Response to COVID-19 Pandemic
April 7, 2020
UPDATE: The Government of Canada and Canadian Chamber of Commerce have just launched a new website
In partnership with the Government of Canada, the Canadian Chamber of Commerce established the Canadian Business Resilience Network to help Canadian businesses navigate the COVID-19 reality and prepare for recovery.
Visit their website: Canadian Business Resilience Network
April 6, 2020
UPDATE: Government of Ontario List of Essential Workplaces See full details here
UPDATE: Everything you need to know about the upgraded COVID-19 wage subsidy program See full details here
This week, the government released detailed information on the new Canada Emergency Wage Subsidy (CEWS), which provides both small and large employers with a subsidy that may cover up to 75 per cent of employee wages. It’s meant to help employers who have had a significant decline in revenue as a result of the COVID-19 pandemic keep their workers.
This comes on top of the previously announced 10 per cent Temporary Wage Subsidy (TWS), which was passed into law last week. The TWS is aimed at assisting small- and medium-sized employers with their payrolls. Here’s what we know, so far, about the new CEWS, and how it ties in with the TWS.
What’s the CEWS?
The CEWS will provide a subsidy to “enable employers to re-hire workers previously laid off, and to keep those who are already on payroll.” The benefit is equal to 75 per cent of “eligible remuneration” paid by “eligible employers” for up to three months, retroactive to March 15, 2020.
What is an eligible employer?
Eligible employers include individuals, taxable corporations, partnerships whose partners are eligible employers, non‑profit organizations, and registered charities. Employers would have to attest that their monthly revenues have dropped by at least 30 per cent in the month(s) of March, April or May 2020, compared to the same month(s) in 2019. Public bodies, such as municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals, don’t qualify.
How do you measure a revenue decrease of 30 per cent?
To qualify for one of the three eligible periods, revenues must have decreased by 30 per cent or more during the relative reference period. The first eligible period is for remuneration paid from March 15 to April 11 and the relative reference period is revenues from March 2020 over March 2019. The second period is for remuneration paid from April 12 to May 9, with a measurement period for revenue of April 2020 over April 2019. The final period for remuneration runs from May 10 through June 6, with the third revenue measurement period being May 2020 over May 2019.
The revenue used to determine if there has been a decrease of 30 per cent or more includes amounts from business carried on in Canada that are earned from arm’s-length sources; extraordinary items and revenue arising from the sale of capital assets are excluded. Revenue would be calculated using the employer’s normal accounting method.
For non-profits and charities, the government said it would continue to consult with the sector to ensure the definition of revenue is appropriate to their specific circumstances.
What is eligible remuneration?
Eligible remuneration includes salary, wages, and other remuneration but does not include items such as severance pay, employee stock option benefits or the personal use of an employer’s vehicle.
How much is the subsidy worth?
The subsidy is generally equal to 75 per cent of the amount of eligible remuneration actually paid, up to a maximum benefit of $847 per week; however, employers may be entitled to a subsidy of up to 75 per cent of pre-crisis wages of existing employees (if, for example, wages or hours have been reduced), up to the actual amount paid, with the same maximum of $847 per week for each employee. Employers may also claim the CEWS for eligible remuneration paid to new employees.
Is it taxable?
The CEWS is considered government assistance and will be included in the employer’s income and taxed in the year it’s received.
How do you apply?
Eligible employers will be able to apply for the CEWS through the CRA’s My Business Account portal as well as a web-based application. Employers must keep records demonstrating their reduction in revenues and remuneration paid to employees.
The government warned employers that if they don’t meet the eligibility requirements of the CEWS or fail to pay their employees accordingly, the employer would be required to repay amounts received under the CEWS. In addition, penalties may apply in cases of fraudulent claims and anti-abuse rules will be introduced to ensure that the CEWS is not inappropriately obtained. The penalties would apply to individuals, employers or business administrators who provide “false or misleading information to obtain access to this benefit or who misuse any funds obtained under the program.” The penalties could include fines or possibly imprisonment.
What about the Temporary Wage Subsidy (10 per cent)?
This program remains unchanged. Under the TWS, an “eligible employer” can claim an amount equal to 10 per cent of the remuneration paid between March 18, 2020 and June 19, 2020. If no remuneration was paid to employees during this period, then no subsidy is available. The maximum amount of the subsidy is $1,375 per employee and $25,000 per employer. There is no required drop in revenues needed to qualify for the TWS.
Eligible employers that qualify for the TWS include individuals (sole-proprietors), certain partnerships, non-profit organizations, charities and certain Canadian-controlled private corporations (CCPCs). A CCPC is essentially a private corporation whose shares are not listed on a stock exchange, and that is owned and controlled by Canadian residents. Large CCPCs which have taxable capital of more than $15 million among their associated corporations in the previous year won’t qualify for the TWS.
Employers are only eligible if they had a payroll program account with the CRA on March 18, 2020.
The TWS is calculated manually and the employer can choose to reduce its payroll income tax remittances to the CRA by the amount of the TWS. Although the TWS is based on remuneration paid to employees between March 18 and June 19, there is no deadline for claiming the TWS (through reduced income-tax remittances.) In other words, if the amount of the TWS exceeds the income tax that the employer would normally have to remit up to June 19, 2020, the employer can continue to reduce subsequent income tax remittances to claim remaining TWS after this date.
Just like the CEWS, the TWS is taxable and will be included in the employer’s income and taxed in the year it is received.
Can you claim both the 75 per cent CEWS and 10 per cent TWS?
Sort of. Some employers will be eligible for both the 75 per cent CEWS and the 10 per cent TWS. The government has stated that any benefit from the TWS paid in a specific period will reduce the amount available to be claimed under the 75 per cent CEWS for that same period.
Source: The National Post
March 27. 2020
UPDATE: Federal Government Boosts Wage Subsidy to 75% for Small, Medium Businesses to Avoid Layoffs During COVID-19 Crisis
Prime Minister Justin Trudeau today announced more help for small and medium-sized businesses to keep employees on the payroll during the COVID-19 crisis, including a 75 per cent wage subsidy and guaranteed interest-free loans.
During a news conference outside his residence at Rideau Cottage in Ottawa, Trudeau called small and medium-sized businesses the “backbone” of the economy and said the new measures will help them avoid ordering layoffs or closing down because of the climate of uncertainty caused by the pandemic.
“We’re thinking about that family-owned restaurant that’s been around for years, [has] had many of the same employees for years. Employees who’ve been there through slowdowns, good times and bad times, and now in this moment of crisis they’re having to lay these people off at their time of need,” he said.
“We know that allowing people to continue that relationship, allow[ing] people to continue to feel and to know they have a job … is a really important thing, not just for people’s confidence, but for the ability of all us to bounce back strongly from this once we’re through it.”
The prime minister said the wage subsidies will be backdated to March 15, 2020.
March 26, 2020
UPDATE: Federal Government Economic Response Plan
On March 25, 2020, the Federal Government announced an update to their previous Economic Response Plan. Full details of the plan can be found here.
Canada Emergency Response Benefit (CERB)
To support workers and help businesses keep their employees, the government has proposed legislation to establish the Canada Emergency Response Benefit (CERB). This taxable benefit would provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic. The CERB would be a simpler and more accessible combination of the previously announced Emergency Care Benefit and Emergency Support Benefit. Once approved, this legislation will provide eligible Canadians with their first CERB payments within 10 days of their application. The CERB would be paid every four weeks and be available from March 15, 2020 until October 3, 2020.
Who is eligible?
The CERB would cover Canadians (including wage earners, contract workers, and self-employed individuals) who:
- Have lost their job due to COVID-19. For example, someone who has been laid off from their workplace due to a shutdown or shortage of work.
- Are sick. For example, someone who has been asked not to work by their employer because they are experiencing flu-like symptoms.
- Quarantined. For example, someone who is in a 14-day quarantine because they have travelled outside of Canada.
- Taking care of someone who is sick with COVID-19. For example, someone who is taking care of an elderly parent who has tested positive.
- Working parents who must stay home without pay to care for children who are sick. For example, someone who is taking care of a child who is experiencing flu-like symptoms or other illness.
- Working parents who must stay home without pay to care for children at home because of school and daycare closures. For example, someone who is unable to find a suitable option to provide care for their child(ren).
- Workers who are still employed, but are not receiving income because of disruptions to their work situation due to COVID-19. For example, this may apply to someone who has opted not to work due to their proximity with a vulnerable family member.
NOTE: This also applies to individuals who would otherwise be eligible for EI benefits and who have NOT currently applied.
What if I have already applied for EI?
- Canadians who are already receiving EI regular and sickness benefits as of today would continue to receive their benefits and should NOT apply to the CERB.
- If an individual’s EI benefits end before October 3, 2020, they can apply for the CERB once their EI benefits cease and they are still unable to return to work due to COVID-19.
- Canadians who have already applied for EI and whose application has not yet been processed would NOT need to reapply and should NOT apply for the CERB.
- To determine your ability to change the status of your current claim, you will need to inquire with Service Canada.
March 24, 2020 – Province of Ontario Releases List of Essential Workplaces
To further contain the spread of COVID-19, the Ontario Government ordered the mandatory closure of all non-essential Workplaces effective Tuesday, March 24, 2020. This closure will be in effect for 14 days with the possibility of extending this order as the situation evolves.
The Government of Ontario has provided a list of Essential Workplaces that are allowed to remain open during the COVID-19 Pandemic.Businesses include any for-profit, non-profit or other entity providing the goods and services listed here. This does not preclude the provision of work and services by entities not on this list either online, by telephone or by mail/delivery. Note that teleworking and online commerce are permitted at all times for all businesses.
The Prime Minister, Justin Trudeau, today announced important new measures to support farmers and agri-food businesses in Canada facing financial hardship due to the impacts of the COVID-19 pandemic.
Farm Credit Canada will receive support from the Government of Canada that will allow for an additional $5 billion in lending capacity to producers, agribusinesses, and food processors. This will offer increased flexibility to farmers who face cashflow issues and to processors who are impacted by lost sales, helping them remain financially strong during this difficult time.
In addition, all eligible farmers who have an outstanding Advance Payments Program (APP) loan due on or before April 30 will receive a Stay of Default, allowing them an additional six months to repay the loan. This important measure, which represents $173 million in deferred loans, will help keep more money in farmers’ pockets during these critical months.
The Stay of Default will also provide farmers the flexibility they need to manage their cashflow when facing lower prices or reduced marketing opportunities. Applicable farmers who still have interest-free loans outstanding will have the opportunity to apply for an additional $100,000 interest-free portion for 2020-2021, as long as their total APP advances remain under the $1 million cap.
March 20, 2020 – The Canadian Institute of Food Science & Technology has been monitoring the situation with the COVID-19 pandemic and will be providing regular updates to its members over the next few days and weeks. If you have any questions please do not hesitate to contact us at firstname.lastname@example.org
We have done the research so you don’t have to. Here are some helpful links which we will update on a regular basis:
- Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses
- Canadian Chamber of Commerce: COVID 19 updates and resources for businesses
- Government of Canada: Coronavirus disease (COVID-19) info
- Canadian Federation of Independent Business COVID-19 Small Business Help Centre
- Canadian Food Inspection Agency Coronavirus Information for the Industry
COVID-19 Pandemic Resources
FEDERAL ECONOMIC SUPPORT PLAN (announced March 18)
The federal government has announced the first phase of its economic support plan in response to COVID-19. $82 billion is being released to support Canadian individuals and businesses, including $27B in direct support and $55B to meet liquidity needs through tax deferrals.Below is an overview of the specific measures announced and a table summarizing the cost and implementation dates.The backgrounder with additional details can be found here
- Allow all businesses 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 installments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. This measure will result in businesses having more money available during this period.
- Increase the credit available to small, medium, and large Canadian businesses. As announced on March 13, a new Business Credit Availability Program will provide more than $10 billion of additional support to businesses experiencing cash flow challenges through the Business Development Bank of Canada and Export Development Canada. The Government is ready to provide more capital through these financial Crown corporations.
- Further expand Export Development Canada’s ability to provide support to domestic businesses.
- Provide flexibility on the Canada Account limit, to allow the Government to provide additional support to Canadian businesses, when deemed to be in the national interest, to deal with exceptional circumstances.
- Augment credit available to farmers and the agri-food sector through Farm Credit Canada.
- Launch an Insured Mortgage Purchase Program to purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). As announced on March 16, this will provide stable funding to banks and mortgage lenders and support continued lending to Canadian businesses and consumers. CMHC stands ready to further support liquidity and the stability of the financial markets through its mortgage funding programs as necessary. The Government will enable these measures by raising CMHC’s legislative limits to guarantee securities and insure mortgages by $150 billion each.
The six largest financial institutions in Canada have made a commitment to work with personal and small business banking customers on a case-by-case basis to provide flexible solutions to help them manage through challenges, such as pay disruption due to COVID-19, childcare disruption due to school or daycare closures, or those suffering from COVID-19. As a first step, this support will include up to a six-month payment deferral for mortgages, and the opportunity for relief on other credit products. The Government of Canada will continue to monitor evolving economic conditions and seek greater relief measures should it be necessary.
SUPPORT FOR WORKERS
To support workers and their families, the Government of Canada is taking action to:
- Provide additional assistance to families with children by temporarily boosting Canada Child Benefit payments. This measure would deliver almost $2 billion in extra support.
- Introduce an Emergency Care Benefit of up to $900 bi-weekly for up to 15 weeks to provide income support to workers who must stay home and do not have access to paid sick leave. This measure could provide up to $10 billion to Canadians, and includes:
- Workers, including the self-employed, who are sick, quarantined, or who have been directed to self-isolate but do not qualify for Employment Insurance (EI) sickness benefits.
- Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent or other dependents who are sick, but do not qualify for EI sickness benefits.
- EI-eligible and non EI-eligible working parents who must stay home without pay because of children who are sick or who need additional care because of school closures.
- Introduce an Emergency Support Benefit delivered through the Canada Revenue Agency to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment.
- Provide additional assistance to individuals and families with low and modest incomes with a special top-up payment under the Goods and Services Tax (GST) credit. This measure would inject $5.5 billion in the economy.
- Waive, for a minimum of six months, the mandatory one-week waiting period for EI sickness benefits for workers in imposed quarantine or who have been directed to self-isolate, as announced on March 11.
- Waive the requirement for a medical certificate to access EI sickness benefits.
- Extend the tax filing deadline for individuals to June 1, and 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. This measure will result in households having more money available during this period.
- Provide eligible small businesses a 10 percent wage subsidy for the next 90 days, up to a maximum of $1,375 per employee and $25,000 per employer. Employers benefiting from this measure would include corporations eligible for the small business deduction, as well as not-for-profit organizations and charities. This will help employers keep people on their payroll and help Canadians keep jobs.
- Provide increased flexibility to lenders to defer mortgage payments on homeowner government-insured mortgage loans to borrowers who may be experiencing financial difficulties related to the outbreak. Insurers will permit lenders to allow payment deferral beginning immediately.
In addition, to provide targeted support for vulnerable groups, the Government is investing to:
- Reduce minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25 per cent for 2020 in recognition of volatile market conditions and their impact on many seniors’ retirement savings.
- Implement a six-month, interest-free, moratorium on Canada Student Loan payments for all individuals who are in the process of repaying these loans.
- Provide $305 million for a new distinctions-based Indigenous Community Support Fund, to address immediate needs in First Nations, Inuit, and Métis Nation communities.
- Support women and children fleeing violence by providing up to $50 million to women’s shelters and sexual assault centres to help with their capacity to manage or prevent an outbreak in their facilities. This includes funding for facilities in Indigenous communities.
- Provide an additional $157.5 million to address the needs of Canadians experiencing homelessness through the Reaching Home program.
FEDERAL MONETARY AND FISCAL MEASURES (announced March 13)
A series of monetary and fiscal measures were announced by the Department of Finance, the Bank of Canada and the Office of the Superintendent of Financial Institution to help stabilize Canada’s economy:
- The Department of Finance is establishing a $10B credit facility program to support and medium-sized businesses. This will be offered through the Business Development Bank of Canada BDC and Export Development Bank of Canada EDC .
- The BDC will be offering: small business loans up to $100,000 online in as little as 48 hours from time of approval; working capital loans to bridge cash flow gaps; and purchase order financing. Further details on the BDC program can be found here: https://www.bdc.ca/en/pages/special-support.aspx?special-initiative=covid19
- Further details on the EDC program can be found here: https://www.edc.ca/en/campaign/coronavirus-covid-19.html
- The Bank of Canada has reduced the key overnight lending rate to 0.75%: https://www.bankofcanada.ca/2020/03/bank-of-canada-lowers-overnight-rate-target-to-%c2%be-percent/
- The Bank of Canada is introducing a Bankers’ Acceptance Purchase Facility. The Bankers’ Acceptance market is one of Canada’s core funding markets and a key source of financing for small- and medium-size corporate borrowers: https://www.bankofcanada.ca/2020/03/bankers-acceptance-purchase-facility/
- OSFI is lowering the Domestic Stability Buffer by 1.25 points effective immediately. The new DSB requirement will now be set at 1%. This will increase banks’ lending capacity by $300B to increase credit to the economy. OSFI is encouraging banks to use these funds. The DSB will not increase for at least 18 months and OSFI will continue to review the buffer in case a further reduction is needed.
- All OSFI consultations are being suspended, including the consultation on changes to the mortgage stress test.
- All major banks have made a commitment to the Minister of Finance to support businesses and individuals through these times in a responsible, fair and compassionate way.
- A further significant stimulus package will be released shortly aimed at individual Canadians to ensure that they have access to money they need for their families.