March 31, 2020
Canada Emergency Business Account
- $40,000 line of credit
- No minimum monthly payments until December 31, 2022
- $10,000 loan forgiveness is available provided the outstanding balance is fully paid on or before December 31, 2022
- The organization is an operating business (i.e. not a holding company) in operation, March 1, 2020
- The organization’s payroll expense in 2019 calendar year was between $50,000 and $1 million
- Business agrees to use the funds to pay for operating costs that cannot be deferred
- The business must have an active business operating account with the financial institution
- Can only apply for the loan from a single financial institution
Financial institutions will make the application for this benefit available in the coming weeks.
March 26, 2020
Canada Emergency Response Benefit Act – Summary
This benefit was passed into law on March 25, 2020 and there is limited regulations or guidance available.
Please consult you professional advisor before taking action based upon the information below.
- Will provide a benefit of $2,000 for every 4 week period.
- An individual can receive this benefit a maximum of 4 times.
- The benefit will be paid for periods beginning Sunday, March 15, 2020, and ends Saturday, October 3, 2020.
- The benefit is based upon rolling week-by-week periods, beginning Sunday – it appears the individual can choose the beginning period.
- The benefit is an all-or-nothing benefit, an individual either qualifies for an entire 4 week period or does not qualify at all.
- The individual must meet the following requirements at the time of the application
- At least 15 years of age
- Is a resident of Canada
- Earned at least $5,000 from employment, self-employment, maternity or paternity EI benefits or similar provincial benefits:
- This income was earned in the calendar year 2019, or in the 12 months preceding the application
- The individual ceases working for reasons related to COVID-19 for at least 14 consecutive days within the four-week period and the individual cannot receive, in respect of the 14 days, income from employment, self-employment, or EI
- People who quit voluntarily are not eligible
- It is unclear if income means gross revenue before expenses, or net income after expenses.
- An individual who was a self-employed person and needed to shut down their business on March 27, 2020, would be eligible for the benefit for the period from March 15 to April 11, because the individual has at least 14 consecutive days during the period (March 28 – April 11) during which they had ceased working. They would continue to be eligible for the benefit every four-week period as long as their business remained shut down.
Salary from controlled corporation
- An individual owns 100% of the shares of a corporation which operates a business in Canada.
- The business was forced to close down on March 20, 2020.
- The individual’s only source of income historically was from dividends paid to the individual from the company.
- The individual paid themselves a wage of $5,000 on March 20, 2020. Generally the payroll withholdings in respect of this wage would be due April 15.
- As the individual has ceased working as of March 21, 2020, and has not received any income in respect of their work after March 21, 2020, they would have 14 consecutive days during which they had ceased working prior to April 11, 2020.
- The individual should be eligible for the $2,000 income support for the period March 15 – April 11, 2020
- If a business owner that historically remunerates themselves through dividends or capital gains is required to close their business due to COVID-19, they must pay themselves a salary of at least $5,000 before they are eligible to claim this benefit.
- To claim the credit an individual first chooses a consecutive four-week period beginning on Sunday, and then the individual must be able to identify 14 consecutive days within the 4 week period that they have ceased working (and have not received income with respect to this period). It is irrelevant weather or not the individual is working the other days within the 4 week period.
- Individuals can claim this benefit even if they are eligible to receive EI, however they cannot benefit from this benefit if they have received an EI benefit with respect to the 14 days that they have ceased working.
- Based upon statements from the government, it appears that individuals that have applied for EI but have not received EI due to delays in the system are eligible.
Temporary Wage Subsidy for Employers (Revised)
Bill C-13 was passed into law on March 25, 2020, which provides legislation with respect to the Temporary Wage Subsidy for Employers. The legislation further clarifies our post of March 23, 2020, with respect to the Temporary Wage Subsidy by providing the following:
The subsidy is equal to 10% of the remuneration paid to an eligible employee during the eligible period, up to $1,375 per employee and to a maximum of $25,000 total per eligible employer.
Please note that the legislation passed into law has expanded the definition of eligible employer.
Eligible employee means an individual who is employed in Canada
Eligible period means the period beginning on March 18, 2020, and that ends on June 19, 2020
Eligible employer means a person or partnership that:
- Employs one or more eligible employees
- has, on March 18, 2020 a payroll account established with CRA
- is any of
- a Canadian-controlled private corporation that has more than $0 of small business limit (ignoring the passive income grind) in its last taxation (taxable capital employed in Canada for the preceding taxation year, calculated on an associated group basis, must be less than 15 million dollars)
- an individual
- a partnership, all of the members of which are described in i, ii, iii or v
- non-profit organization
- registered charity
- The recent legislation has added individuals and partnerships to the list of eligible employers
- Joint ventures may have some uncertainty with respect to claiming the wage subsidy as they do not appear to be an eligible employer
- The $25,000 limit is on a corporation by corporation basis (not an associated group basis)
March 23, 2020
Temporary Wage Subsidy for Employers (Revised on March 25, 2020, click here for revisions)
The Temporary Wage Subsidy for Employers is a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).
- The subsidy is only eligible for non-profits, registered charities, and Canadian Controlled Private Corporations (“CCPCs”). Partnerships, self-employed persons, joint ventures, and trusts do not seem to qualify.
- In order for CCPCs to qualify, their taxable capital employed in Canada for the preceding taxation year, calculated on an associated group basis, must be less than 15 million dollars.
- A corporation is only qualified if it has an existing business number and payroll program account with CRA on March 18, 2020.
- The subsidy is on the basis of wages paid during the period March 18, 2020 – June 20, 2020. It appears to be irrelevant whether the employee worked on those date.
Example: If a business closed its doors to the public on March 17, 2020, and had its final pay cheque to its employees on March 20, 2020, the wages paid on March 20, 2020, would qualify even though no portion of the wages were earned after March 18, 2020.
For more information, please visit: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
March 20, 2020
COVID-19 Economic Response Plan
Support for Canada and Saskatchewan
With the COVID-19 pandemic spreading throughout the province and the country our clients are facing unique and difficult circumstances in their businesses. The following information may be of assistance, however, it should only be acted upon in conjunction with professional advice.
Saskatchewan COVID-19 Economic Response Plan
- Self-Isolation Support Program – will provide $450 per week, for a maximum of two weeks or $900. The Self-Isolation Support Program is targeted at Saskatchewan residents forced to self-isolate that are not covered by recent federally announced employment insurance programs and other supports. The program is designed to ensure that all Saskatchewan residents are covered by either a federal or provincial program to ensure no one is faced with choosing to work instead of protecting their family and community from COVID-19 by self-isolating. The program will mostly benefit self-employed residents of Saskatchewan.
- Three Month PST Remittance Deferral – effective immediately, Saskatchewan businesses who are unable to remit their PST due to cash flow concerns will have relief from penalty and interest charges over the course of three months. Businesses that are unable to file their provincial tax return(s) by the due date may submit a request for relief from penalty and interest charges on the return(s) affected.
- Audit Suspensions – at this time, audit program and compliance activities have been suspended to allow businesses time to focus on the health and safety of their customers and staff, reduce impacts to their business operations, and minimize the spread of the virus through reduced audit travel.
- Crown Utility Interest Deferral Programs – earlier this week, the government announced a crown utility interest deferral program waving interest on late bill payments for up to six months. Effective immediately, the crown utility interest deferral program is available to all crown utility customers.
- Student Loan Repayment Moratorium – effective immediately, a six-month student loan repayment moratorium has been put in place, mirroring a similar federal provision. This provides individuals with student loans immediate relief, and comes at a $4 million cost to the provincial government.
- Business Response Team to be Established – the Government of Saskatchewan will be establishing a webpage for businesses to access information and receive timely updates on provincial support initiatives. This will be complemented by the establishment of a Business Response Team, led by the Ministry of Trade and Export Development, which will work with businesses to identify program supports relevant to particular businesses. Once the Business Response Team has been established, contact information will be communicated to the public, and to local chambers of commerce for dissemination to chamber membership.
For more details with respect to the above support measures please see the following link: Saskatchewan Financial Support
Saskatchewan Labour Standards
- Individual employee (and group) notice requirements and related information can be found at the following link: Saskatchewan Employment Standards – Layoffs and Terminations.
- Changes to Employment Standard Regulations –
The Employment Standard Regulations have been amended to:
- Ensure that during a public emergency, businesses will not have to provide notice or pay in lieu of notice when they lay-off staff if it is for a period of 12 weeks or less in a 16-week period.
- If an employer lays off employees periodically for a total of more than 12 weeks in a 16-week period, the employees are considered to be terminated and are entitled to pay instead of notice as outlined in the Act. This will be calculated from the date on which the employee was laid off.
- These amendments create a balance for employers and employees where the difficult decision may be made to lay-off employees due to public health emergencies. In this circumstance, employees would have immediate access to new federal employment insurance programs, while keeping employers financially stable to ensure employees have a job to return to.
- Legal counsel – we strongly recommend businesses consult legal counsel with respect to any layoffs as a result of COVID-19.
Ensuring Leave For Employees During Public Health Emergencies
- The Government of Saskatchewan introduced amendments to The Saskatchewan Employment Act ensuring employees have access to job protected leaves during a public health emergency.
- The proposed amendments to the Act are:
- to remove the requirement of 13 consecutive weeks of employment with the employer prior to accessing sick leave;
- to remove the provision requiring a doctor’s note or certificate; and
- introduction of a new unpaid public health emergency leave that can be accessed:
- when the World Health Organization has determined that there is a public health emergency and the province’s chief medical health officer has also issued an order that measures be taken to reduce the spread of a disease; or
- the province’s chief medical health officer has independently issued an order that measures be taken provincially to reduce the spread of a disease where it is believed there is sufficient risk of harm to citizens of the province. The orders would also be made public to ensure everyone is aware of the direction.
- The amendments to the Act would come into force retroactive to March 6, 2020.
Employment Insurance (EI) – Pre-Existing Programs
- Standard EI benefits are available after a two week waiting period.
- Supplemental Unemployment Benefit Program: Allows employers to top-up pay without impacting EI benefits. See the following link for details: Supplemental Unemployment Benefit Plan.
Canada’s COVID-19 Economic Response Plan
Since the beginning of March, restrictions and measures related to COVID-19 have rapidly escalated. While the first stages focused on public health and safety, in very short order, businesses and personal finances began to be affected. It is clear that these challenges will become worse before they get better. In an effort to combat these effects, the Government of Canada released a series of financial measures in mid-March. You can find the federal government’s document here: Canada’s COVID-19 Economic Response Plan – Support for Canadians and Businesses
This document summarizes selected government comments up to March 18, 2020.
Support for Canadians
- Service Canada will be waiving the one-week waiting period for EI sickness benefits for those individuals in imposed quarantine. This measure will be in effect as of March 15, 2020.
- The Regulations to the Employment Insurance Act provide guidance with respect to being under “quarantine”. Quarantine can include a situation where individuals are recommended to quarantine by an official of public health and were also asked by their employer. For practical purposes this could include individuals returning from travel abroad. The following link provides a technical definition of “quarantine”: Employment Insurance Regulations.
- The requirement to provide a medical certificate to access EI sickness benefits is waived for individuals in quarantine. See the following link for additional information: Employment Insurance Changes Due to COVID-19.
- Modifications to EI Work Sharing Program (including making the program easier to access). See the following link for additional information: Work Sharing Program.
- Emergency Care Benefit – For those in quarantine or suffering from COVID-19 and would not ordinarily be able to claim EI. Application will be available in April 2020. See the following link for additional information: Emergency Care Benefit.
- Goods and Services Tax Credit (GSTC) – average boost for the 2019-2020 benefit year will be approximately $400 for individuals and $600 for couples.
- Canada Child Tax Benefit (CCTB) – Increase of up to $300 per child, all extra amounts will be paid in May.
- Canada Student Loans – six month interest-free moratorium for all individuals currently repaying.
- Registered Retirement Income Funds (RRIF) – minimum withdrawals reduced by 25% in 2020.
Flexibility for Canadians
- Individual Tax Filing Deadline – extended to June 1, 2020.
- Trusts Tax Filing Deadline – extended to May 1, 2020 (for December year ends).
- Corporate and Partnership Tax Filing Deadlines – no extensions announced.
- Deferral of income tax owing, instalments due and interest owing – for individuals and corporations until after August 31, 2020. There is some uncertainty with respect to existing balances owing for which a notice of assessment has not been received by the taxpayer.
- GST, payroll withholdings or other balances owing – no deferral announced
- Electronic Signatures – effective immediately electronic signatures will be recognized as meeting the requirements of the Income Tax Act (includes T183 and T183CORP).
Role of Financial Institutions
- Minister of Finance is in constant contact with Canada’s largest banks.
- Banks are committed to flexibility – could include: up to a 6 month deferral of mortgage payments and the opportunity for relief on other credit products.
- CMHC will be providing additional tools and relief to assist home owners.
- Canada’s largest banks will be injecting up to an additional $300B into the economy.
Through discussions with lending partners in the local Saskatoon community we have been provided the following general commentary:
- Lenders are considering postponements, interest free periods and similar arrangements on a case by case basis and in most cases appear highly motivated to assist their clients through these challenging times.
- Certain industries will have more significant economic impacts on their businesses and lenders are of course taking these factors into account.
- Most lenders appear to be focusing on current client relationships as they have a pre-existing understanding of the clients business and cash flow needs.
- Business Credit Availability Program (BCAP) – BDC and EDC will provide more than $10B of additional support to small and medium sized businesses. We understand that BDC will have access to working capital loans at very attractive interest rates and repayment terms with reduced due diligence requirement in light of the immediate need for financing in the market place. Visit BDC’s website for the most up to date information.
- Near term credit for Farmers will be facilitated through FCC.
Helping Businesses Keep Their Workers
- To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months (remuneration paid on or after March 18th and before June 20th). The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.
- We hope to see draft legislation in the near term as the details of this program will be extremely important for understanding eligibility for and administration of the program.
Flexibility for Businesses Filing Taxes
- No income tax or GST audits for the next four weeks.
- Audits underway will be suspended for the majority of taxpayers.
Supporting Financial Market Liquidity
- Insured Mortgage Purchase Program (IMPP) – Government will purchase $50B of insured mortgage pools through CMHC to provide long term stable funding to banks and mortgage lenders.
- Many of the federal measures listed above have only been announced recently (March 18, 2020) and are noted as requiring Royal Assent. In recent public comments, it was indicated that the opposition parties have promised their support to move these measures quickly, therefore, we can presumably expect draft legislation in the short term.
- Similarly, the Government of Saskatchewan will be providing further updates and details with respect to their support measures in the coming days and weeks.
Over the next days and weeks, the specifics on these programs will be released. Most of the details for these initiatives will be released on one of the following webpages:
Employment and Social Development Canada: https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html
Saskatchewan Government Updates: https://www.saskatchewan.ca/government/health-care-administration-and-provider-resources/treatment-procedures-and-guidelines/emerging-public-health-issues/2019-novel-coronavirus/~/link.aspx?_id=6C6BF971659346E0B8E9DE4AE3B2AFF9&_z=z
As the situation develops further, there may be additional government measures, or modifications to those already announced. Please contact our office at 306-657-8999 for any inquiries with respect to the above information.