UPDATED APRIL 22 – Government Programs for Businesses
These are challenging times for businesses. With the current circumstances, there are a few measures the government has put in place to try and assist businesses, not-for-profits and charities impacted by the situation.
We are striving to provide more information as it becomes available, but as of April 22, 2020, this is what we know. Look for (*New note*) indicating key changes.
Canada Emergency Wage Subsidy – the 75% subsidy
- As long as your revenues have decreased by 15% from same time last year (for the month of March) or 30% for the months of April, May, June 2020 you qualify – this can be shown by just printing out a sales summary from March 2020 and March 2019. You can also compare to an average of Jan and Feb 2020 if it works better for you.
- The company will have to reapply for this subsidy each month. Just because someone qualifies (or doesn’t qualify) in March doesn’t mean it will be the same for April or May.
- This will be done through the CRA My Business Account.
- Any business regardless of size is eligible.
- Wages paid to a shareholder of the business are eligible for the subsidy, but their subsidy will be capped at their average weekly earnings from January 1 – March 15, 2020. Shareholders can not increase their pay during the pandemic and receive more subsidy (*New note*).
- Employees will be paid as normal by the employer.
- The employer will receive the subsidy back from the government in 4-6 weeks.
- There will be a lag in getting money back from government.
- The subsidy is maxed at 75% of an annual salary of $58,725 or $847 per week. A shareholder or employee making more than that will not receive a full 75% subsidy of his wages. They would be capped at $847 per week.
- The government would like employers to pay the remaining 25% of the employees wages, but they do understand there are some that are completely shut down and have no cash to do this. If they absolutely cannot pay, they do understand that.
- A company can have 100% of the company portion of EI and CPP reimbursed for furloughed employees (employees that are on leave with full or partial pay) (*New note*).
- Any subsidy received under the 10% subsidy will reduce the amount available under the 75% subsidy. This is saying that basically the cap is 75%, but you could get 10% from one and 65% from the other.
- The government would like businesses to use this where they can in order to keep as many people off EI as possible. We believe it’s set up to try to give people a bit more than they would get on EI.
- A calculator has been set up for businesses to determine the amount of wage subsidy they are eligible for: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-calculate-subsidy-amount.html (*New note*).
- Businesses can apply for the subsidy as of Monday, April 27th (*New note*).
Wage Subsidy for Small Businesses – the 10% subsidy
- This subsidy is for small business that had wages between $50,000 and $1 million last year.
- This subsidy is for businesses with taxable capital of under $15 million.
- This is 10% of wages paid after March 18, 2020, to June 19, 2020.
- This subsidy is capped at $1,375 for each employee and to a maximum of $25,000 for the business.
- You do not need to apply for this subsidy.
- Shareholders of a business qualify for this subsidy.
- You receive this subsidy by reducing the amount of income tax you are remitting with your source deductions in the following month – for example, if the source deductions payable for all employees in March was CPP – $500, EI – $300, Income Tax $1,000 – for a total of $1,900 and you calculated you were eligible for a 10% subsidy of $300, you would end up remitting the CPP of $500, EI of $300 and income tax of only $700 for a total of $1,600.
- You will need to track this on an employee by employee basis to ensure you haven’t claimed more than the max per employee.
Canada Emergency Business Account
- This is a loan that the government has for businesses.
- We believe they would like businesses that can use this to use it to help their cash flow between the time they qualify for the 75% wage subsidy and they actually get the money from the government.
- This is a $40,000 interest-free, government-guaranteed loan to help you pay for operating costs that you’re not able to defer as a result of COVID-19.
- $10,000 (25%) of the $40,000 loan is eligible for complete forgiveness if the loan is fully repaid on or before December 31, 2022.
- If the loan cannot be repaid by December 31, 2022, it can be converted into a 3-year interest only term loan charging an interest rate of 5%.
- Can apply beginning the week of April 6th– Applications are not accepted until then.
- Clients will need to provide their CRA payroll employer number and the amount from box 14 of their T4SUM Summary of Remuneration Paid for 2019.
- Businesses or not-for-profits will be eligible to apply for this loan if they are an operating company and have payroll between $20,000 and $1.5 million last year (*New change*).
- CRA is not charging interest on taxes nor requiring them to be paid until September 2020. But they will still charge penalties if returns aren’t filed on time.
- GST payments have been extended to June 30, 2020 for the following remittance periods:
- Quarterly GST filers for the months of January through March 2020.
- Annual GST filers that have instalments due in March, April or May 2020 have to remit amounts collected and owing for their previous fiscal year.
- There is not an extension on filing the GST returns, please ensure that you are still filing your GST returns on time.
- The filing and payment due dates are extended to September 30, 2020 for the following Provincial taxes:
- Provincial sales tax (PST)
- Carbon tax
- Municipal and Regional district tax on accommodation (MRDT)
- Motor fuel tax
- Tobacco tax
- Employer Health Tax
- Quarterly reporters – Payment can be deferred to June 30, 2020, but first quarter return should still be filed as normal.
Please continue to monitor the government websites as more details are provided and changes are made. Contact Apex Accounting, Chartered Professional Accountants if you have any questions on these measures.