In response to the COVID-19 pandemic, both the Canada and BC governments recently released new benefits and subsidies designed to provide emergency support to both individuals and businesses. While some measures have received royal assent and are already underway, the most recent announcements with the greatest impact have not been fully approved by Parliament. We are still awaiting further details on how the new programs will be administered.
We advise clients affected by the pandemic who have experienced personal income loss or business interruption to visit the ‘News’ section of our website as we will provide the most recent updates we can to all the programs as they are released.
New benefits and subsidies available to individuals include:
- Canada Emergency Response Benefit (“CERB”)
New benefits and subsidies available to businesses:
- 10% Temporary Wage Subsidy
- 75% wage subsidy – Canada Emergency Wage Subsidy (“CEWS”)
- Canada Emergency Business Account (“CEBA”)
CERB (announced March 18, 2020)
CERB provides temporary emergency support for Canadian residents who have had to stop working and are without income for reasons related to the pandemic. Eligible individuals will receive $2,000 for every 4-week period to a maximum of 16 weeks (4 periods).
Eligibility requirements for CERB:
- A Canadian resident who is at least 15 years old
- Has stopped working because of COVID-19 (they have contracted the illness or are taking care of someone who is sick, whose business or self-employment cannot continue at this time or parents who have had to leave work to take care of their children)
- Has had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application (income can be from a combination of employment, self-employment, or maternity/paternity benefits under EI); and
- Are expecting to be without employment or self-employment income for at least 14 consecutive days in the initial 4-week period.
How to apply for CERB (beginning April 6, 2020):
- Canadians eligible for EI benefits will apply through Service Canada using Appliweb; or
- Canadians not eligible for EI benefits will apply through CRA’s MyAccount or CRA’s automated toll-free line 1-800-959-2019
We strongly suggest that individuals without online access should register for CRA MyAccount. Click on this link to access an FAQ sheet on how to register for MyAccount.
10% Temporary Wage Subsidy
The Temporary Wage Subsidy is a three-month measure that allows eligible employers to reduce the amount of payroll deductions required to be remitted to CRA. The subsidy is equal to 10% of remuneration paid from March 18, 2020 to June 19, 2020 up to $1,375 for each eligible employee to a maximum of $25,000 per employer.
Eligibility requirements for the Temporary Wage Subsidy:
- Individuals (excluding trusts), partnership, non-profit organization, registered charity, or Canadian-controlled private corporation (“CCPC”) eligible for the small business deduction
- Have an existing business number and payroll program account with the CRA on March 18, 2020; and
- Pay salary, wages, bonuses, or other remuneration to an eligible employee
How to apply for the Temporary Wage Subsidy:
- The Temporary Wage Subsidy does not require employers to directly apply for the subsidy;
- Employers will calculate the allowable subsidy and reduce income tax withholdings from future payroll remittances.
Additional information on the Temporary Wage Subsidy:
- The Temporary Wage Subsidy is eligible for payments made to employees who are shareholders of the business;
- The amount claimed for the Temporary Wage Subsidy are taxable to the employers in the year of receipt;
- Corporations associated under the Income Tax Act are not required to share the $25,000 maximum subsidy per employer;
- Corporations and associated corporate groups with taxable capital greater than $15,000,000 are not eligible for the Temporary Wage Subsidy (consult your tax advisor if you are unsure whether you meet this requirement);
- Payroll reduction can only be applied to the income tax withholdings (reduction cannot be applied to CPP or EI withholdings);
- Visit our website for a spreadsheet template that can be used to calculate the Temporary Wage Subsidy
CEWS (75% wage subsidy)
CEWS is a 75% wage subsidy to eligible employers for up to 12 weeks retroactive to March 15, 2020. The eligibility period is for remuneration paid between March 15 and June 6, 2020.
The wage subsidy will be calculated as the greater of:
- 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- The amount of remuneration paid, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration, whichever is less.
Eligibility requirements for CEWS:
- Individuals, taxable corporations, certain partnerships, non-profit organizations, and registered charities;
- Employer demonstrates a drop in revenue of at least 30% for a comparable period; and
- Employers are required to attest to the decline in revenue at the time of application.
How to apply for CEWS:
- Eligible employers can apply for CEWS via CRA’s MyBusiness account portal
- Additional details will be available in the near future
Additional information on CEWS:
- CEWS is available to all employers subject to the revenue decline test
- The eligible period for the revenue decline test is as follows:
- Period 1 (March 15 to April 11, 2020): March 2020 vs. March 2019
- Period 2 (April 12 to May 9, 2020): April 2020 vs. April 2019
- Period 3 (May 10 to June 6, 2020): May 2020 vs. May 2019
- The amounts received for CEWS are taxable to the employers in the year of receipt;
- CEWS can be combined with the 10% Temporary Wage Subsidy provided the employer meets the criteria for both measures.
- The exact details have not been provided, but the government has advised that the amount of the Temporary Wage Subsidy would reduce the CEWS benefit claimed in the same period.
- An employer is not eligible for the CEWS for remuneration paid to an employee in a week that falls within the 4-week period for which the employee is eligible for CERB.
CEBA provides interest-free loans of up to $40,000 for small businesses and not-for-profits through financial institutions. The loan is provided interest-free until December 31, 2022 and up to 25% of the loan is eligible for forgiveness if the balance is fully repaid on or before December 31, 2022. Any balance outstanding at December 31, 2022 can be converted into an interest-bearing term loan.
Eligibility requirement for CEBA:
- Eligible organizations must demonstrate they paid between $50,000 and $1 million in total payroll in 2019.
How to apply for CEBA:
- CEBA is administered through financial institutions. Clients are advised to contact their bank representative to receive instructions on how to begin the application process.
BC Government’s COVID-19 Support for Businesses in BC
We strongly recommend that you also refer to the BC Government’s COVID-19 Support for Businesses in BC webpage. We have found the BC Government link to be a very detailed and comprehensive list of both the Federal and BC COVID-19 programs which include those relating to income tax, payroll and employer health tax, PST, GST, government loans, and for property owners and tenants.
We will be reviewing and updating the new measures and benefits on our website as they become available. If you have any questions or concerns on the information above, please contact the office or your Cameron Izard Snell LLP advisor.