The COVID-19 Pandemic has affected businesses and personal finances, in an effort to combat these effects, the Government of Canada is continuously making changes to the current COVID-19 programs that are available. We wanted to provide all of our clients with an update, please see the changes to date below.
Canada Emergency Response Benefit (CERB)
Many Canadians are still out of work and need temporary income support, therefore the Government of Canada has extended the CERB by 8 weeks to a maximum of 24 weeks, at the current benefit rate of $500/week to ensure support for the transaction back to work.
The benefit is available from March 15, 2020 to October 3, 2020. You can apply no later than December 2, 2020 to retroactively receive the payments to within this time frame.
Prior to this extension the maximum of 16 weeks of temporary support payments was available to workers who have stopped working for reasons related to COVID-19 or have exhausted their employment insurance regular benefits between December 2019 and October 3, 2020.
If you have reached your previous maximum of 16 weeks, you would simply continue to apply as you have previously or contact our office for further support.
Canada Emergency Student Benefit (CESB)
The CESB provides financial support to post-secondary students and recent graduates who are unable to find work due to COVID-19. This benefit is only available to students or recent graduates that do not qualify for the CERB or employment insurance.
In order to be eligible for this program you must meet the following criteria:
- You are a Canadian citizen, registered Indian, or a permanent resident of Canada;
- You did not apply or receive CERB or employment insurance benefits;
- You are studying in Canada or abroad;
- You enrolled in a post-secondary educational program (at least 12 weeks in duration) that leads to a degree, diploma or certificate; or you completed or ended your post secondary studies in December 2019 or later; or you have completed or are expected to complete high school equivalency in 2020, and have applied for a post-secondary educational program that starts before February 1, 2021.
If you are eligible for this program, from May to August 2020, the Canada Emergency Student Benefit provides payment to eligible students of $1,250 each 4-week period & $2,000 every 4-week period if you have dependents or a disability.
Canada Emergency Wage Subsidy (CEWS)
On July 17, 2020 Finance Minister Bill Morneau announced the following regarding CEWS:
- It will be available through end of December 19, 2020
- For the period starting in July, up through the period beginning in November:
- The 30% revenue reduction requirement will be reduced to “ANY REDUCTION”.
- There is a 25% additional subsidy if the revenue decline is greater than 50%. This is capped at $960 per employee per week. These numbers change over the periods
Base subsidy for all employers impacted by the crisis
- This base CEWS would be a specified rate, applied to the amount of remuneration paid to the employee for the eligibility period, on remuneration of up to $1,129 per week. The rate of the base CEWS would now vary depending on the level of revenue decline, and its application would be extended to employers with a revenue decline of less than 30 per cent (see Table 1).
- The maximum base CEWS rate would be provided to employers with a revenue drop of 50% or more.
- The maximum base CEWS rate would be gradually reduced from 60 per cent in Periods 5 and 6 (July 5 to August 29) to 20 per cent in Period 9 (October 25 to November 21).
Top-up subsidy for the most adversely affected employers
A top-up CEWS of up to 25 per cent would be available to employers that were the most adversely impacted by the pandemic. Generally, an eligible employer’s top-up CEWS would be determined based on the revenue drop experienced when comparing revenues in the preceding 3 months to the same months in the prior year.
Canada Emergency Business Account (CEBA)
If a business has over $20,000 of payroll in 2019, they are eligible to apply for the CEBA loan. In addition, the government has expanded the eligibility for the CEBA loan for businesses to obtain up to a $40,000 interest free loan. If this loan is paid back by December 31, 2022, 25% of the loan will be forgiven (up to $10,000).
Under the new eligibility requirements, CEBA applications with payroll less than $20,000 or with no payroll at all will need the following in order to apply:
- A business operating account at a participating financial institution; (personal bank accounts are not eligible)
- A Canada revenue agency business number;
- A 2018 or 2019 tax return; and
- Eligible non-deferrable expenses between $40,000 and $1.5 million.
The expanded eligibility rules mean owner operated small businesses, sole proprietorships, and family owned corporations are eligible to apply as long as they have the met the requirements above.
Eligible non-deferrable expenses allowed include:
- Wages and other employment expenses to independent third parties
- Rent or lease payments for real estate used for business
- Rent or lease for capital equipment
- Payments for insurance & Property Tax
- Payment for telephone and utilities (gas, electricity, oil, and internet) for business purposes.
- Payment for regularly scheduled debt service
- Payments incurred under agreements with independent contractors
- Fees to maintain licenses to conduct business by borrower
Expenses that are not included above are ineligible for the application process.
The new expanded eligibility for the CEBA loan will follow a two-step process:
- Businesses will initiate the application directly at their financial institution where they hold their business account.
- Applicants will be directed to the CEBA website to provide supporting documentation for the 2020 eligible non-deferrable expenses and complete the application.
OTHER FILINGS AND ADMINISTRATION
On July 27, 2020 CRA has announced the following:
Payment Deadline Extension
- They will be extending the payment due date for current year individual, corporate, and trust income tax returns, including instalment payments, from September 1, 2020, to September 30, 2020.
- Penalties and interest will not be charged if payments are made by the extended deadline of September 30, 2020 (includes the late-filing penalty provided return is filed by Sept. 30, 2020).
Interest on Existing Tax Debt
- They will be waiving interest on existing tax debts related to individual, corporate, and trust income tax returns from April 1, 2020, to September 30, 2020 and from April 1, 2020, to June 30, 2020, for goods and services tax/harmonized sales tax (GST/HST) returns.
- The previously extended filing due dates for individual, corporate, and trust income tax returns remain unchanged. However, CRA will not impose late-filing penalties where a current year individual, corporation, or trust return is filed late provided that it is filed by September 30, 2020
Many of the measures listed above have only been announced recently, therefore, we can presumably expect changes in the short term. These updates and changes are very complex, therefore, if you require any assistance, please contact our office.