The Canadian government has brought in several new—updated—measures to help business owners, workers and their families get through the coronavirus crisis.
Canada’s coronavirus benefits form a three-point economic plan, which supports business owners through new loans, subsidising paycheques, and protecting jobs. As the situation is evolving, the government is responding with positive changes, including easing wage subsidy qualifications for businesses affected by the pandemic, and more.
Canada Emergency Response Benefit
Have you been without work for the past couple of weeks or expect to be without self-employment income very soon? CERB, a heavy lifter of Canada’s coronavirus benefits, will provide temporary income support if you or any employees, have stopped working and lost income for reasons related to COVID-19.
Self-employed Canadians now losing money due to the coronavirus pandemic can access a taxable benefit of $2,000 a month for up to four months. This income support is available for the period from March 15, 2020 to October 3, 2020.
To deliver payments to Canadians quickly, CERB is a joint collaboration and effort by Service Canada and the Canada Revenue Agency. As of April 6th, there is a single portal for the application process. To apply, you will answer a few simple questions that direct you to the service option that best fits your situation.
If your employees have been affected by the coronavirus and they are no longer working, you need to issue a Record of Employment (ROE). When the employee is no longer working because of business slowing down substantially or closing due to the COVID-19 outbreak, use code A (Shortage of work). If an employee decides not to come to work and is isolating but is not sick or quarantined, use code N (Leave of absence), as appropriate. They can then apply for CERB through their CRA ‘My Account’ portal.
They should apply for CERB as soon as possible after they stop working. Let them know they can apply for benefits even if you haven’t given them their ROE. CERB will provide a $500 a week for up to 16 weeks. If there’s more than a month’s delay in filing a claim for benefits, they may lose benefits. As of the morning of Monday, April 13, 2020, 5.38 million people were already getting payments through the Canada Emergency Response Benefit. The Canadian government is expected to fill gaps in the existing programs, such as by expanding the scope of the CERB to include workers currently being left out.
Canada Emergency Wage Subsidy
Did you lose 15 per cent of revenue in March and expect at least 30 per cent loss for April and May, as a result of the COVID-19 pandemic?
Qualifying businesses can apply for a 75 per cent wage subsidy to help keep employees on the payroll. Prime Minister Trudeau said businesses will only need to show a 15 per cent decline in revenue for March, instead of the previously announced 30 per cent, a 50 per cent reduction. Compare your revenue to the same month last year OR an average of January and February 2020, which helps new companies who would not have qualified based on a comparison to a year ago.
The program will now allow businesses to use either accrual or cash accounting methods for determining qualification for the subsidy. “We want to make these emergency measures as inclusive as we can so we’re listening and making adjustments along the way”, Trudeau said. Anyone employed by a qualifying business is eligible for up to $847 per week per employee. The subsidy is available for up to 12 weeks, retroactive to March 15, 2020. Employer-paid Employment Insurance (EI) & Canada Pension Plan (CPP) premiums will also be reimbursed. Anyone caught taking advantage of the wage subsidy could face penalties up to 225% of what they’ve received and up to 5 years in prison. This program is a disaster relief and important that the businesses that truly need it, get it.
Canada Summer Job program
Were you expecting to hire a summer student?
The Canadian government will also cover up to 100 per cent of Canada Summer Job program costs for small businesses hiring students. And because many businesses have had to scale back their operations, they will be able to hire students part-time. Job placements could begin as early as May 11, 2020. The time frame has been extended until February 28, 2021.
Canada Emergency Business Account
Did your small business pay between $50,000 to $1 million in total payroll during 2019?
You’re eligible for an interest-free loan of up to $40,000, as a part of Canada’s coronavirus benefits. CEBA applications are now open through banks and credit unions. You’ll need:
- 2019 T4 Summary of Remuneration Paid Statement
- Employment income reported in Box 14
- 15-digit employer account number
- Copy of T4s/T5s of owners
There are some specific conditions the business needs to follow for several years afterwards. Make sure that your financial team is informed of what these are.
Income tax deferral for businesses
Do you have income tax owing between March 18 and September 2020? All businesses can now defer those payments until after August 31, 2020.
Canada Child Benefit Increase
Do you have kids at home? Parents will receive an extra $300 per child, with no need to apply. You will receive the benefit as part of your regular Canada Child Benefit (CCB) payment. It’s expected to kick in with the May 2020 payment.
The hope is for small business owners to use these benefits to re-hire and pay any workers. For our economy to get through this crisis, we need businesses to survive and their workers to get paid. This should be easier with help from the Canada Emergency Response Benefit, the Canada Emergency Wage Subsidy, the Canada Summer Job program, the Canada Emergency Business Account, Income tax deferrals and the increase to the Canada Child Benefit. If you have any questions about Canada’s coronavirus benefits, or to see if you qualify, talk to your ‘essential worker’ financial professionals. See our other related article, Canada’s COVID-19 Financial Assistance.