As the COVID-19 situation evolves, we are keeping a close watch on the trend and will continue to take proactive steps to update our clients on the different economic relief plans available from the various levels of government. Remember, the safety and well-being of our community is paramount so please continue to comply with the government guidelines on social distancing and other measures.

May 19, 2020 Update – CEBA Loan Program Expanded | CECRA more details released 

PM announces updates on the expansion of the CEBA loan program:

• Canada Emergency Business Account (CEBA) loans program will be expanded for those:

  • who are sole owner-operators;

  • that depend on contractors; and

  • that are family businesses that pay employees by dividends rather than payroll.

• As well, CEBA will be modified to become available to new businesses (those which have never filed a tax return) and businesses which do not have “business accounts” at the bank, but operate through personal accounts.

• To qualify under the expanded eligibility criteria, applicants with payroll lower than $20,000 would need:

  • a business operating account at a participating financial institution;

  • a Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return; and

  • eligible non-deferrable expenses between $40,000 and $1.5 million. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance.

April 24, 2020 Update – CEWS Application Guide released

The government has now released the guide for applying for the 75% wage subsidy which opens on Monday, April 27, 2020. Click here for the guide.

April 24, 2020 Update – Commercial rent relief for small businesses

Small businesses with monthly rents of less than $50,000 will be eligible for a 75% reduction for April, May and June. 50% will be covered by the federal government. The remaining 25% will be covered by the lessor. Non-profits and charities will also be eligible.

In particular:

• The program will provide forgivable loans to qualifying commercial property owners to cover 50 per cent of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.

• The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 per cent for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25 per cent of the rent.

• Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70 per cent drop in pre-COVID-19 revenues. This support will also be available to non-profit and charitable organizations.

More details are to come in Mid May.

April 23, 2020 Update

The FAQ on CERB has been updated.

Some new elements from the update:

Are self-employed small business owners eligible for the Canada Emergency Response Benefit?

Yes, provided they meet the eligibility criteria including that they stopped working due to COVID-19 and do not earn more than $1000 in a period of at least 14 consecutive days in the first benefit period and for the entire four-week benefit period of any subsequent claim.

Small Business owners can receive income from their business in different ways, including as salary, business income or dividends.  In determining their eligibility for the Canada Emergency Response Benefit:

• Owners who take a salary from their business should consider their pre-tax salary;

• Owners who rely on business income should consider their net pre-tax income (gross income less expenses);

• Owners who rely on dividend income should consider this as self-employment income provided it comes from non–eligible dividends (generally, those paid out of corporate income taxed at the small business rate).

Can someone qualify for Canada Emergency Response Benefit if they still have a small amount of income coming into their business account as a sole proprietor to pay some of their business expenses (commercial rent, utility costs, etc.) as long as they are not paying themselves any income from the business?

Yes. To be eligible for the Canada Emergency Response Benefit, you must have stopped working as a result of  reasons related to COVID-19 and receive less than $1,000 in employment or self-employment income for at least 14 consecutive days within the initial four-week period for which you apply. For subsequent periods, you cannot receive more than $1,000 in employment or self-employment income for the entire four-week period.”

There may be other reasons related to COVID-19 beyond these examples why you may have stopped working.  However, you cannot voluntarily quit your job.

If you are concerned about the safety of your working conditions, you should discuss the situation with your employer.

• If you work in a federally-regulated workplace, you may wish to consult your workplace health and safety committee or health and safety representative as well as the document “Right to refuse dangerous work” at https://www.canada.ca/en/employment-social-development/services/health-safety/reports/right-refuse.html

• Otherwise, you may wish to consult the website for the department of labour in your province or territory for further information on your rights and the process you should follow.

• The Canadian Centre for Occupational Health and Safety (https://www.ccohs.ca/) is another possible resource

Am I eligible to apply for the Canada Emergency Response Benefit if I have not declared that I earned any money in the last year?

While having filed income tax for 2019 is not an eligibility requirement, you will need to confirm when applying for the Canada Emergency Response Benefit that you had at least $5000 in employment or self-employment income in 2019 or in the 12 months prior to the date of your application.  You will also need to confirm that you have not earned more than $1000 in employment and/or self-employment income in a period of at least 14 consecutive days within the first benefit period and for the entire four-week benefit period of any subsequent claim. If you are deemed ineligible for the Benefit at a later date, you will be required to pay it back.

The income of at least $5,000 may be from employment and/or self-employment.  For those who are not eligible for Employment Insurance you may also include maternity and parental benefits under the Employment Insurance program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan as part of the calculation for income.

Once I receive my first payment, can I assume I will receive my next payment 4 weeks later?

No, the renewal of payments will not be automatic. You must confirm your eligibility for each period for which you apply either online or by phone (1-833-966-2099).

If you are receiving your Benefit through Service Canada you must complete your Employment Insurance Report Card to confirm your eligibility.

The calculation of the 16 weeks begins with the first week for which you are receiving the Benefit.   However, the 16 weeks do not have to be taken consecutively.  For example, you could receive the Benefit for 4 weeks beginning March 15th and reapply for your second benefit period a few months later based on your personal situation.

April 22, 2020 Update on Student Support

$9 billion of funding in total for students have been anounced. They include:

• Canada Emergency Student Benefit

  • $1,250/month from May to August

  • up to $1,750/month if you take care of someone else or have a disability

  • must be a post secondary student, going to school in September, or graduated in 2019

  • available if earning up to $1,000/month

  • apply through CRA

• Canada Student Service Grant – those volunteering instead of working will be eligible for $1,000 to $5,000 based on the work done.

• 76,000 student jobs will be created. Funds will be extended scholarship, fellowships and grants.

• Student grants will be doubled for the 2020-2021 school year. Additional funding will be made available for Inuit, Metis and First Nations students.

Previously announced student measures include:

Canada Summer Jobs

• The Canada Summer Jobs program provides opportunities for youth to develop and improve their skills within the not-for-profit, small business, and public sectors, and supports the delivery of key community services.

  We are making temporary changes to the Canada Summer Jobs program to allow employers to:

  • receive an increased wage subsidy, so that private and public sector employers can also receive up to 100 per cent of the provincial or territorial minimum hourly wage for each employee;

  • extend the end date for employment to February 28, 2021;

  • adapt their projects and job activities;

  • hire staff on a part-time basis.

Studen loans

• All student loan borrowers will automatically have their loan repayments and interest suspended until September 30, 2020.

• Students do not need to apply for the repayment pause.

• This moratorium applies to the federal portion of student loans. Borrowers should check with their provincial or territorial student loan provider to see if payment is required on the provincial or territorial portion.

April 21, 2020 Update on 75% CEWS

• 75% Canada Emergency Wage Subsidy

  • Registration will commence on April 27, 2020 and be first processed on May 4 in bulk.

  • Payments are targeted to begin on May 5.

  • 3,000 auditors have been assigned to manually review certain claims. They will review based on the size of the claims, or the size of employers. For example, 100% of claims made by large employers are expected to be reviewed. Most will be automatically processed. Reviews are intended to be completed in 72 hours.

  • 2,000 agents will be assigned to answer questions on the program.

  • A revised CEWS website and new calculator is available here.

• $350 Million committed to an emergency community support fund

April 11, 2020 Update

On April 11, 2020, legislation (Bill C-14) was tabled to enact the 75% Canada Emergency Wage Subsidy.  The subsidy is available to eligible employers based on their eligible remuneration paid during certain 4-week periods.  Eligibility is based on sufficient declines in qualifying revenue.  The following are some of the key points, clarifications, and confirmations from today’s releases and legislation.

Eligible Remuneration

This includes wages, salaries or other remuneration.  Also, fees, commissions, or other amounts for services paid to “eligible employees” are included.  However, the subsidy is limited to the employee’s baseline remuneration (see below).

Baseline Remuneration

Baseline remuneration means the average weekly eligible remuneration paid to the eligible employee by the eligible entity during the period that begins on January 1, 2020 and ends on March 15, 2020, excluding any period of seven or more consecutive days for which the employee was not remunerated.

Remuneration Non-arm’s Length Employees

For these individuals, no more than 75% of baseline remuneration can be available as a subsidy.  In other words, if no remuneration was paid in January through March 15, 2020 to the individuals, no subsidy would be available.

Qualifying Revenue

This is the standard used to measure whether a sufficient decrease has occurred (15% for March, 30% for April).  It means the inflow of cash, receivables or other consideration arising in the course of the ordinary activities of the eligible entity.  It excludes extraordinary items and amounts derived from persons or partnerships not dealing at arm’s length with the employer.

• Corporate Groups – Special rules for the computation of revenue take into account issues related to corporate groups. Affiliated groups would be able to compute revenue on a consolidated basis at their discretion. Certain entities receiving substantially all of their revenue from non-arm’s length sources will be permitted to determine their decline in revenue based on the decline in the non-arm’s length parties’ revenues. See Subsection 125.7(4).

• Cash vs. Accrual – As previously announced, employers may choose to computer their revenue on the accrual or cash basis.  The legislation clarifies that “cash basis” will be computed as defined in Subsection 28(1), the provision commonly used for farming and fishing income.
• Business with Cyclical Revenues – Minister Morneau verbally stated that as of now, he is satisfied with the current solution.

Future Eligibility

Once an employer meets the criteria in respect of a revenue decline, they would automatically meet the revenue decline criteria for the next period of the program.  For example, an employer with a revenue drop of more than 15% in March would qualify for the first and second periods of the program, covering remuneration paid between March 15 and May 9.

Qualifying Period

While government announcements indicate that the program is only available for 3 months (to June 6, 2020), the legislation allows flexibility for it to be extended to the end of September, 2020.

EI, CPP, QPP and QPIP

Employer’s premiums for employees that are on leave (not working) with pay are fully (100%) included in the subsidy.

Interaction with the 10% Wage Subsidy

Amounts enjoyed under the 10% subsidy will reduce the amounts eligible under the 75% subsidy.

Interaction with Work-sharing EI Benefit

The 75% subsidy is reduced for EI amounts received by the employees under the Work-sharing benefit.

Interaction with CERB and 75% Wage Subsidy

No subsidy is available for an individual who is without remuneration by the eligible entity in respect of 14 or more consecutive days in the qualifying period.  The Department of Finance backgrounder (updated April 11, 2020) noted that the Government will consider implementing an approach to limit duplication.  This could include a process to allow individuals rehired by their employer during the same eligibility period to cancel their CERB claim and repay that amount.  This would have to implemented in the future.

Anti-avoidance

• Multiple Employers in a Group – The maximum subsidy that may be claimed in respect of an individual that is employed by multiple non-arm’s length employers, is limited to a claim that would be made as if they had one employer.
• Manipulation of Remuneration or Revenue – There are anti-avoidance rules that prevent artificial increases in remuneration eligible for the subsidy.  In addition, several rules have been proposed to target revenue manipulation that would entitle employers to the subsidy.

Penalties

Minister Morneau reiterated his belief that the vast majority of Canadian businesses are honest, and will properly use the subsidy to enable them to maintain their workforce through the COVID-19 crisis.  He also reiterated that severe penalties will apply to the few who may seek to abuse the program.   This includes a new 25% penalty for employers manipulating their revenues, as well as existing penalty of 50% of an excessive claim for false statements or gross negligence, or as much as a 200% fine and five years’ imprisonment for fraud/tax evasion.

Information to Be Communicated

The Minister may communicate or otherwise make available to the public, in any manner that the Minister considers appropriate, the name of any person or partnership that makes an application under the 75% wage subsidy.

Payment Timing

Minister Morneau verbally stated that he expects money under the subsidy will be available within 2-4 weeks.

April 1, 2020 Update from the PM on Wage Subsidy and Emergency Response Benefit