COVID-19 update: Summary of federal measures as of April 17, 2020

Canada Emergency Wage Subsidy (CEWS)

  • CEWS is a subsidy which includes up to 75 percent of eligible payroll costs on the first $58,700 per employee, maxing out at $847 per week.

  • The subsidy is proposed to be available from March 15, 2020 to June 6, 2020.

  • Businesses of all sizes, that are not public bodies, can apply (including individuals, partnerships and corporations, as well as non-profit organizations and charities).

  • Special rules apply to calculate the subsidy for non-arm’s length employees (e.g. owner/managers).

  • Eligibility is based on a decline in revenues from 2019 of at least 15 percent for the month of March and 30 percent for April and May.

  • The rules offer flexibility in determining revenues, with special rules for organizations earning revenues from non-arm’s length sources. Employers will have options on how to best calculate revenues and how to determine the percentage decrease in revenue to qualify for the subsidy.

  • As a further incentive to re-hire employees, the government will offer an additional refund of 100 percent of employer EI and CPP premiums for each week that an employee is on leave with pay.

  • A business can claim this subsidy with respect to an employee who has not been without pay for 14 or more days during the qualifying period. Timing will need to be considered when re-hiring employees.

  • Employees who were eligible for the Canada Emergency Response Benefit (CERB) may need to repay any benefit received under that program if they are re-hired and the CEWS is subsequently received.

Canada Emergency Business Account (CEBA)

  • The CEBA consists of a $40,000 interest-free loan that will be available to small businesses and non-profit organizations.

  • To qualify, an organization must have paid between $20,000 and $1.5 million in payroll for 2019 (previously, the range was between $50,000 and $1 million), as evidenced by its 2019 T4 Summary page.

  • If repaid by December 31, 2022, 25 percent of the loan will be forgivable, up to $10,000.

  • Structured as a revolving line of credit until December 31, 2020, any remaining balance on the line of credit after this date will be converted to a non-revolving five-year term loan, maturing on December 31, 2025.

  • The organization must have a business banking account at the financial institution at which it is applying, which must be its primary financial institution.

  • Online applications are now open, and the major banks are indicating that this application should be completed online, so it appears that it may not be possible to apply in person. Smaller financial institutions, such as credit unions, may have a different process.

  • Once the application has been approved, it is estimated that the funds will be received within five days.

Temporary Wage Subsidy

  • The Temporary Wage Subsidy is available to employers that had a business limit in the prior year. Canadian-controlled private corporations (CCPC) that claimed the small business deduction would generally have a business limit; however, other CCPCs may also qualify.

  • It will allow an eligible employer to reduce its payroll income tax remittances by 10 percent for up to three months, up to a maximum of $1,375 per employee.

  • The maximum aggregate amount an employer can save is $25,000 (and associated corporations are not required to share this maximum employer limit).

  • There is no application required to access the subsidy. The employer would calculate the amount of the subsidy and reduce the amount of income tax remittances (both the employer and employee portions of CPP and EI are still required to be remitted).

  • The Temporary Wage Subsidy and the CEWS are separate programs, so an employer that was eligible for both programs could access both, but any amount received under the temporary wage subsidy would reduce the amount able to be obtained through the CEWS for the same period.

Canada Emergency Commercial Rent Assistance (CECRA)

  • The federal government intends on introducing this program to provide rent relief for small businesses.

  • It will provide loans, including forgivable loans, to commercial property owners who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May, and June.

  • The program will require a partnership between the federal government and provincial and territorial governments, which are responsible for property owner-tenant relationships. Additional details should be available soon.

Canada Emergency Response Benefit (CERB)

  • CERB provides $2,000 per month (i.e., $500 per week) to qualified workers for up to 16 weeks.

  • The program is currently set to run from March 15 to October 3, 2020. Individuals can now apply for this benefit.

  • To qualify, a worker must have had income of at least $5,000 (through salary or non-eligible dividends) in the 12 months prior to the date of application.

  • Individuals who submit a claim must not have earned more than $1,000 of income from employment or self-employment for 14 or more consecutive days in the first four-week benefit period in which they submit their claim. The individual must not have earned $1,000 or more within the entire four-week benefit periods that they submit subsequent claims for. This is a recent change to the program.

  • Seasonal workers and workers who have recently exhausted their EI regular benefits and who cannot find work due to COVID-19 can also qualify. This was another recent change.

  • Those wishing to continue to receive the CERB after the first month must re-apply each month. Any employee that is rehired by their employer who is claiming the CEWS for that employee will likely have to repay the CERB if pertains to the same four-week period.

Temporary wage boost for essential workers

  • Low-income essential workers who earn less than $2,500 per month will receive a top-up.

  • This will apply to workers such as auxiliary nurses, elderly-care workers, grocery store and food supply workers, workers in essential retail services and others.

  • The federal government will work closely with the provinces and territories to cost-share the temporary top-up.

  • Additional details will be provided.

Canada Summer Jobs Program

  • Changes have been made to this program as a response to the pandemic.

  • Private and public sector employers who are employing students and other young people through this program will be able to obtain a wage subsidy equal to 100 percent of the provincial or territorial minimum hourly wage for each employee, up from 50 percent previously. Private sector employers must have 50 or fewer full-time employees to qualify.

  • Not-for-profit employers can continue to receive a subsidy equal to 100 percent of the provincial or territorial minimum hourly wage.

  • Employees must be between the ages of 15 and 30 to qualify. Previously, only full-time employees (i.e. those working a minimum of 30 hours/week) qualified; however, it has been expanded to part-time employees now.

  • Job placements must begin by May 11, 2020. The job end date has been extended from August 28, 2020 to February 28, 2021.

  • Applications to the Summer Jobs Program are currently closed for the 2020 year so there are questions as to whether this new support will only be available to those who had previously applied to the program, or if the government will open it up to new applications as a result of COVID-19.

  • More information about the program can be found here.

Employment insurance change

  • EI provides an employee with 55 percent of their earnings, to a maximum of $573/week.

  • For workers eligible for EI, the one-week mandatory waiting period has been waived for those accessing EI due to impacts from COVID-19.

  • The requirement for a doctor’s note has also been waived.

  • Both employed and self-employed individuals can qualify for EI. The individual must participate and pay into the EI program, have lost at least 40 percent of their usual pay and worked a minimum of 600 hours in the year prior to the claim or since their last claim. Self-employed individuals must wait at least 12 months after registering to participate in the program.

  • The application for EI can be found on the benefits page of the Government of Canada website.

  • Depending on the type of assistance being applied for, and the type of worker, workers can click on the appropriate link and provide the information required, including personal and banking details (to receive payment) and potentially a copy of the Record of Employment (ROE), if a paper-copy is provided. If electronic copies of the ROE are submitted to Service Canada, this step is not required.

Individuals who became eligible for EI after March 15, 2020 will automatically be rolled into the CERB for the remainder of their benefit period.

Additional measures affecting Canadian businesses and individuals

Mortgage deferrals

  • Canada’s banks have confirmed that they will provide Canadian businesses and individuals with up to a six-month deferral of mortgage payments (principal and interest) and other credit relief, which will reduce short-term cash flow issues.

Canada-US border

  • The Canadian and US governments have agreed to close the border to tourists, shoppers and all non-essential travel. However, the border remains open for commerce (e.g., trucks with delivery of goods) to ensure minimal disruption to supply chains and the flow of goods.

GST credit

  • An additional one-time payment of $400 for single individuals and $600 for couples beginning in April.

Canada Child Benefit

  • An additional one-time payment of $300 per child to be paid in early May.

Student loans

  • Repayment requirements will cease until September 30, 2020, interest-free.

Seniors

  • Minimum withdrawals required for registered retirement income funds (RRIFs) will be reduced by 25 percent for 2020.

  • Old Age Security and Guaranteed Income Supplement payments will continue on a regular basis.

….. A thank you for Grant Thornton for the summary …..

Jane Zhao