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March 21, 2020

Summary of Government Support Measures for Businesses and Individuals

COVID-19 Pandemic Resource V
LAST UPDATED April 2, 2020

This bulletin provides a summary of the COVID-19 Economic Response Plan and related measures. As the measures are continually being revised, amended and updated by the federal government, we welcome you to contact us to discuss your specific scenario. We will continue to update this summary as new information becomes available from the federal government sources. 

Relief for Businesses

Payroll Assistance

The Government of Canada proposed providing certain small employers, such as Canadian-controlled private corporations (CCPCs) with taxable capital employed in Canada for the preceding tax year, calculated on an associated group basis, of less than $15 million and non-profit organizations and charities, with a temporary wage subsidy for a period of three months (March 18, 2020 – June 20, 2020). The subsidy, subject to the March 27, 2020, announcement noted below, would be equal to 10% of remuneration paid during that time, to a maximum of $1,375 per employee and $25,000 per employer. The CRA has confirmed that eligible employers are permitted to reduce remittances of federal, provincial, or territorial income tax by the amount of the subsidy, and that if the subsidy is not applied in reduction of payroll remittances throughout the year, eligible employers can request it be paid to them at year-end or transferred to the next year’s remittance. The CRA has also confirmed that associated CCPCs will not be required to share the maximum subsidy of $25,000 per employer.

The Canada Emergency Wage Subsidy

The federal government is proposing to introduce a wage subsidy of 75% for qualifying businesses. The subsidy “ will enable employers to re-hire workers previously laid off, and to keep those who are already on payroll…”

 According to the federal government on April 1, 2020:

The Canada Emergency Wage Subsidy would apply at a rate of 75% of the first $58,700 normally earned by employees – representing a benefit of up to $847 per week. The program would be in place for a 12-week period, from March 15 to June 6, 2020.

Eligible employers who suffer a drop in gross revenues of at least 30% in March, April or May, when compared to the same month in 2019, would be able to access the subsidy.

Eligible employers would include employers of all sizes and across all sectors of the economy, with the exception of public sector entities.

For non-profit organizations and registered charities similarly affected by a loss of revenue, the government will continue to work with the sector to ensure the definition of revenue is appropriate to their circumstances. The government is also considering additional support for non-profits and charities, particularly those involved in the front line response to COVID-19. Further details will be announced in the near term.

An eligible employer’s entitlement to this wage subsidy will be based entirely on the salary or wages actually paid to employees. All employers would be expected to at least make best efforts to top up salaries to 100% of the maximum wages covered.

The federal government further noted that “[t]hose organizations that do not qualify for the Canada Emergency Wage Subsidy may continue to qualify for the previously announced wage subsidy of 10% of remuneration paid from March 18 to before June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.”

Tax Payment Deferral & Collection Activities

The Canada Revenue Agency (CRA) is planning to allow all businesses to defer until after August 31, 2020, without interest or penalties, the payment of any income tax amounts that become owing on or after March 18 but prior to September. This applies to tax balances and instalments due under Part I of the Income Tax Act, which would include tax balances and instalments related to “regular” business income.

The CRA has also announced that collections activities on new debts will be suspended until further notice, and flexible payment arrangements will be available.

Credit Measures

The federal government plans to make $10 billion in credit available for businesses through the Business Development Bank of Canada (BDC) and the Export Development Bank of Canada vis-à-vis the Business Credit Availability Program. This expanded program is expected to include targeted industry-specific support, with details to follow.

On March 27, 2020, the Prime Minister announced that the federal government will guarantee loans of up to $40,000 for small businesses, of which up to $10,000 could be forgivable. The loans will not bear interest for the first year. Details are to follow.

The BDC itself announced that it would offer relief and support for certain businesses. This includes, for illustration, working capital loans with flexible terms and payment postponements, payment postponements for up to six months for certain existing clients, and reduced rate loans. We can assist in determining what supports may be available to you.

The Office of the Superintendent of Financial Institutions also announced that it would offer support, in particular by lowering the “Domestic Stability Buffer.” This measure will permit Canada’s big banks to lend an additional $300 billion to borrowers, which could result in a significant injection of capital into the economy.

Relief for Individuals

Tax Filing Deadlines, Collections Activities & Objections/Appeals

For individuals (other than trusts), the filing due date for 2019 tax returns will be deferred until June 1, 2020.  The CRA has confirmed that this extension also applies to all forms tied to the T1 filing deadline, including Form T1135, Foreign Income Verification Statement. For trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred until May 1, 2020. The CRA did encourage individuals who expect to receive benefits under the GSTC or the Canada Child Benefit not to delay the filing of their return to ensure their entitlements for the 2020-21 benefit year are properly determined. 

The CRA has announced that any objections related to Canadian taxpayers’ entitlement to benefits and credits have been identified as a critical service that will continue to be delivered during this time, and that with respect to other objections related to tax matters filed by individuals and businesses, the CRA is holding these accounts in abeyance. Likewise, all timelines prescribed by the Rules of the Tax Court of Canada (the TCC) have been extended while the TCC is closed for business until March 30, 2020.

The federal government also announced that the “Canada Revenue Agency will allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.”  The CRA has confirmed that the payment deadline will be September 1, 2020, and that the deferral does not currently apply to taxes owing under other parts of the Income Tax Act, such as Part IV tax, Part VI.1 tax, and Part XIII withholding tax, or to the GST/HST or other deductions at source, all of which should be paid (remitted) by their normal due dates.

The CRA has also announced that collections activities on new debts will be suspended until further notice, and flexible payment arrangements will be available.

Income Support

Where a Canadian is sick, quarantined or forced to stay home to care for children, and does not have paid sick leave (or something similar), the federal government will waive the one-week waiting period for those in imposed quarantine that claim Employment Insurance sickness benefits (effective as of March 15), and also waive the requirement to provide a medical certificate to access Employment Insurance (EI) sickness benefits.

As previously announced on March 11, 2020, there will also be an “EI Work Sharing Program” to provide EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers.

For modest-income families, the federal government will also provide a one-time special payment through the Goods and Services Tax credit.

Canada Emergency Response Benefit

The Federal government announced on March 25, 2020, that it will be combining the previously announced Emergency Care Benefit and the Emergency Support Benefit into one single new “Canada Emergency Response Benefit.” The benefit will provide a $500 weekly benefit (up to $2,000 per month) for workers who qualify, with some retroactive assistance. 

The Canada Emergency Response Benefit Act was tabled in Parliament on March 25, 2020, as part of the Notice of Ways and Means Motion to Introduce An Act respecting certain measures in response to COVID-19. According to this Act, a worker is eligible for an income support payment if, in summary:

  1. the worker,  whether employed or self-employed, ceases working for reasons related to COVID-19 for at least 14 consecutive days within a four-week period; and
  2. they do not receive in respect of the consecutive days on which they have ceased working: (i)   income from employment or self-employment,  (ii)  unemployment benefits under the Employment Insurance Act, and (iii)  benefits paid to the worker under a provincial plan because of pregnancy or in respect of the care by the worker of one or more of their new-born children.

The current maximum number of weeks for which income support payments may be made to a worker is 16 weeks. The Federal Cabinet has reserved powers to make changes to the above. 

It is our current understanding that individuals who previously applied for Employment Insurance, but who are now eligible for the Canada Emergency Response Benefit, will automatically be transferred to this program without the need to re-apply.

Children

The Plan also contemplates increasing the maximum annual Canada Child Benefit payment amounts, for the 2019-20 benefit year, by $300 per child.

Targeted Measures

The Plan also includes the following targeted measures: (a) create a new “Indigenous Community Support Fund” to address immediate needs in First Nations, Inuit, and Métis Nation communities, (b) place a six-month interest-free moratorium on the repayment of Canada Student Loans, (c) reduce required minimum withdrawals from Registered Retirement Income Funds by 25% for 2020 (similar rules will apply to individuals receiving variable benefit payments under a defined contribution Registered Pension Plan), (d) provide support people to experiencing homelessness, (e) provide funding to women’s shelters and sexual assault centres to help with their capacity to manage or prevent an outbreak in their facilities.

Federally Insured Mortgages

The federal government noted that: 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.”

We are available.

We recognize the significant economic and personal consequences facing our clients at this time. All our lawyers are available and we’ll do everything we can to help.

With reports from Aron Grusko and Ari Hanson.

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