It has been 11 days since my last update and a number of items have changed or been implemented by the federal government. I will not repeat the various change in due dates or payment dates. If you have questions about those please contact me. I will instead focus on programs for individuals and businesses to support us through this historic time.
Additional GST payments to low income households have now been made.
The CERB (Canada Emergency Response Benefit) is now in place and some people have received payments. While this program will help millions of Canadians it does have criteria. Detail are here:
The key points of this program are:
- Must be at least 15 years old (so many students will qualify)
- You must have stopped working due to Covid-19. It is not available if someone just does not have a job or cannot get a job.
- You must have had $5,000 of earned income (employed or self-employed) in 2019 or in the 12 months before you apply.
The government has announced (at a press conference) that more support for students and those earning some income will be announced. Details will be sent out when available. There are many people not eligible for CERB since they have some income which makes them ineligible. And for many clients that are self-employed it is not clear what stopped working means.
CEBC (Canada Emergency Business Account)
The Canada Emergency Business Account is an interest-free loan of $40,000 for qualifying businesses. Up to $10,000 of that amount will be eligible for complete forgiveness if $30,000 is fully repaid on or before December 31, 2022. This program is now available and you must apply online through your normal business bank. Applications were being received as of last Thursday. Key requirements for this program are that a business must have had between $50,000 and $1,000,000 of wages paid to employees in 2019. If your business does not meet this basic criteria you cannot apply.
CEWS (Canada Emergency Wage Subsidy) – 75% Subsidy
Legislation was passed on Saturday to allow for this program. Key features of this program are:
- Sales must decrease 15% in March, and 30% in April or May. There are four different ways to calculate the drop in revenue.
- There are three eligibility periods that are not calendar months. The dated run from March 15th to June 6th.
- Support is generally 75% of wages paid up to a maximum grant of $847 per employee per week. There is no limit to the subsidy.
- Support may be up to 100% of wages if employers pay an amount that is at least 75% of pre-crisis earnings but less than $847 per week.
- There are anti-avoidance rules for payments made to non-arms length employees.
The calculations are very complex. We have developed a Canada Emergency Wage Subsidy Calculator in excel that will soon be available on my website under resources (downloads). It is currently undergoing testing. Anyone needing assistance with these calculations are encouraged to contact our office.
Temporary Wage Subsidy – 10% Subsidy
For the three months (March 18th to June 20th) there will be a 10% wage subsidy. This is to a maximum of $1,375 per employee and $25,000 per business. There will not be any actual money from the government. Employers will simple reduce withholding tax remittances. How this works in practice is unknown. Hopefully, by April 15th we will learn how to actually do this. The government has said to manually calculate this and reduce you payroll remittance by the subsidy. You can only reduce tax withheld, not CPP or EI premiums. Also, if the subsidy exceeds the tax withheld you can reduce a future remittance. Those clients that use a payroll provider (ADP, Wagepoint etc.) nothing changes until the detailed rules are announced by CRA. For those clients that do not have immediate cash flow problems I encourage you to wait until the detailed rules are announced before claiming your subsidy. We all want to reduce the future complexity when T4s need to be filed next year.
These two programs are complex and can interact. Every situation is different and we will assist all our clients as we work through this. We also note that the periods are different for the two programs. So while the 75% program ends June 6th, the 10% program continues until June 20th. This creates a very complex reporting requirements and I cannot help but think that the federal government will simplify this soon.
Our office is open for clients that need to drop off paperwork. But we do encourage you to send up information electronically. We have a table at the front door to leave documents. All documents are being “aged” so we will not be handling paperwork immediately after we receive it. We are not meeting anyone and anything we have to return to clients will be mailed or emailed. My staff are mostly working remotely from home so there will be some delays as we continue to help you.