an eligible employer may claim.
- CRA has provided an online calculator to walk people through applying for the subsidy amount. The subsidy should be calculated before the application is started.
How to Apply
- Applications will be open starting April 27, 2020. Applications will be processed starting May 4, and the first payments are expected May 7, 2020.
- Applications will be made through CRA’s My Business Account, Represent a Client (for accountants), and a separate web-based application.
Compliance
- Employers would have to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to employees.
- Penalties may apply, including fines or imprisonment, in cases of fraudulent claims. In addition, anti‑abuse rules will be proposed to ensure that the subsidy is not inappropriately obtained and to ensure that employees are paid the amounts they are owed.
Interaction with 10 Per Cent Wage Subsidy
- For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10 per cent wage subsidy for a period, any benefit from the 10 per cent wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period.
- CRA’s link on how to calculate the subsidy includes a step to input how much was received for the 10% subsidy, so this is not easily forgotten.
Interaction with the Canadian Emergency Response Benefit
- An employer would not be eligible to claim the Canada Emergency Wage Subsidy for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the Canadian Emergency Response Benefit.
- Employers who are not eligible for the Canada Emergency Wage Subsidy would still be able to furlough employees who will receive up to $2,000 a month.
Records
- Records demonstrating the reduction in revenues and remuneration paid to employees.
Temporary Wage Subsidy
- Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.
o The subsidy will be equal to 10 per cent of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
o The credit is received by way of a reduction in payroll remittances of income tax withheld on their employees’ remuneration. It is not available to reduce EI or CPP withholdings.
- The credit is available for renumeration paid between March 18 and June 19, 2020.
- If subsidy calculated exceeds payroll remittances, future payroll remittances can be reduced, even if they fall out of the application period of the subsidy (the March 18 – June 19th period).
- The subsidy received will be considered taxable income in the year received.
- Records to support the subsidy calculation will need to be kept, including total renumeration paid, total tax with holdings, and eligible number of employees.
EI Change
- Many companies are faced with the sudden and difficult decision to lay off staff at this time. If you are such an employer, you may want to consider consulting with an employment lawyer prior to making lay-off decisions. It is our understanding that in BC, there is limited ability to temporarily lay off employees.
- The one-week waiting period for EI for those in quarantine has been waived. It appears that this only applies to quarantine situations. An employer must still file an ROE to be eligible.
Canada Emergency Business Account
- Up to $40,000 will be provided to small and medium business, applications are made through your primary banking institution.
- The amount is considered a revolving line of credit until December 1, 2020, at which time it will be converted into a 5-year loan that matures on December 31, 2025.
- The loan is interest-free until December 31, 2022. No principal repayments are required during this period unless you are seeking to repay $30,000, or 75% of the loan, to qualify for the $10,000 forgiveness feature.
- If businesses choose to extend the loan beyond this date, an annual interest rate of 5% will apply during the extension period.
Eligibility:
- Businesses or not-for-profits will be eligible to apply for this loan if they have:
o Organizations will need to demonstrate they paid between $20,000 to $1,500,000 in total payroll in 2019. This is an expansion from the previous $50,000 – $1,000,000 eligibility criteria.
o As per the requirements of the program set out by the Government of Canada, businesses will agree to use funds from this loan to pay for operating costs that cannot be deferred, such as payroll, rent, utilities, insurance, and property tax.
Canada Emergency Commercial Rent Assistance
- A new program has been announced where non-repayable loans will be provided to commercial property owners to cover 50 per cent of rent payments for April, May and June.
- The loans will be forgiven in the property owner agrees to cut rent by at least 75 per cent for those months, and promises not to evict tenants. The small business tenant must pay the remaining portion of rent, up to 25 per cent.
- Eligibility:
o Small business tenants must pay less than $50,000/month in rent
o The tenant must also have experienced a decline in revenue of at least 70 per cent from pre-COVID levels, or have been forced to close down.
BC Hydro – Relief Fund for Small Businesses
- Small businesses may be eligible to have their business’ electricity use charges waived for 3 months. Electricity charges from the later of April 1, 2020 or the close of business through June 30, 2020 will be waived.
Eligibility:
o The business must have closed, ceased most operations, or are not earning revenue due to a government order or because of a reduction of business due to COVID-19.
o Information demonstrating that the business is closed must be uploaded, including a screenshot of the closure notice on social media or website, or other customer notifications.
- Ineligible customers include (but are not limited to) government agencies, stratas (commercial and residential common use), churches, companies with more than 10 General Service accounts.
- The online application form is now open. Applications can be submitted until June 30, 2020.
Business Credit Availability Program (BCAP)
- BCAP will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses.
- BDC and EDC are cooperating with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism.
Changes to the Canada Summer Jobs (“CSJ”) Program
- CJS employers will receive a subsidy of up to 100 per cent of the cost of hiring students, and students can be hired on a part-time basis.
- The timeframe for job placements of students will extend into winter, as some jobs will starting later than usual.
- It is our understanding that businesses must apply to be a part of this program, and applications for the year are currently closed.
The Canada Account – Loans, Guarantees or Insurance
- The government is changing the Canada Account so that the Minister of Finance would now be able to determine the limit of the Canada Account in order to deal with exceptional circumstances. The Canada Account is administered by Export Development Canada (EDC) and is used by the government to support exporters when deemed to be in the national interest. This will allow the government to provide additional support to Canadian companies through loans, guarantees or insurance policies.
Farmers
- The near-term credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada.
Interest Rates
- The Bank of Canada “overnight” rate has been lowered to 0.25 per cent. Expect bank interest and mortgage (and savings) rates to go lower as a result.
Provincial Updates
- The scheduled April 1 increase to provincial carbon taxes, and registration requirements on e-commerce and carbonated drinks will be delayed, subject to at timing review by September 30, 2020.
- BC business and commercial properties will also have their property tax rate cut in half for 2020.
HELPING INDIVIDUALS AND FAMILIES
Reduced interest rates on mortgages, deferring some mortgage and loan payments, easier access to prescriptions, and delayed dates for paying (and filing taxes) are meant to help all individuals.
Canada Emergency Response Benefit
The Canada Emergency Response Benefit (“CERB”) collapses the two previously announced programs, the Emergency Care Benefit and the Emergency Support Benefit, into one.
- It will be available to wage earners, contract workers and self-employed people who don’t qualify for employment insurance (EI).
- Workers who are still employed, but are not receiving income because of disruptions to their work situation due to COVID-19, would also qualify for the CERB.
- An expansion to the program on April 15, 2020 announced that it will also be available to the following:
o Essential workers who are earned less than $1,000 in employment or self-employment income for the 14 or more days within the 4 week benefit period of the claim. Pensions, student loans, and bursaries are not included in the $1,000.
- For eligibility, an individual needs to have made $5,000 in the previous year from employment or self-employment. This includes non-eligible dividends 7 for those who own their own companies. Non-eligible dividends are count towards the $1,000 threshold for the benefit period;
o Seasonal workers who cannot find work due to COVID-19;
o Those who had exhausted their EI benefits since January 1, 2020.
- Up to 16 weeks of income support will be offered to those who lost their jobs, got sick, are under quarantine or have to stay home because of school closures.
- The application process is scheduled to open in early April, with individual income support payments amounting to about $2,000 a month expected to flow about 10 days later
- Payments will be issued every four weeks, and will be available from March 15, 2020 to Oct. 3, 2020.
- Those already receiving employment insurance (EI) regular benefits and sickness benefits will, as of March 25, continue to receive those benefits and should not apply to the CERB.
- You will need to apply for the above benefits. Application Options:
- CRA MyAccount secure portal;
- My Service Canada Account; or
- Calling a toll-free number equipped with an automated application process.
Wage Boost
- On April 15, 2020 it was announced that the government will provide a wage boost to essential workers, such as those employed in a long-term care home, who earn less than $2,500/month. Details are to come.
Mortgage and Rent Relief
- The Canada Mortgage and Housing Corporation (CMHC) and other mortgage insurers offer tools to lenders that can assist homeowners who may be experiencing financial difficulty. These include payment deferral, loan re-amortization, capitalization of outstanding interest arrears and other eligible expenses, and special payment arrangements.
- The Government, through CMHC, is providing increased flexibility for homeowners facing financial difficulties to defer mortgage payments on homeowner CMHC-insured mortgage loans. CMHC will permit lenders to allow payment deferral beginning immediately.
- Banks in Canada have affirmed their commitment to working with customers to provide flexible solutions, on a case-by-case basis, for managing through hardships caused by recent developments. This may include situations such as pay disruption, childcare disruption, or illness. Canada’s large banks have confirmed that this support will include up to a 6-month payment deferral for mortgages, and possibly some other loans or credit products.
- The British Columbia government is introducing a new temporary rental supplement through BC Housing and halting evictions. The new rental supplement will help households by offering up to $500 a month towards their rent, which will be paid directly to the landlords to those who do not already qualify for existing rental assistance programs. The province still has details to work out including how it will distribute money to rental properties where multiple people live.
- BC government is also applying a rent freeze effective April 1.
- The federal government announced on April 15, 2020 that it is working on plans to help post-secondary students worrying about paying rent. Details are to come.
Utilities and Insurance Relief
- BC has announced that it will allow deferments on BC Hydro and ICBC payments. People are urged to call BC Hydro and ICBC and set up payment plans or deferrals.
- BC Hydro also has a relief program to provide up to 3 months of credit to their BC Hydro bill.
o Applications are open and eligible customers can apply any time until June 30, 2020.
o Eligibility Requirements (Personal Account)
- Have had a residential account as of March 31, 2020;
- Must be eligible for EI, CERB;
- Individual or their spouse must have stopped working due to COVID-19;
- Documents to prove eligibility must be uploaded;
- Average electricity consumption ust not exceed 2,500 kWh.
GST and Other Credits
- One-time special payment of GST credits is expected by early May 2020, which will double the maximum annual GST payments. This will boost the payments by close to $400 for eligible individuals and $600 for eligible couples.
- A one-time $1,000 payment to British Columbians whose employment is affected by the coronavirus pandemic. This is intended for people who have been laid off, quarantined, sick, or taking care of a child or sick relative – whether they are eligible for EI or not. This is expected to be available in May.
- BC is increasing and expanding the BC Climate Action Tax Credit in July 2020. If you have family income that was already over $ 41,000 you and your family are likely were not getting any or much of this in any event. Eligible families of four will receive up to $564 and eligible individuals will receive up to $218 in an enhanced payment.
Retirees
- Minimum RRIF withdrawals are reduced by 25 per cent for 2020.
- An emergency loan system set up by Global Affairs Canada will provide up to $5,000 to Canadian citizens or permanent residents abroad who are seeking to come home or to help cover costs should they have to wait to get back.
- The College of Pharmacists of BC says (most) prescriptions can be renewed without having to go to the doctor office first.
HELPING PARENTS/STUDENTS
- Interest on student loans will be suspended for a six-month period.
- Payment of provincial student loans will be paused until September 30, 2020.
- Canada Child Benefits (CBD) will increase amounts for this year by $300 per child. This is expected to commence in May 2020.
- A Canada Student Service Grant will be implemented, which will give between $1,000 – $5,000 to students who volunteer in COVID efforts, depending in the number of hours volunteered.
Canada Emergency Student Benefit (CESB)
- Students who qualify for this program will receive $1,250/month from the government beginning in May and lasting through August.
- If the student is taking care of someone or have a disability, the benefit is $1,750/month.
- Payments will come through the Canada Revenue Agency.
TAX FILING AND PAYMENT EXTENSIONS
New Deadlines
- Personal Tax Returns filing deadlines are extended from April 30th to June 1, 2020
- Trust returns with a December 31, 2019 year end are extended to May 1, 2020
- PST filings, municipal and regional district taxes, and tobacco taxes are now due September 30, 2020 We encourage those who expect to receive a refund, or who receive GST credits, or child benefit payments, not to delay in filing their personal tax returns to receive their refunds or payments earlier.
Payments Extensions
- Personal tax payments are deferred until September 1, 2020
- Corporations that have balances or instalments of corporate taxes due between March 18th and August 31st will have payments deferred until September 1, 2020
o This relief would apply to most Federal tax balances due. However, certain taxes, such as on investment income, do not qualify for this deferral.
- Payments of income taxes on trust returns due after March 18th are deferred until September 1, 2020.
- BC has announced that employer health tax payments will be deferred until September 30, 2020.
- PST, municipal and regional district tax, tobacco tax, motor fuel tax and carbon tax payments deferred until Sept. 30, 2020 • GST and HST payments, and duties on imports will be deferred until June.
Derrold Norgaard is with Norgaard Kratofil Professional Group
