NRC IRAP Innovation Assistance Program

A new program designed to provide support for labour costs for small and medium sized organizations in the innovation industry.

  • Organization must have less than 500 employees
  • Organizations that use the 75% Canada Emergency Wage Subsidy are not eligible
  • Designed to target companies that are pre-revenue high-growth
  • The focus is on providing wage support for skilled labour
  • Unlike most IRAP programs, this program doesn’t look at the technology being developed

Applications for the program open April 22, 2020.

Key Takeaway: this program is designed as a substitute for those companies that do not qualify for the more generalized Canadian Emergency Wage Subsidy due to being in a high-growth phase or pre-revenue phase of the business. It is unclear at this point if the wage support will be more or less generous than the Canadian Emergency Wage Subsidy.

Canada Emergency Wage Subsidy (“CEWS” or “the 75% wage subsidy”)

(Updated based on information available up until May 20, 2020)

  • To help businesses keep and return workers to their payroll through the challenges posed by the COVID-19 pandemic, Bill C-14 has been passed into law, providing for the new Canada Emergency Wage Subsidy. This measure will provide up to a 75 per cent wage subsidy to Eligible Entities for up to 24 weeks, retroactive to March 15, 2020.
  • The 75% subsidy did not replace the previously announced 10% wage subsidy, but rather, is an entirely new program.

The “Big Picture”

Eligible Entities who have experienced a Required Revenue Reduction or deemed Required Revenue Reduction in a Reference Period (see the table below) will receive up to a 75% wage subsidy for Eligible Remuneration paid to Eligible Employees in respect of a Claiming Period.

We note that the legislation allows the government to extend the Claiming Periods up to September 30, 2020. If the subsidy is extended past May 30, 2020, the government also has the ability to change the maximum weekly amount of the subsidy.

Eligible Entities

  • Individuals, corporations, partnerships, trusts, NPOs, and Charities
  • There are specific rules dealing with organizations that are owned partially by governments.
  • Had a payroll account registered with CRA on or before March 15, 2020
  • Also of note is that Trusts do not appear to be Eligible Entities

Claiming Period, Required Revenue Reduction and Reference Period

Claiming Period Required Revenue Reduction Reference Period
Period 1 March 15 to April 11 15% March 2020 over:

  • March 2019 or
  • Average of Jan and Feb 2020
Period 2 April 12 to May 9 30%
  • ***Eligible for Period 1***
  • OR
  • April 2020 over:
    • April 2019 or
    • Average of Jan and Feb 2020
Period 3 May 10 to June 6 30%
    ***Eligible for Period 2***
  • OR
  • May 2020 over:
    • May 2019 or
    • Average of Jan and Feb 2020
Period 4 June 7 to July 4 30%
  • ***Eligible for Period 3***
  • OR
  • June 2020 over:
    • June 2019 or
    • Average of Jan and Feb 2020
Period 5 July 5 to August 1 30%
  • ***Eligible for Period 4***
  • OR
  • July 2020 over:
    • July 2019 or
    • Average of Jan and Feb 2020
Period 6 August 2 to August 29 30%
  • ***Eligible for Period 5***
  • OR
  • August 2020 over:
    • August 2019 or
    • Average of Jan and Feb 2020

*** If an Eligible Entity meets the Required Revenue Reduction in a Reference Period they are deemed to meet the Required Revenue Reduction in the subsequent Reference Period.***

Eligible Employees

  • an individual who is employed in Canada and;
  • Has not been without work for more than 14 consecutive days in the Claiming Period.
  • This additional requirement replaces the previously announced restriction that an employer cannot claim the CEWS for remuneration paid to an employee in a week that falls within a 4-week period in which the employee is eligible for the $2,000 per month Canada Emergency Response Benefit.
  • If an Eligible Employee is employed in a week by two or more Eligible Entities that do not deal with each other at arm’s length, the total amount of the subsidy in respect of the Eligible Employee for that week shall not exceed the amount that would arise if the Eligible Employee’s Eligible Remuneration for that week were paid by one Eligible Entity.

Qualifying Revenue

  • Revenue, means the inflow of cash, receivables or other consideration arising in the course of the ordinary activities of the Eligible Entity — generally from the sale of goods, the rendering of services and the use by others of resources of the Eligible Entity — in Canada in the particular period (does not appear to include work in progress)
  • In general, normal accounting method/policies previously used by business must be used for comparison
  • Excludes the following sources of revenue:
    • Revenue from non-arm’s length parties
    • extraordinary income
    • proceeds from selling capital property
    • The 75% wage subsidy, or the 10% wage subsidy
  • Employers can make several elections when making their claim under the CEWS:
    • Accounting method election – Employers can elect to calculate their Qualifying Revenue on an accrual basis or a cash basis. This election, if made, applies to all of the reference periods.
    • Reference period election – Employers can elect to use the month-over-month comparison or the average revenue earned in January and February as the benchmark used to determine if there was a decline in Qualifying Revenue (see the Reference Periods in the above chart). This election, if made, applies to all of the reference periods.
    • Government sources election (NPOs and charities only) – NPOs and registered charities can elect whether or not to include revenue from government sources in the calculation of Qualifying Revenue. This election, if made, applies to all of the reference periods.
    • Consolidated financial statements – If a corporate group normally prepares consolidated financial statements, each member of the group may determine its Qualifying Revenue separately, provided every member of the group determines its Revenue on that same basis (i.e. each Eligible Entity within the group must determine its revenue separately)
    • Affiliated Group – Alternatively affiliated groups may jointly elect to calculate the gross revenue on a consolidated basis and each Eligible Entity in the group will use the result of the calculation.
      • For example, if a corporate group has met the Required Revenue Reduction in a Reference Period this could alleviate the situation where a “payroll corporation” has no arm’s length Revenue.
    • Joint Venture – if all of the interests in an Eligible Entity are owned by participants in a joint venture and all or substantially all of the Qualifying Revenue of the eligible entity for a Reference Period is in respect of the joint venture, then the Eligible Entity may use the Qualifying Revenues of the joint venture instead of its Qualifying Revenues.
    • “Look Through” Rule – If all or substantially all of a qualifying employer’s income is from non-arm’s length sources, the Eligible Entity can “look through” to the non-arm’s length payor(s) Revenue Reduction to determine whether the Eligible Entity qualifies for the subsidy.
      • Where income is received from multiple non-arm’s length sources special rules prorate and average the Revenue Reduction of each payor in determining the Eligible Entities’ Revenue Reduction.

Anti-Avoidance Rules

  • A special rule provides that an Eligible Entity will not receive a subsidy where the Eligible Entity enters into a transaction, event or series of transactions or events, or takes an action (or fails to take an action) – that has the effect of reducing its revenue in a Reference Period and it is reasonable to conclude that one of the main purposes of the transaction, event, series or action is to cause the Eligible Entity to qualify for the subsidy.
  • If the anti-avoidance rule applies, the Eligible Entity is liable to a penalty of 25% of the subsidy claimed in the application made by the Eligible Entity.
  • The wording on this test is incredibly broad and could be invoked by CRA in many circumstances. However one limitation inherent in the rule is, if the action (or failure to take an action) would not have made the difference between receiving the subsidy and not, it would be hard for the CRA to argue that one of the main purposes of the action (or failure to take an action) is to qualify for the subsidy.

Baseline Remuneration

  • Defined to be the average weekly remuneration paid between January 1 and March 15, 2020, excluding any 7 consecutive days (or longer) where the employee was not remunerated.
  • An employer can elect, on an employee by employee basis, to instead use the period of March 1 – May 31, 2019 as the baseline remuneration period.
  • We note that Baseline Remuneration is based on the average weekly remuneration paid (cash basis) whereas the 75% wage subsidy is based on wages paid to an eligible employee in respect of a week (accrual basis) in a Claiming Period.
  • Employees paid monthly will not be able to include their March pay in the calculation of Baseline Remuneration (when using the Jan – March 2020 baseline period). As a result the Baseline Remuneration may be smaller than expected.
  • The legislation does not specify exactly how to calculate “average weekly remuneration” however we believe the following approach is reasonable:
    • (A) * (7/(C – B)).
    • The variable “A” represents the total Eligible Remuneration paid by the Eligible Employer to the Eligible Employee between January 1, 2020 and March 15, 2020
    • The variable “B” represents the period of time measured in days that are excluded from the calculation of baseline remuneration (periods of 7 or more consecutive days for which the employee was not remunerated).
    • The variable “C” represents the period of time measured in days that are within the baseline period (for March 1 – May 31, 2019 this would be 92, for January 1 – March 15, 2020 this would be 75).
    • The 7 represents the number of days per week.

Eligible Remuneration (maximum benefit based on $58,700 of annualized remuneration)

  • Consists of most forms of taxable remuneration provided to employees including commissions with the exception of severance pay, stock option benefits or personal use of a corporate vehicle.
  • Bonus income may technically be included in the definition of Eligible Remuneration, however, it is likely difficult to argue that the full amount of the bonus is in respect of a Claiming Period
  • Employers are also eligible for the subsidy with respect to new employees.
  • Anti-avoidance rules have been added to exclude the following amounts from Eligible Remuneration:
    • Any amount that can reasonably be expected to be paid or returned (directly or indirectly) to the employer including amounts returned to a non-arm’s length entity or paid or returned to another entity at the employer’s direction
    • Amounts paid in excess of the employee’s Pre-crisis weekly remuneration where subsequent to the Claiming Periods the employee is reasonably expected to be paid lower than their Pre-crisis weekly remuneration (i.e. increasing remuneration during a Claim Period and subsequently clawing the income back)

Amount of the wage Subsidy

  • There is no overall limit on the subsidy amount that an Eligible Entity can claim.
  • The amount of the wage subsidy is calculated on an employee by employee basis as 75% of the Eligible Employee’s Baseline Remuneration in respect of a week to a maximum benefit of $847 per week. In order to get this benefit, the employee must be paid at least the amount of the wage subsidy in respect of the week. In addition, if an Eligible Employee is paid more than the Eligible Employee’s Baseline Remuneration, the amount of the benefit is 75% of the amount paid in respect of the week to a maximum of $847.
  • Written in a more numeric fashion the calculation of the wage subsidy in respect of an Eligible Employee for a particular week within a Claiming Period is as follows:

The greater of:

  1. The least of:
    1. 75% of Eligible Remuneration paid to the Eligible Employee in respect of the week,
    2. $847, and
  2. The least of:
    1. 100% of Eligible Remuneration paid to the Eligible Employee in respect of the week,
    2. 75% of the Baseline Remuneration in respect of the Eligible Employee
    3. $847

Example 1 – An employee is paid salary once per month at the end of the month of $6,000 and the salary does not change.

The employee was paid $12,000 in the period of January 1 to March 15, 2020. Therefore the Baseline Remuneration for the employee is: $12,000 * 7 / (75 – 0) = $1,120

The employee’s weekly earnings are calculated as follows: $6,000 * 12 months/year / 52 weeks/year = $1,385.

Note: The baseline remuneration is different from the weekly earnings because half a month’s worth of earnings was not included in the calculation of Baseline Remuneration

Each week the employer would be eligible for a wage subsidy in respect of the employee of $847 as calculated below. The amount of the subsidy with respect to the employee for the Claiming Period is $3,388 (4 weeks * $847 per week)

The greater of ($847):

  1. The least of ($847):
    1. 75% * $1,385 = $1,039,
    2. $847, and
  2. The least of ($840):
    1. 100% * $1,385 = $1,385
    2. 75% * $1,120 = $840
    3. $847

Example 2 – Employee pre-crisis earnings of $3,200/month, and starting March 15, earnings of $2,400/month (75% of the pre-crisis earnings) because the business is closed during the pandemic and the employee is on leave with partial pay:

The employee was actually paid $6,400 in the period of January 1 to March 15, 2020. Therefore the Baseline Remuneration for the employee is: $6,400 * 7 / (75 – 0) = $597.

The employee’s weekly earnings after March 15, 2020 are calculated as follows: $2,400 * 12 months/year / 52 weeks/year = $1,385 = $553.
Each week the employer would be eligible for a wage subsidy in respect of the employee of $447 as calculated below. The amount of the subsidy with respect to the employee for the Claiming Period is $1,792 (4 weeks * $448 per week)

The greater of ($448):

  1. The least of ($415):
    1. 75% * $553 = $415,
    2. $847, and
  2. The least of ($448):
    1. 100% * $553 = $553
    2. 75% * $597 = $448
    3. $847

The employee’s pay was reduced from $3,200 to $2,400, however, as the employer was paying 75% of the employee’s pre-crisis earnings, we would expect the employer to be fully reimbursed by the wage subsidy. However because baseline earnings are calculated on a cash basis, the employer does not receive a subsidy of all cash paid. In addition in this situation, the employer may be eligible to get a refund of the employer portion of the CPP and EI paid with respect to this employee.

Refund for Certain Payroll Contributions

  • The government is expanding the CEWS by introducing a new 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan.
  • Requires both of the following conditions to be satisfied:
    1. The employee must not have worked at any point throughout a week
    2. The wages must be paid in a claiming period of the Eligible Entity where the employer is eligible to claim the CEWS
  • This refund is in addition to the CEWS and is not subject to the maximum weekly benefit per employee of $847. There will be no overall limit on the amount of refund that an Eligible Entity may claim.
  • For greater certainty, Eligible Entities will be required to continue to collect and remit both the employer and employee contributions to each program as usual.
  • Eligible Entities will apply for a refund, as a part of the application for the CEWS.

Ensuring Compliance

  • Employers will be required to repay amounts paid under the CEWS if they do not meet the eligibility requirements.
  • Penalties may apply in cases of fraudulent claims. The penalties may include fines of up to as much as 200% (in addition to the 25% penalty and the gross-negligence penalty) or even imprisonment.


  • If an Eligible Entity knowingly, or under circumstances amounting to gross negligence, makes a false statement in the application for the wage subsidy, a penalty equal to 50% of the amount, if any, by which the subsidy claimed in the Eligible Entity’s application exceeds the Eligible Entity’s actual entitlement to the wage subsidy.
    • This penalty would be in addition to the penalty for inappropriately reducing the Qualifying Revenue
  • Criminal penalties are also applicable with respect to claims made under the CEWS. Penalties on conviction can include a fine of up to 200% of the amount of the CEWS claimed (in addition to the other penalties) plus imprisonment for up to 5 years.

Non-arm’s length wages

  • Bill C-14 limits the 75% wage subsidy in respect of Eligible Remuneration paid to owner-managers to 75% of Baseline Remuneration. When considering the detailed formula described above, non-arm’s length employees always calculate paragraph “a” as nil.
  • Recall that Pre-crisis weekly remuneration is defined to be the average weekly remuneration paid between January 1 and March 15 or between March 1 and May 31, 2019.
  • The recent legislation does not appear to address the concern of owner managers that have historically compensated themselves with dividends. From a policy perspective this seems to be an unfair result for active owner managers receiving dividends rather than salary.

Interaction with the 10% wage subsidy

  • Any amounts claimed under 10% wage subsidy program in a Claiming Period reduces the 75% wage subsidy in that same period.
    • The calculation of the 75% wage subsidy requires that the “deemed” 10% wage subsidy first be claimed and then subtracted from the 75% wage subsidy.
    • This may have unintended consequences. Consider the following example:
      • An Eligible Entity is entitled to the maximum $25,000 10% wage subsidy in March and is also eligible for the 75% wage subsidy in respect of that period. The $25,000 10% wages subsidy must be claimed first and reduce the 75% claim. If the company was not eligible for the 75% wage subsidy in May they would not be able to claim the 10% wage subsidy as it was deemed to be received in March.
      • Alternatively, if the same Eligible Entity was not entitled to the 75% wage subsidy in March they would be able to claim the 10% wage subsidy. If they then became eligible for the 75% wage subsidy in April (and May) they would end up with a larger total subsidy.
      • It remains to be seen how CRA will apply this calculation in practice.

Taxability of Wage Subsidy

  • The wage subsidy is taxable income to the employer.

How to Apply

  • Employers must file an application in respect of each Claiming Period in prescribed form and manner on or before September 30, 2020.
  • The individual who has principal responsibility for the financial activities of the Eligible Entity attests that the application is complete and accurate in all material respects.
  • Employers will be able to apply through My Business Account Portal and through a web-based application.
  • Employers will need to keep records to support their application.
  • The amount of any wage subsidy by an Eligible Entity in respect of a Claim Period cannot exceed the amount claimed by the Eligible Entity in its application in respect of that Claim Period.
    • This provision appears to indicate that if you have filed your application incorrectly (understating the Eligible Entities’ entitlement to the subsidy) there is not an opportunity to amend the application, or perhaps no opportunity to amend the application after September 30, 2020.

Information made available to the Public

  • 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 for the 75% wage subsidy.

Maintaining pre-crisis salary levels

  • In past press conferences and news releases the Department of Finance had indicated that Eligible Entities are expected to make their best effort to top-up employees’ salaries to bring them to pre-crisis levels. Bill C-14 does contain any such requirement.
  • 6 week lead time to receive the Subsidy.
  • After submitting the claim CRA is promising a 7 – 10 day period to pay the Eligible Entity.
  • Business owners will need to consider cash flow concerns in regards to bringing workers back on payroll.
  • The Canada Emergency Business Account may assist small employers with cash flow in the short term.
  • Payroll remittances cannot be reduced as is provided for under the 10% wages subsidy program.

Interaction with the Work-Sharing Program

  • On March 18, 2020, the Prime Minister announced an extension of the maximum duration of the Work-Sharing program from 38 weeks to 76 weeks for employers affected by COVID-19. This measure will provide income support to employees eligible for Employment Insurance who agree to reduce their normal working hours because of developments beyond the control of their employers.
  • For employers and employees that are participating in a Work-Sharing program, EI benefits received by employees through the Work-Sharing program will reduce the benefit that their employer is entitled to receive under the CEWS.
  • This interaction would eliminate all of the benefit from the work-sharing program to the extent that the employer was participating in both programs

Interaction with the Canada Emergency Response Benefit (CERB)

  • If an employee is being paid more than $1,000 in a claiming period and the employee doesn’t have a 14 consecutive day period in a claiming period where they are not paid, the employee would not be eligible for CERB with respect to the claiming period. It is the responsibility of the employee to repay any CERB that they have received.
  • If an employee is earning less than $1,000 in a claiming period, it may be possible (if all other criteria are satisfied) for the employee to be eligible for CERB in addition to the employer being eligible for CEWS with respect to the employee’s wages.

Temporary Wage Subsidy for Employers – 10% Wage Subsidy

  • 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.
  • 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
      1. 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)
      2. an individual
      3. a partnership, all of the members of which are described in 1, 2, 3 or 5
      4. non-profit organization
      5. registered charity

Key Takeaways:

  • The recent legislation has added individuals and partnerships to the list of eligible employers.
  • Joint ventures and trusts 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).

Canada Emergency Response Benefit

See the following link for FAQs:

Individuals can apply through CRA My Account or over the Automated Phone Service

  • 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.

Example 1:
Self-employed individual

  • 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.

Example 2:
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

Key Takeaways:

  • If a business owner that historically remunerated themselves through dividends 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 whether 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.
  • EI applications for individuals ceasing work on or after March 15, 2020 will be directed through the CERB program. If the individual is still unemployed after receiving the maximum benefit from the CERB program they would be eligible to apply for EI. This is occurring even if the benefit under EI would be higher than the benefit under CERB.

Canada Emergency Business Account (“CEBA”)

(Updated June 29, 2020)

CEBA loans have opened for businesses that do not have payroll. Previously these loans were only open for businesses that had between 20K and 1.5M of payroll.

The full details of the program can be found at

Most corporations other than holding companies should be able to qualify for this program as long as they have a bank account and at least $40,000 of expenses per year (including debt service payments). Notably candidates under the expanded criteria would be landlords, doctors, and farmers. Note that partners of professional service firms (i.e. lawyers) “might” be able to qualify, please reach out to your contact at BBLLP for more details.

The key terms of the program are as follows:

  • The business (which could be a sole proprietorship) will receive a loan from their financial institution of $40,000
  • The loan is interest free, payment free, and fee free until December 31, 2022.
  • If $30,000 of the load is repaid by December 31, 2022 then the remaining $10,000 balance will be forgiven

In order for the business to qualify the following criteria must be satisfied:

  • Have a CRA business number (sole proprietorships that don’t have a business number are not eligible)
  • Have an active operating account with a financial institution opened on or prior to March 1, 2020 and was not in arrears on existing borrowing facilities, if applicable with the financial institution by 90 days or more as at March 1, 2020.
  • Has not previously used the program (and the legal entity that contains the business has not used the program)
  • Must acknowledge its intention to continue to operate its business or to resume operations
  • Agree to participate in post-funding surveys conducted by the government
  • The $40,000 of proceeds must be spent on non-deferrable expenses

In addition to the above the business must qualify under one of two streams:

  • Payroll Stream – which requires the business to have paid at least $20,000 in wages during the 2019 calendar year. When qualifying under this stream the business must provide the total wages paid according to the T4 Summary in 2019.
  • Non-Deferrable Expenses Stream – requires the business to submit documentation showing that the business will incur $40,000 in eligible non-deferrable expenses in 2020. This is done in a separate step at a specific government portal and will be reviewed by the government (not the financial institution).

Non-deferrable expenses include the following:

  • Payroll
  • Rent
  • Utilities
  • Insurance
  • Property tax
  • Regularly scheduled debt service
  • Other expenses that cannot be deferred

Non-deferrable expenses do not include the following:

  • Prepayment/refinancing of existing indebtedness
  • Payments of dividends
  • Distributions
  • Increases in management compensation

For the Non-Deferrable Expenses Stream the business must have $40,000 of “Eligible Non-Deferrable expenses” which are defined as follows:

  • Wages and other employment expenses to independent (arm’s length) third parties
  • Rent or lease payments for real estate used for business purposes
  • Payments incurred for insurance related costs
  • Payments incurred for property taxes
  • Payments incurred for business purposes for telephone and utilities in the form of gas, oil, electricity, water and internet
  • Payments for regularly scheduled debt service
  • Payments incurred under agreements with independent contractors and fees required in order to maintain licenses, authorizations or permissions necessary to conduct business
  • When calculating the Non-Deferrable Expenses of a business other COVID-19 government relief should be subtracted (for example if the business received the Canada Emergency Commercial Rent Assistance, the rent expenses should be reduced)

Supplemental Unemployment Benefit Program

  • Pre-existing (i.e. pre COVID-19) plan that allows employers to increase employee’s weekly earnings without impacting EI benefits where:
    • Temporary stoppage of work
    • Illness, injury or quarantine
  • Employee ceases work completely and the employer wishes to “top up” their earnings.
  • What is the benefit? Employee can receive 95% of their normal weekly earnings where EI pays 55% of the weekly earnings up to approximately $54,000 (annualized) and the employer pays the balance.
  • Employer must register the SUB Plan with Service Canada
  • Key steps to registration include:
    • Meet the Plan Requirements – i.e. Prepare a SUB Plan based on the example at this link: Sample SUB Plan
    • Fill out the SUB Plan Registration Form located here: SUB Plan Registration Form
    • Additional documents – some companies may need to submit additional documents as described here: Additional Documents – SUB Plan
    • ROE – to be filled out as required by the SUB Plan. See the following link – ROE for SUB Plan
    • Note:
      • Registration date is the date the plan is submitted to Service Canada
      • Any amounts paid to an employee that is on EI prior to the registration date will be treated as earnings and would likely reduce the employee’s EI benefits
  • CERB and SUB Plan – we presume that the ROE indicating the SUB Plan would allow the employee’s application to still be processed through EI (and not the CERB program).
  • If the employer is eligible for the Canada Emergency Wage Subsidy, it will generally be advantageous to claim the wage subsidy.

Work Sharing Program

  • An agreement between employers, employees and Service Canada that allows groups of employees to share hours of work during a temporary reduction in business activity (that is beyond the control of the employer).
  • The program allows employees to retain more income than regular EI benefits would otherwise provide had the employees been laid off.
  • Must have been in business for 2 years.
  • Demonstrate a temporary shortage of work.
  • Submit and implement a recovery plan for workers to return to full time employment.
  • Individual employees who have the same job description cannot participate in work-sharing while others continue to work normal hours. As work increases, the additional hours of work must be shared equally.
  • Must be able to demonstrate a 10% decrease in sales within the last 6 months.
  • The reduction in work hours (10-60%) must correspond to the number of anticipated temporary layoffs for the whole section of employees affected by the shortage of work.
  • Application is submitted at the time of job sharing is agreed to.

Receiving Employment Insurance Work-Sharing benefits

  • Samantha works as a full-time employee and earns $40,000 per year (weekly earnings of $769). Due to the COVID-19 crisis, the firm faces significant reduction in workload because of decline in sales, and the possibility of laying off a quarter of its employees. The firm decides to enter into a Work-Sharing agreement with Service Canada, where all eligible employees in Samantha’s work unit agree to reduce their work hours per week by 35% and receive EI Work-Sharing benefits for days where they do not work as a result of the agreement.
  • If Samantha and her co-workers did not agree to voluntarily reduce their work hours to participate in the Work-Sharing program and were laid off, each of them would have been entitled to receive 55% of their weekly income ($423), by applying for EI regular benefits. By participating in the Work-Sharing program, Samantha and her co-workers receive 35% less of their regular weekly income (earning $500 per week); and collect EI benefits for that 35% of their average hours worked per week (equal to 55% of the value of the insurable earnings she would have received from the firm ($423), which is $148).
  • By participating in the Work-Sharing program, Samantha and her co-workers are able to earn a total of $648 per week ($500 worth of income from working at the firm plus $148 from Work-Sharing benefits), compared to $423 if they had been on EI regular benefits following a layoff. By participating in the Work-Sharing program, Samantha and her co-workers are able to earn more and keep their jobs, and keep their skills up to date. At the same time, the firm is able to retain its skilled and experienced workforce.
  • Consider that if the company was eligible for the Canada Emergency Wage Subsidy, it may be possible to achieve even better results.

Canada Emergency Student Benefit

(Updated May 15, 2020)


  • The individual must be a Canadian citizen, permanent resident, or a registered Indian under the Indian Act
  • There is no age restrictions
  • The individual must be able to attest that due to reasons related to COVID-19 they are in one of the following situations:
    • Unable to work
    • Seeking work but unable to find it
    • Working but unable to make more than $1,000 (before taxes) over the 4 week period for which they are applying
  • If the individual is seeking work but unable to find it, they may be required to demonstrate that they have been looking for work. CRA indicates that this could be done by registering with the Government of Canada Job Bank.
  • An individual is not eligible for the CESB if the individual is receiving the Canada Emergency Response Benefit in respect of the same 4 week period
  • The $1,000 of income includes the following sources of income:
    • Employment / self-employment income
    • Taxable benefits and allowances
    • Tips
    • Non-eligible dividends
    • Honoraria
    • Royalties
  • The $1,000 of income does not include
    • Pensions, student grants and loans, scholarships, bursaries, graduate stipends
    • Income earned by anyone else
  • The individual must be in one of the following three situations:
    • The individual is enrolled in a post-secondary program of at least 12 weeks in duration leading to a degree, diploma, or certificate at an allowable educational institution (an educational institution eligible for the Canada Student Loan program)
    • The individual graduated from or left their post-secondary studies no earlier than December 2019
    • The individual has graduated from high school as at the first day of the 4 week period and has applied for a post-secondary educational program that begins before February 1, 2021.
      • For example if the student graduates high-school on June 30, the individual could apply for the July 5 – August 1 and August 2 – August 29 period.
  • The individual must apply by September 30, 2020

Eligibility periods

  • An individual who is eligible for the benefit can apply with respect to fixed 4 week periods:
    • May 10 to June 6, 2020
    • June 7 to July 4, 2020
    • July 5 to August 1, 2020
    • August 2 to August 29, 2020

Benefit amount

  • Everyone eligible for the benefit in respect of a 4 week period will receive at least $1,250
  • An additional $750 is available for an individual who has a disability or a dependent
    • A disability is defined as: a physical, mental, intellectual, cognitive, learning, communication or sensory impairment, or a functional limitation – whether permanent or episodic in nature, or evident or not – that, in interaction with a barrier, hinders a person’s full and equal participation in society.
    • In order for a person to be considered to have a dependent, the individual must have at least one child under the age of 12 or a person with a disability who is wholly dependent on the individual or the individual’s spouse or common-law partner.
  • The benefit received by the individual will be taxable and included in a 2020 T4A slip


  • Individuals who are eligible apply for the CESB through the Canada Revenue Agency’s My Account.
  • Individuals must reapply for the CESB for each 4 week eligibility period and must meet the eligibility criteria each time
  • Documentation will not need to be provided as a part of the CESB application

Regional Relief and Recovery Fund (RRRF)

Two streams – Funding of $40,000, and funding from $40,000 – $1,000,000

Eligibility – Funding of $40,000:

  • Fewer than 500 full-time employees
  • Located in Western Canada
  • Not located in an area served by a Community Futures office (there are alternate programs available for businesses located in rural locations)
  • Not eligible for the Canada Emergency Business Account
  • Was operational as of March 1, 2020
  • Have suffered financially because of the COVID-19 pandemic
  • Intend to continue operations in Western Canada
  • NOT organized as a sole proprietorship
  • NOT a not-for-profit organization


  • Interest-free loan with no scheduled payments required until after December 31, 2021
  • If 75% of the loan is repaid prior to December 31, 2021, 25% of the loan will be forgiven
  • If not repaid by December 31, 2021 the full loan will be repayable by December 31, 2025
  • The loan is included in income for tax purposes when received, repayments are deducted when made

Key points – This financing is available to a business that doesn’t have any employees and pays its owner dividends.

Eligibility – Funding of $40,000 – $1,000,000:

  • Fewer than 500 full-time employees
  • Incorporated to operate in Canada
  • Located in Western Canada
  • Have suffered financially because of the COVID-19 pandemic
  • Has revenue of less than $10 million
  • Has applied for other federal COVID-19 support measures
  • Intend to continue operations in Western Canada
  • Can describe the financial impact that COVID-19 has had on its operations, and outline how the funding will help support the Western Canadian economy to:
    • Retain diverse and valuable talent
    • Maintain capital flow
    • Maintain critical supply chains and increase capacity to withstand supply chain disruptions
    • Protect technologies and processes that improve resilience, productivity, and/or competitiveness
    • Protect vital intellectual property


  • The support must be repaid
  • No scheduled repayments until December 31, 2022
  • Full balance must be repaid by December 31, 2025
  • The loan is included in income for tax purposes when received, repayments are deducted when made

Saskatchewan Small Business Emergency Payment (SSBEP)

Government of SK – SSBEP Information

  • A grant of up to $5,000 for businesses that are required to close or significantly curtail operations due to a provincial health order
  • A second grant of up to $5,000 for businesses that are required to remain closed or significantly curtailed under a public health directive
  • The amount of the grant is 15% of monthly revenue (for most businesses the greater of April 2019 and February 2020 revenue, for seasonal businesses the average monthly revenue for full months that the business is carried on).
  • The business must have been carried on February 29, 2020 (or eligible to carry on business if a seasonal business)
  • The business must have less than 500 employees
  • The business must be able to attest to the following:
    • that it has experienced a loss in sales revenue from business activities due to a COVID-19 public health order,
    • plan to reopen operations following the cancellation of the public health order, and
    • not have received any payments or amounts from any other sources, including insurance, to replace or compensate for the loss of sales revenue other than amounts from other government assistance orders.

Canada Emergency Commercial Rent Assistance (CECRA)

(Updated July 2, 2020)

Program extended to July

  • Only those tenants approved in the April, May & June application are eligible for the July extension.
  • If a business had an average revenue decline of 70% or more in April, May and June, they are deemed eligible for the additional month of rent relief. However, not all tenants in the original application need to be included for the July extension.
  • Provides forgivable loans to qualifying “commercial property owners” to cover 50 percent of the monthly rent payable by “eligible small business tenants” who are experiencing financial hardship during April, May, and June. This program also applies in respect of sub-tenants.
  • The loans will be forgiven if the “qualifying commercial property owner” agrees to reduce the “eligible small business tenants’ rent by at least 75% 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.
  • “eligible small business tenants” are businesses paying less than $50,000 per month in rent, have less than 20M in revenues (calculated on a consolidated basis) and who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID-19 revenues. The reduction in revenue seems to be calculated in a manner similar to the calculation of the reduction in revenue under CEWS (comparison of April, May, and June to the same month in 2019, or an average of revenues earned in January and February of 2020).
  • This support will also be available to non-profit and charitable organizations.
  • The program is expected to be operational by the second half of May and will be retroactive for the months of April and May.
  • It looks like the tenants will provide attestations that they have suffered the required revenue losses to the landlord.
  • It is possible for rent paid between non-arm’s length parties to qualify for this program, however it does require that the operating company is paying rent pursuant to a legal contract at no greater than fair market value rent.