Has your Ontario small business had to significantly curb services or even close under the new Provincewide Shutdown?
If so, you should apply for the new Ontario Small Business Support Grant, courtesy of the Government of Ontario. Your business will have to show how it has experienced a revenue decline of at least 20 per cent when comparing monthly revenue in April 2019 and April 2020.
This time period was chosen as it reflects ‘before’ and then the impact of the COVID-19 pandemic shutdown of spring 2020. These two monthly snapshots should provide a good image of the impact the public health measures have on small businesses like yours. Other time periods are available for businesses that were not in operation as of April 2019.
How Much Funding?
The grant will provide all eligible businesses with one-time dollar for dollar funding, a minimum of $10,000 and up to a maximum of $20,000, to help cover diminished revenue expected as a result of Ontario’s Provincewide Shutdown. Your small business can use the support in whatever way makes the most sense for you, such as continuing to pay employee wages or rent. Businesses that are not eligible include those that were already closed prior to the introduction of modified Stage 2 measures.
Those health measures were introduced, region by region, by the Government of Ontario, during October 2020, in consultation with public health experts and local medical officers of health. By November 2020, Ontario’s public health unit regions moved to the Keeping Ontario Safe and Open Framework which categorizes public health regions into five levels: Green-Prevent, Yellow-Protect, Orange-Restrict, Red-Control, and Lockdown being a measure of last and urgent resort. Only a month later, the colour-coded zone Response Framework was paused. On December 26, 2020, we entered a Provincewide Shutdown. And then, effective Thursday, January 14, 2021,the second declaration of emergency came into effect.
Ongoing Provincial support for Ontario small businesses include:
- Hydro bills are cheaper for the month of January 2021, in order to account for more people staying home during the new lockdown. All residences, small businesses, and farms will be charged the lowest price for electricity that the province offers — 8.5 cents per kilowatt-hour. The savings will be automatically applied to customers’ bills, and is in effect 24 hours a day, seven days a week.
- The province is offering a one time, on-bill credit for those with overdue energy bills through the COVID-19 Energy Assistance Program (CEAP). Any residential customer with an overdue electricity or natural gas bill is eligible to apply. Electricity customers may be eligible for up to $115 in support towards their bill, or up to $230 if their home is mainly electrically heated or someone in the home uses certain at-home medical devices. Gas customers may be eligible for up to $80 in support towards their bill.
- There’s also a one time on-bill credit (up to $850) for eligible small businesses to help catch up on their energy bills and resume regular payments via the COVID-19 Energy Assistance Program for Small Business (CEAP-SB). You must show a digital copy of the first energy bill (including electricity, natural gas, propane or other) you received on or after the day modified Stage 2, Control, Lockdown or Provincewide Shutdown restrictions were put in place in your region. You can also submit other energy bills if your business is heated by propane or heating oil. Contact your utility or unit sub-meter provider directly as each may have a unique approach for application in-take. Changes to COVID-19 Energy Assistance Program are underway, so apply ASAP if you haven’t already.
- The province is also offering conditional deferral of defined benefit employer contributions. If you are an Ontario employer, this new regulation will allow you to defer your defined benefit pension contributions due from October 1, 2020, to March 31, 2021, to be made up with interest from April 2021 to March 2022. If you make this election, you will be subject to a number of prohibitions and restrictions until the deferred contributions are made to the pension fund. You’ll be required to file an election and payment schedule with the Financial Services Regulatory Authority of Ontario (FSRA) specifying which payments will be deferred. The election and schedule must be filed no later than the date the contributions for the first deferred month are due.
- The provincial government has increased the Employer Health Tax (EHT) exemption for 2020 from $490,000 to $1 million due to the COVID‑19 pandemic. In the 2020 Budget, Ontario announced it was making the EHT payroll exemption increase permanent.
- Ontario’s Small Business COVID-19 Recovery Network links 47 Small Business Enterprise Centres together to help support small businesses and entrepreneurs. Check out their services, and programs virtually, and here’s the full list of locations for later on.
Ongoing Federal support includes:
- Canadian businesses who have seen a drop in revenue due to the COVID-19 pandemic may be eligible for a Canada Emergency Rent Subsidy (CERS) subsidy to cover part of their commercial rent or property expenses, until June 2021. This subsidy provides payments directly to renters and property owners, without requiring the participation of landlords.
- Simplifying the process for claiming a deduction for home office expenses for employees working from home due to COVID-19. You are eligible to claim a deduction for home office expenses for the period you worked from home. There’s now a shorter qualifying period to ensure that more people can claim the deduction. Here’s the criteria:
- you worked from home in 2020 due to the pandemic
- you worked more than 50% of the time from home for at least four consecutive weeks in 2020
- have a completed and signed T2200S or T2200 from your employer, if the detailed method is used to complete the claim
- the expenses are used directly in your work during the period
- There’s also the New temporary flat rate method which simplifies your claim for home office expenses if you worked more than 50% of the time from home for at least four consecutive weeks in 2020 due to the pandemic. You can claim $2 for each day you worked from home during that period plus any additional days you worked at home in 2020. The maximum you can claim using the new temporary flat rate method is $400 (200 working days) per person, but only for the 2020 tax year. Multiple people working from the same home can each make a claim. You don’t have to figure out the size of your work space, keep supporting documents or get a T2200 completed and signed by an employer.
We hope this information and the new Ontario Small Business Support Grant, as well as other provincial and federal COVID-19 pandemic support, can help your small business survive through this second Declaration of emergency. Further details about the grant, including how to apply, will be available through the Government of Ontario later in January 2021. Please stay home (as much as you can) and stay safe, as we ride out the challenge of COVID-19. If you would like to discuss your business challenges via a Zoom, please feel free to contact us and we’ll set up a meeting. In the meantime, these articles may be of interest to you:
CRA’s Simplified Home Office Expense Deduction
Business Planning for Entrepreneurs