CLIENT INSPIRED. COVID INFORMED.

Access our COVID-19 HUB for up-to-date information on economic support measures to help Canadians and businesses through the COVID-19 outbreak.

THE SUPPORT REPORT

 

 

UPDATE: July 30, 2021 – Extensions to COVID-19 support programs

On July 30, the Government of Canada announced the extension of crucial COVID-19 support measures for Canadians and Canadian businesses,. These extensions include:

  • Extending the eligibility period for the Canada Emergency Wage Subsidy, the Canada Emergency Rent Subsidy and Lockdown Support until October 23, 2021, and increasing the rate of support employers and organizations can receive during the period between August 29 and September 25, 2021.
  • Extending the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and the Canada Recovery Sickness Benefit (CRSB) until October 23, 2021.
  • Increasing the maximum number of weeks available for the CRB, by an additional 4 weeks, to a total of 54 weeks, at a rate of $300 per week, and ensuring it is available to  those who have exhausted their employment insurance (EI) benefits.

In addition, the government is proposing to offer businesses greater flexibility when calculating the revenue decline used to determine eligibility for the wage and rent subsidy programs and the new Canada Recovery Hiring Program. The government is also releasing draft legislation that provides further clarity on previously announced changes to the wage subsidy for furloughed employees.

Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy and Lockdown Support Extension

The wage subsidy, rent subsidy and Lockdown Support were set to expire in June 2021. Budget 2021 extended these measures until September 25, 2021 and provided the government with the authority to further extend the programs through regulations should the economic and public health situation warrant it. Today, the government is proposing to use this authority to further extend these measures until October 23, 2021, and increase the wage and rent subsidy rates between August 29 and September 25, 2021.

Specifically, the maximum rate for the wage and rent subsidies would be set at 40 per cent in Period 20 (August 29 to September 25) instead of being reduced to 20 per cent, as announced in Budget 2021. These programs would also be extended by one additional period, with a maximum rate of 20 per cent in Period 21 (September 26 to October 23). The Lockdown Support would also be extended until October 23, 2021, at its set rate of 25 per cent.

Eligible employers would still also be able to apply for the new Canada Recovery Hiring Program instead of the wage subsidy if they so choose. The hiring program provides alternative support for businesses affected by the pandemic and helps them hire workers, and increase workers’ hours or wages, as the economy reopens. The hiring program is available from June 6, 2021 until November 20, 2021, allowing employers to shift from the Canada Emergency Wage Subsidy to this new support, at a pace that works for them.

Tables 1 and 2, below, detail the proposed wage and rent subsidy rate structures from August 1, 2021 to October 23, 2021. Only employers experiencing a decline in revenues of more than 10 per cent are eligible for this support.

 

Revenue Decline Calculation

For the purposes of the wage subsidy, rent subsidy, and the Canada Recovery Hiring Program, an employer’s decline in revenues is generally determined by comparing the employer’s revenues in a current calendar month with its revenues in the same calendar month, pre-pandemic (this is known as the general approach). An employer may also elect to use an alternative approach, which compares the employer’s monthly revenues relative to the average of its January 2020 and February 2020 revenues.

An eligible employer that was not carrying on a business, or otherwise not carrying on its ordinary activities, on March 1, 2019 can only use the alternative approach for Periods 1 to 4 (March 15 to July 4, 2020). For Period 5 and beyond (i.e., as of July 5, 2020), these employers can either continue using the alternative approach or switch to the general approach. However, once an approach is chosen, the employer is required to use the same approach for all qualifying periods as of Period 5.

As of Period 14 (March 14 to April 10, 2021), the prior reference periods used under the general approach reverted to calendar months from 2019, ensuring that organizations continue to calculate their decline in revenues relative to a pre-pandemic month. However, this change may lead to unintended consequences for certain organizations that were not operating on March 1, 2019. For example, a business that began operating in May 2019 that switched from the alternative approach to the general approach from Period 5 onwards would be required to use April 2019 as its prior reference period for Period 15, even though it would have had no revenue during this month. This would make it ineligible for the subsidy support during this qualifying period as it would be unable to demonstrate a decline in revenues.

To provide greater flexibility to organizations in these circumstances, the government proposes to allow an eligible organization to elect to use the alternative approach to calculate its revenue decline for Periods 14 to 17 (March 14 to July 3, 2021) if it was not carrying on a business or otherwise carrying on ordinary activities on March 1, 2019.  Subject to approval by the Governor in Council, these changes would align the rules for Periods 14 to 17 (March 14 to July 3, 2021) with those for Periods 1 to 4 (March 15 to July 4, 2020) for organizations that began operating between March 1, 2019 and the onset of the pandemic, making them eligible for continued support under these programs.

Wage Subsidy Support for Furloughed Employees

To ensure that the wage subsidy for furloughed employees remains aligned with benefits available under the Employment Insurance (EI) program, Budget 2021 extended the wage subsidy for furloughed employees so that the weekly wage subsidy for a furloughed employee from June 6, 2021 to August 28, 2021 (Periods 17 to 19) is the lesser of:

  • the amount of eligible remuneration paid in respect of the week; and
  • the greater of:
    • $500; and
    • 55 per cent of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $595.

The wage subsidy for furloughed employees continues to be available to eligible employers that qualify for the wage subsidy for active employees for the relevant period until August 28, 2021. Employers also continue to be entitled to claim under the wage subsidy their portion of contributions in respect of the Canada Pension Plan, EI, the Quebec Pension Plan and the Quebec Parental Insurance Plan for furloughed employees.

As announced in Budget 2021 and to provide certainty to employers and employees, the government intends to introduce legislative proposals to clarify that the wage subsidy for furloughed employees would no longer be available after August 28, 2021, including the subsidy for the employer’s portion of contributions under the Canada Pension Plan, EI, the Quebec Pension Plan and the Quebec Parental Insurance Plan in respect of furloughed employees.


UPDATE: July 21, 2021 – CRHP is open for application

The new Canada Recovery Hiring Program (CRHP) is now open for application. The CRHP provides eligible employers with a subsidy of up to 50 per cent of incremental remuneration paid to eligible active employees between June 6, 2021, and November 20, 2021.

The first claim period, period 17 (numbered as such to align with the Canada Emergency Wage Subsidy periods), covers the period from June 6 to July 3, 2021 and is now open for application.  The deadline to apply is December 30, 2021. Remember, eligible employers can claim either the CEWS or the CRHP, but not both.

The CRHP application site, the CRA calculator, and technical Q&A are all now available for guidance. To learn more about the Canada Recovery Hiring Program, visit our COVID-19 Hub.


UPDATE: July 21, 2021 –  Applications open for Tourism Relief Fund 

The Tourism Relief Fund (TRF), administered by Canada’s regional development agencies and Innovation, Science and Economic Development Canada (ISED), is a $500-million national program to support the tourism sector in Canada. The TRF will help position Canada as a destination of choice when domestic and international travel is once again deemed safe, by:

  • empowering tourism businesses to create new or enhance existing tourism experiences and products to attract more local and domestic visitors
  • helping the sector reposition itself to welcome international visitors, by providing the best Canadian tourism experiences we have to offer the world

Initiatives under this fund will help tourism businesses and organizations adapt their operations to meet public health requirements, improve their products and services, and position themselves for post-pandemic economic recovery. A minimum of $50 million of the TRF will specifically support Indigenous tourism initiatives. For more information and to apply, contact your regional development agency.

Contributions to businesses will be either non-repayable (contributions up to $100,000) or repayable (contributions up to $500,000). Not-for-profit organizations and Indigenous organizations (not generating profits) will be eligible for non-repayable contributions.

To find out if your organization qualifies for TRF funding and to apply, visit your regional development agency‘s web page:

Other funding support measures for tourism businesses:


UPDATE: July 21, 2021 –  Applications open for Canada Community Revitalization Fund

The Canada Community Revitalization Fund (CCRF) is a two-year, $500 million national infrastructure program to revitalize communities across Canada. Not-for-profit organizations, municipalities and other public institutions, and Indigenous communities can apply for funding for projects that aim to:

  • revitalize downtown cores and main streets
  • reinvent outdoor spaces
  • create green infrastructure
  • increase the accessibility of community spaces

Examples of projects that could receive funding under this program include:

  • farmers markets
  • community and cultural centres
  • parks or community gardens
  • recreational trails and public outdoor sports facilities
  • multi-purpose centres

Projects funded under the CCRF could receive a maximum contribution of up to $750,000 or $1 million (depending on project location), with funding to cover up to 75% of the total project costs. Indigenous community projects may qualify for funding to cover 100% of total project costs. All contributions will be non-repayable.

Indigenous applicants to the Canada Community Revitalization Fund (CCRF) may request additional time to submit applications, taking into account that the CCRF is a time-limited initiative ending March 31, 2023. For more information, Indigenous applicants are asked to contact their respective Regional Development Agency as early as possible prior to July 23, 2021.

To find out if your community qualifies for CCRF funding and to apply, visit your Regional Development Agency’s web page:

Atlantic Canada Opportunities Agency (ACOA) -For communities in Atlantic Canada

Canada Economic Development for Quebec Regions (CED)-For communities in Quebec

Canadian Northern Economic Development Agency (CanNor) -For communities in Canada’s three territories

Federal Economic Development Agency for Southern Ontario (FedDev Ontario) -For communities in southern Ontario

Federal Economic Development Initiative for Northern Ontario (FedNor)For communities in northern Ontario

Western Economic Diversification Canada (WD) -For communities in Western Canada


UPDATE: April 22, 2021 – Federal Budget includes key COVID-19 support measures

The federal budget tabled on April 19, 2021 includes a number of COVID-19 support measures. These include extensions and adjustments to the Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS) and Lockdown Support programs, the introduction of a new Canada Recovery Hiring Program (CRHP), and a change to the taxation of COVID-19 benefits. Below is a summary of these measures.

Canada Emergency Wage Subsidy

Budget 2021 proposes to extend the Canada Emergency Wage Subsidy until September 25, 2021.  Budget 2021 also proposes to provide the government with the legislative authority to add additional qualifying periods until November 20, 2021, should the economic and public health situation warrant it.

The maximum combined base subsidy and top-up wage subsidy rate for active employees is currently set at 75 per cent through the qualifying period ending on June 5, 2021. Budget 2021 proposes the maximum wage subsidy rates be gradually phased out starting on July 4, 2021, from 60%, to 40%, and finally to 20%, as set out in the table below.

Further, only employers with a decline in revenues of more than 10 per cent would be eligible for the wage subsidy as of July 4.

Furloughed Employees

To ensure that the wage subsidy for furloughed employees remains aligned with benefits available under EI, Budget 2021 proposes that the weekly wage subsidy for a furloughed employee from June 6, 2021 to August 28, 2021 be the lesser of:

  • the amount of eligible remuneration paid in respect of the week; and
  • the greater of:
    • $500; and
    • 55 per cent of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $595.

The wage subsidy for furloughed employees would continue to be available to eligible employers that qualify for the wage subsidy for active employees for the relevant period until August 28, 2021. Employers will also continue to be entitled to claim under the wage subsidy their portion of contributions in respect of the Canada Pension Plan, EI, the Quebec Pension Plan and the Quebec Parental Insurance Plan in respect of furloughed employees.

Reference Periods

Budget 2021 proposes the reference periods to be used to determine an employer’s revenue decline for the qualifying periods from June 6, 2021 to September 25, 2021 to continue to follow the current methodology, and is further set out in the table below.

Employers that had chosen to use the general approach for prior periods would be required to continue to use that approach. Similarly, employers that had chosen to use the alternative approach would be required to continue to use the alternative approach.

Baseline Remuneration

Baseline remuneration means the average weekly eligible remuneration paid to an eligible employee by an eligible employer during the period beginning January 1, 2020 and ending March 15, 2020. However, the eligible employer may elect, for each qualifying period in respect of an employee, an alternative baseline period for calculating the average weekly eligible remuneration. Budget 2021 proposes to allow an eligible employer to elect to use the following alternative baseline remuneration periods:

  • March 1 to June 30, 2019 or July 1 to December 31, 2019, for the qualifying period between June 6, 2021 and July 3, 2021; and
  • July 1 to December 31, 2019, for qualifying periods beginning after July 3, 2021.

Requirement to Repay Wage Subsidy

Budget 2021 proposes to require a publicly listed corporation to repay wage subsidy amounts received for a qualifying period that begins after June 5, 2021 in the event that its aggregate compensation for specified executives during the 2021 calendar year exceeds its aggregate compensation for specified executives during the 2019 calendar year.

Canada Emergency Rent Subsidy

Budget 2021 proposes to extend the Canada Emergency Rent Subsidy and the Lockdown Support until September 25, 2021. Budget 2021 also proposes to provide the government with the legislative authority to add additional qualifying periods for the rent subsidy and the Lockdown Support until November 20, 2021, should the economic and public health situation warrant it.

Rate Structure

The maximum base rent subsidy rate is currently set at 65 per cent through the qualifying period ending on June 5, 2021. Budget 2021 proposes the rent subsidy rates be gradually phased out starting on July 4, 2021, from 60%, to 40%, and finally to 20%, as set out in the table below.

Further, only organizations with a decline in revenues of more than 10 per cent would be eligible for the base rent subsidy and, as discussed below, the Lockdown Support, as of July 4, 2021.

Revenue-Decline Calculation

Both the rent subsidy and the wage subsidy use the same calculation to determine an organization’s revenue decline. As a result, the same reference periods are used to calculate an organization’s decline in revenues for the wage subsidy and the rent subsidy. Likewise, if an organization elects to use an alternative method for computing its revenue decline under the wage subsidy, it must use that alternative method for the rent subsidy.

Purchase of Business Assets

In order to qualify for the wage subsidy, an applicant must have had a payroll account with the Canada Revenue Agency (or engaged a qualifying payroll service provider). For the purpose of the rent subsidy, an applicant is required to have a business number with the CRA. If certain conditions are met, the wage subsidy rules provide that an eligible entity that purchases the assets of a seller will be deemed to meet the payroll account requirement if the seller met the requirement. Budget 2021 proposes to introduce a similar deeming rule that would apply in the context of the rent subsidy, where the seller met the business number requirement. This measure would apply as of the start of the rent subsidy.

Lockdown Support

Budget 2021 proposes to extend, for the qualifying periods from June 6, 2021 to September 25, 2021, the current 25-per-cent rate for the Lockdown Support.

Canada Recovery Hiring Program

Budget 2021 proposes to introduce the new Canada Recovery Hiring Program to provide eligible employers with a subsidy of up to 50 per cent on the incremental remuneration paid to eligible employees between June 6, 2021 and November 20, 2021. An eligible employer would be permitted to claim either the hiring subsidy or the Canada Emergency Wage Subsidy for a particular qualifying period, but not both.

Eligible Employers

Employers eligible for the Canada Emergency Wage Subsidy would generally be eligible for the hiring subsidy. However, a for-profit corporation would be eligible for the hiring subsidy only if it is a Canadian-controlled private corporation (including a cooperative corporation that is eligible for the small business deduction). Other eligible employers would include individuals, non‑profit organizations, registered charities, and certain partnerships. Corporations and trusts that are ineligible for the Canada Emergency Wage Subsidy because they are public institutions would not be eligible for the hiring subsidy. Public institutions generally include municipalities and local governments, Crown corporations, wholly owned municipal corporations, public universities, colleges, schools and hospitals. Eligible employers (or their payroll service provider) would be required to have had a payroll account open with the Canada Revenue Agency on March 15, 2020.

Eligible Employees

An eligible employee must be employed primarily in Canada by an eligible employer throughout a qualifying period (or the portion of the qualifying period throughout which the individual was employed by the eligible employer).

The hiring subsidy would not be available for furloughed employees (on leave with pay). An employee would not be considered to be on leave with pay for the purposes of the hiring subsidy if they are on a period of paid absence, such as vacation leave, sick leave, or a sabbatical.

Eligible Remuneration and Incremental Remuneration

The types of remuneration eligible for the Canada Emergency Wage Subsidy would also be eligible for the hiring subsidy. Eligible remuneration generally includes salary, wages, and other remuneration for which employers are required to withhold or deduct amounts on account of the employee’s income tax obligations. However, it does not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle. The amount of remuneration for employees would be based solely on remuneration paid in respect of the qualifying period.

Incremental remuneration for a qualifying period means the difference between an employer’s total eligible remuneration paid to eligible employees for the qualifying period and its total eligible remuneration paid to eligible employees for the baseline period. In both the qualifying period and the baseline period, eligible remuneration for each eligible employee would be subject to a maximum of $1,129 per week.

As is currently the case for the Canada Emergency Wage Subsidy, the eligible remuneration for a non-arm’s length employee for a week could not exceed their baseline remuneration determined for that week. More information on baseline remuneration is available in the supplementary information on Emergency Business Supports.

The applicable dates for the calculation of the incremental remuneration are shown in the table below.

Subsidy Amount

Provided that an eligible employer’s decline in revenues exceeds the revenue-decline threshold for a qualifying period (see Revenue-Decline Threshold below), its subsidy in that qualifying period would be equal to its incremental remuneration multiplied by the applicable hiring subsidy rate for that qualifying period. These hiring subsidy rates are shown in the table below.

To qualify for a hiring subsidy in a qualifying period, an eligible employer would have to have experienced a decline in revenues sufficient to qualify for the Canada Emergency Wage Subsidy in that qualifying period. For qualifying periods where the Canada Emergency Wage Subsidy is no longer in effect, an eligible employer would have to have experienced a decline in revenues of more than 10 per cent. As such, an eligible employer’s decline in revenues would have to be more than:

  • 0 per cent, for the qualifying period between June 6, 2021 and July 3, 2021; and
  • 10 per cent, for qualifying periods between July 4, 2021 and November 20, 2021.

An employer’s decline in revenues would be determined in the same manner as under the Canada Emergency Wage Subsidy. This method compares the employer’s revenues in a current calendar month with its revenues in the same calendar month, pre-pandemic. An employer can also elect to use an alternative approach, which compares the employer’s monthly revenues relative to the average of its January 2020 and February 2020 revenues. A deeming rule provides that an employer’s decline in revenues for any particular qualifying period is the greater of its decline in revenues for the particular qualifying period and the immediately preceding qualifying period.

Employers that had chosen to use the general approach for prior periods of the Canada Emergency Wage Subsidy would be required to continue to use that approach for the hiring subsidy. Similarly, employers that had chosen to use the alternative approach would be required to continue to use the alternative approach.

The reference periods set out in the table below would be used to determine an eligible employer’s decline in revenues for the qualifying periods from June 6, 2021 to November 20, 2021.

An application for the hiring subsidy for a qualifying period would be required to be made no later than 180 days after the end of the qualifying period.

Tax Treatment of COVID-19 Benefit Amounts

A range of taxable benefits have been made available to qualified individuals in response to the COVID-19 pandemic. Generally, if a benefit amount is repaid (for example, where an individual determines that they were not eligible for the benefit in question), this amount can only be deducted for income tax purposes in the year the repayment takes place. Therefore, if the repayment does not occur in the same year as the year of receipt of the benefit, an individual may owe tax in respect of the benefit for the year of receipt, while obtaining a deduction for the repayment amount in a future tax year.

Budget 2021 proposes to amend the Income Tax Act to allow individuals the option to claim a deduction in respect of the repayment of a COVID‑19 benefit amount in computing their income for the year in which the benefit amount was received rather than the year in which the repayment was made. This option would be available for benefit amounts repaid at any time before 2023.

For these purposes, COVID-19 benefits would include:

  • Canada Emergency Response Benefits/Employment Insurance Emergency Response Benefits;
  • Canada Emergency Student Benefits;
  • Canada Recovery Benefits;
  • Canada Recovery Sickness Benefits; and
  • Canada Recovery Caregiving Benefits.

Individuals may only deduct benefit amounts once they have been repaid. An individual who makes a repayment, but who has already filed their income tax return for the year in which the benefit was received, would be able to request an adjustment to the return for that year.

Budget 2021 also proposes to amend the Income Tax Act to ensure that the COVID-19 benefit amounts noted above, and similar provincial or territorial benefit amounts, are included in the taxable income of those individuals who reside in Canada but are considered non-resident persons for income tax purposes. As a result, COVID-19 benefits received by these non-resident persons would be taxable in Canada in a manner generally similar to employment and business income earned in Canada.


UPDATE: April 21, 2021 – New Guidance on Amending a CEWS Claim After the Deadline

On April 21, 2021, CRA updated their guidance on amending applications after the applicable deadline has passed. Previously, CRA had stated that only downward adjustments (decreases to claims) would be permitted after a claim deadline has passed. However, the new guidance provides circumstances in which upward adjustments (increases to claims) would be permitted after a deadline has passed. These comments would apply to CERS claims as well. Below is the updated CRA guidance.

UNDER WHAT CIRCUMSTANCES WILL THE CRA ACCEPT MY LATE-FILED AMENDED APPLICATION FOR THE WAGE SUBSIDY?

The CRA will accept your late-filed amended wage subsidy application in certain circumstances.

If you determine that you received a wage subsidy amount in excess of what you are entitled to then you can submit an amended application to reduce your wage subsidy amount (referred to as a downward adjustment) at any time, even after the deadline for the particular claim period. You can submit your amended application using My Business Account or Represent a Client, or by calling Business Enquiries if you filed via the web application.

If, after the deadline for a claim period has passed, you determine that you might have been entitled to a higher wage subsidy amount than what you previously claimed for that claim period, contact the CRA Business Enquiries phone line to see if you are eligible to file an amended application to increase the wage subsidy amount (referred to as an upward adjustment) after the applicable deadline. If you are eligible, you can then submit your amended application using My Business Account or Represent a Client, or by obtaining further direction from Business Enquiries if you filed via the web application.

The circumstances in which the CRA may accept your amended application for review after the filing deadline include:

  • You made an error in filing your wage subsidy application prior to the filing deadline as a result of an arithmetic error, transposition error, or unintended omission of additional business activities or employment expenses;

  • You relied upon inaccurate information provided to you inadvertently by the CRA that directly affected your ability to file your amended wage subsidy application on time;

  • There was an identified outage of CRA secure portals that prevented you from filing the amended application prior to the applicable deadline; or

  • There was undue delay on the part of the CRA in processing an application or providing required guidance impacting the particular application.

Furthermore,

  • The upward adjustment request is not the result of professional advice the fee structure for which was dependent on the upward adjustment amount; and

  • The late-filed amended wage subsidy application request for an upward adjustment was made to the Business Enquiries phone line within 30 calendar days following the later of:

    • April 21, 2021; and

    • The applicable filing deadline.

In the case of late-filed amended wage subsidy application that is accepted for review through the secure portal, and after the review is either accepted, adjusted or denied, a Notice of Determination will be issued to you by the CRA. Please see Q #36 for an explanation of your recourse rights when you receive a Notice of Determination.

If your late-filed amended wage subsidy application was rejected for review by the CRA and not processed through the secure portal because you did not meet one of the above noted criteria, you may then seek a further review by submitting your request online by logging into My Business Account and selecting “Register a formal dispute”.

UNDER WHAT CIRCUMSTANCES WILL THE CRA ACCEPT MY LATE-FILED ORIGINAL APPLICATION FOR THE WAGE SUBSIDY?

The CRA will accept your late-filed wage subsidy original application only in exceptional circumstances. You must make every attempt to file your wage subsidy application on or before the deadline. If, however, you determine that you are entitled to a wage subsidy amount for a particular claim period for which you did not file an application on or before the applicable filing deadline, contact the CRA Business Enquiries phone line to see if you are eligible to file the application after the applicable deadline. If you are eligible, you can then submit your late-filed application using My Business Account, Represent a Client or via the web application.

The circumstances in which the CRA may accept your original application for review after the filing deadline include:

  • It is evident that you attempted to file your application before the applicable deadline but there was an identified outage of CRA secure portals that prevented you from filing the application prior to the applicable deadline;

  • It is evident that you attempted to file your application before the applicable deadline but your specific account was temporarily suspended or there was some other account limitation that prevented the filing of the application prior to the applicable deadline;

  • It is evident that you attempted to file your application before the applicable deadline, and there was undue delay on the part of the CRA in receiving and processing your wage subsidy application before the deadline; or

  • You relied upon inaccurate information provided to you inadvertently by the CRA that directly affected your ability to file your original wage subsidy application on time.

Furthermore,

  • The late filed wage subsidy claim is not the result of professional advice the fee structure for which was dependent on the claim amount; and

  • The late-filed wage subsidy application request was made to the Business Enquiries phone line within 30 calendar days following the later of:

    • April 21, 2021; and

    • The applicable filing deadline.

In the case of a late-filed wage subsidy application that is accepted for review through the secure portal, and after the review is either accepted, adjusted or denied, a Notice of Determination will be issued to you by the CRA. Please see Q #36 for an explanation of your recourse rights when you receive a Notice of Determination.

If your late-filed wage subsidy application was rejected for review by the CRA and not processed through the secure portal because you did not meet one of the above noted criteria then you may seek a further review by submitting your request online by logging into My Business Account and selecting “Register a formal dispute”.


UPDATE: April 15, 2021 – Revenu Québec announces tax filing deadline relief

Revenu Québec announced today they will show tolerance towards citizens who file their income tax return after the deadline.

The Minister of Finance, Revenu Quebec confirms that it will not impose any penalty or interest on citizens who file their income tax return or who pay their tax balance after the deadline of April 30, 2021, but no later than May 31, 2021. This new flexibility measure aims to simplify life for Quebecers who have been affected by the COVID-19 crisis .

The deadline for filing the income tax return and paying the balance of taxes for the 2020 tax year remains Friday, April 30, 2021, at 11:59 p.m. However, no late filing penalty will be applied to citizens who are not able to meet this deadline and no interest will be charged on a 2020 tax balance for the period from 1 st to May 31, 2021.

Penalties may apply for a tax return submitted after Monday, May 31, 2021. Interest will be charged to the outstanding balance of tax on May 31 and, as of 1 st  June 2021, except for citizens who benefit one-year interest leave because they received financial support benefits related to COVID-19.

This flexibility measure responds to the exceptional health situation which continues to develop in Quebec. It aims to give Quebecers affected by the COVID-19 crisis more time to assume their fiscal responsibilities.


UPDATE: April 1, 2021 – CRA issues supplemental guidance on international tax issues

The COVID-19 crisis has resulted in the imposition of travel restrictions around the world, which in turn resulted in concerns about a number of potential Canadian income tax issues.  In 2020, the Canada Revenue Agency (the CRA) issued a document describing each potential issue and outlined the agency’s approach to address the issue. The relief measures described in sections I-VI of this document were applicable from March 16 until September 30, 2020 (the initial relief period).Individuals continue to have concerns about potential income tax issues because of the travel restrictions lasting past the initial relief period. On April 1, the CRA issued additional relief measures contained in the supplemental guidance in section VII to apply for subsequent periods, as described in this section.This supplement provides additional guidance for individuals in these situations, by:

  • extending the administrative relief in respect of individual income tax residence;
  • clarifying some of the CRA’s views regarding the effect of the travel restrictions on the determination of a permanent establishment in Canada; and
  • providing an outline of the Canadian income tax and compliance requirements of certain cross-border employees and providing some relief in respect of these requirements.

As with the guidance initially provided, this supplemental guidance is intended to assist taxpayers during this time of crisis and does not represent any interpretive position or intention to establish any broader policy by the CRA. Accordingly, the supplemental guidance below is applicable only for the periods described in the specific section.

For further details, refer to the supplemental guidance in section VII.


UPDATE: March 22, 2021 – CEBA application period extended

Applicants now have until June 30, 2021 to apply for a $60,000 CEBA (Canada Emergency Business Account) loan or the $20,000 expansion at their financial institution.

UPDATE: March 4, 2021 – CRA issues a notification regarding upcoming international guidance updates

The CRA is currently preparing a supplement to its Guidance on international income tax issues raised by the COVID-19 crisis. This supplement will include further guidance on individual income tax residency, permanent establishment, and cross-border employment income. If it is otherwise practical to do so, affected individuals may wish to delay filing their United States or Canadian income tax return until this supplemental guidance is provided, as there may be significant differences from previous year returns. These individuals may also wish to consider consulting a tax advisor to assist in this determination.


UPDATE: March 3, 2021 – Government of Canada announces wage and rent subsidy levels to remain unchanged to June

The Government of Canada announced its intention to extend the current rate structures for the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Rent Subsidy (CERS) and Lockdown Support subsidies from March 14 to June 5, 2021. Proposed program details for this period for the three measures are described below.

Maintaining the Current Rate Structures Until June 5, 2021

The rate structures for the wage subsidy for active employees, the rent subsidy, and Lockdown Support that are currently in place until March 13, 2021, would be extended for March 14 to June 5, 2021. This means that:

  • The maximum combined wage subsidy rate for active employees would remain at 75 per cent (comprised of base wage subsidy rate of 40 per cent and the maximum top-up wage subsidy rate of 35 per cent).
  • The maximum rent subsidy rate would remain at 65 per cent.
  • Lockdown Support would remain at 25 per cent and continue to be provided in addition to the rent subsidy, providing eligible businesses with rent support of up to 90 per cent.

Support for Furloughed Employees

The wage subsidy for furloughed employees will remain aligned with benefits available under Employment Insurance (EI), that is, the weekly wage subsidy for a furloughed employee, from March 14 to June 5, 2021, would remain the same and continue to be the lesser of:

  • the amount of eligible remuneration paid in respect of the week; and
  • the greater of:
    • $500; and
    • 55 per cent of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $595.

Employers would also continue to be entitled to claim under the wage subsidy their portion of contributions in respect of the Canada Pension Plan, EI, the Quebec Pension Plan and the Quebec Parental Insurance Plan for furloughed employees.

Revenue-decline Reference Periods 

To ensure that the general approach continues to calculate an organization’s decline in revenues relative to a pre-pandemic month, the prior reference periods would be based on calendar months from 2019, effective as of the qualifying period from March 14 to April 10, 2021. The proposed reference periods are summarized in Table 1.

Table 1
Canada Emergency Wage Subsidy and Canada Emergency Rent Subsidy Reference Periods, Periods 14 to 16
(March 14 to June 5, 2021)
Timing Period 14
March 14 – April 10
Period 15
April 11 – May 8
Period 16
May 9 – June 5
General approach March 2021 over March 2019 or February 2021 over February 2020 April 2021 over April 2019 or March 2021 over March 2019 May 2021 over May 2019 or April 2021 over April 2019
Alternative approach March 2021 or February 2021 over average of January and February 2020 April 2021 or March 2021 over average of January and February 2020 May 2021 or April 2021 over average of January and February 2020

 

Employers that had chosen to use the general approach for prior periods would continue to use that approach. Similarly, employers that had chosen to use the alternative approach would continue to use the alternative approach.

Additional Baseline Remuneration Period 

For the wage subsidy, an additional elective alternative baseline remuneration computation for March 14 to June 5, 2021 (Qualifying Periods 14 to 16), is proposed to ensure that the baseline remuneration comparator remains appropriate. In particular, an eligible employer would be allowed to elect, for qualifying periods from March 14 to June 5, 2021, to use the period of March 1, 2019 to June 30, 2019, or July 1 to December 31, 2019 (the current alternative period), to calculate baseline remuneration.

The Canada Revenue Agency will administer this measure on the basis of draft legislative proposals released with today’s announcement.


UPDATE: February 26, 2021 – What to expect when CRA reviews your claim

CRA will be reviewing claims to confirm the information submitted. CRA has issued the guidance (below) on what to expect when they review your CERS claim.

Keep your records

You must keep records showing information that supports your rent subsidy claim, such as your reduction in revenue and amounts for your eligible expenses. If you use the online calculator to calculate your subsidy amounts, print the results summary or save an electronic copy for your records. We may ask to see it when validating your claim. If you calculate your amounts another way, you must still save a record of how you came up with your amounts. If you have affiliated entities that are also applying for CERS for the same period you are, you must save a copy of the agreement you made about the percentage of the subsidy each business will claim.

Revenue drop – supporting documents

Other documents you may need to show to support your revenue drop include your:

  • sales journal
  • general ledger
  • revenue amounts
  • working paper calculations

Eligible expenses – supporting documents

Other documents you may need to show to support the expenses you claimed include your:

  • rental or lease agreements
  • property tax bills
  • insurance documents
  • mortgage documents
    • provincial land title or property abstract, or
    • title number, legal description, or other property identifying numbers such as
      • parcel identifier number (PID)
      • land identifier numerical codes (LINC)
      • property identification number (PIN)
      • mortgage registration number
  • bank statements
  • receipts or other proof of payment

Read more about records you should keep

Calls and letters from the CRA

The CRA may need to contact you by phone or mail to confirm details, ask for more information about your application, or notify you that your claim was not approved. Please make sure your contact information is current.

Calls from the CRA

CRA phone agents will never:

  • use threatening or coercive language
  • ask for full bank information, or
  • ask for your full Social Insurance Number (SIN)

CRA phone agents should be able to provide you with information about your CERS application, as well as their name and phone number.

If you have concerns about a call you received regarding your CERS application, please call the CRA’s business enquiries line at 1-800-959-5525 and ask them to verify the name and number of the person that called you. You can also read more about how to recognize scams.

Letters from the CRA

You may receive a letter from the CRA if your application for CERS was not accepted, or if your claim was modified after we review the information.

Consequences of fraudulent claims

If you do not meet the CERS eligibility requirements for a period, you will be required to repay any amounts you received for that period. Canadians can also report suspected CERS misuse through the CRA’s Leads program. Penalties may apply in cases of fraudulent claims, including fines or even imprisonment. If you artificially reduce your revenue or increase your expenses for the purpose of claiming the rent subsidy, you will be required to repay any subsidy amounts you received, plus a penalty equal to 25% of the total value.


UPDATE: February 26, 2021 – CERS expansion to lockdown support for eligible property owners with non-arm’s length tenants

On February 26, 2021 the CRA provided new guidance on additional lockdown support availability for eligible property owners with tenants not at arm’s length:

The lockdown support portion of the CERS may be available to eligible property owners, if:

  • their tenant is not at arm’s length

  • the tenant uses the qualifying property in the course of its regular activities

  • that property is subject to a lockdown

  • the tenant must shut their doors or significantly restrict their activities under a public health order, and

  • the property owner meets all other applicable conditions required to qualify for lockdown support


UPDATE: February 19, 2021 – Government of Canada proposes increase to number of weeks for recovery benefits and EI regular benefits

The Government of Canada announced its intent to introduce regulatory and legislative amendments to increase the number of weeks of benefits available for the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB), the Canada Recovery Caregiving Benefit (CRCB) and Employment Insurance (EI) regular benefits.

The proposed changes are as follows:

  • increase the number of weeks available under the Canada Recovery Benefit (CRB) and the Canada Recovery Caregiving Benefit (CRCB) by 12 weeks extending the maximum duration of the benefits through regulation from 26 weeks to up to 38 weeks;
  • increase the number of weeks available under the Canada Recovery Sickness Benefit (CRSB) through regulation from the current 2 weeks to 4 weeks; and
  • increase the number of weeks of EI regular benefits available by up to 24 weeks to a maximum of 50 weeks through legislation, for claims that are made between September 27, 2020 and September 25, 2021.
  • self-employed workers who have opted in to the EI program to access special benefits would be able to use a 2020 earnings threshold of $5,000, compared to the previous threshold of $7,555. This change would be retroactive to claims established as of January 3, 2021 and would apply until September 25, 2021.

To ensure employees in the federally regulated private sector can access the proposed additional weeks of CRCB and CRSB without the risk of losing their jobs, the maximum length of the leave related to COVID-19 under the Canada Labour Code would also be extended. Provincial and territorial governments will determine whether they need to amend their job-protected leaves in order to facilitate employees’ access to the proposed additional weeks of CRSB and CRCB benefits.


UPDATE: February 16, 2021 – Applications for the Canada United Small Business Relief Fund have been reopened.

On October 20, 2020, we reported on the introduction of a new relief grant for small businesses, the Canada United Small Business Relief Fund. The Canada United Small Business Relief Fund (CUSBRF) was established to help small businesses offset the cost of expenses to open safely or adopt digital technologies to move more of their business online. Over $14 Million has been contributed by the Federal Government, RBC, and Canada United partners to support recovery efforts due to COVID-19 and relief has already been provided to over 2,000 small businesses across the country.

The CUSBRF is now able to extend relief grants to more small businesses and restart accepting grant applications from small businesses across all provinces for expenses incurred no earlier than March 15, 2020. Applications are open for all provinces and territories as of February 16th, 2021.

Below is a reproduction of our October 20 article. 

The federal government is investing $12 million into the Canada United Small Business Relief Fund (CUSBRF), to support small businesses through the coronavirus pandemic. The CUSBRF provides eligible small businesses with relief grants of up to $5,000, to be used for pandemic recovery efforts. The grant provides a reimbursement of costs incurred in order to allow a safe reopening and the adoption of digital technologies, in relation to COVID-19.

The CUSBRF is part of the #CanadaUnited nationwide campaign, which encourages Canadians to support local businesses by buying, dining and shopping local. The CUSBRF will be managed by the Ontario Chamber of Commerce, on behalf of the national Chamber network in support of other chambers and partners. Applicants for the relief grant do not need to be members of the Ontario Chamber of Commerce (OCC).

Qualifying entities include small to medium-sized (SME) companies from any sector and from all regions of Canada who meet the eligibility criteria. Both for-profit and not-for-profit organizations are eligible to apply, although government organizations, municipalities, charities and the chamber of commerce network are not eligible. Considerations will be made to ensure the fund is distributed broadly, to all Canadian regions. Priority applicants for consideration will include businesses owned by Indigenous Peoples, women, visible minorities, LGBTQ2+ and persons with disabilities.

ELIGIBLE EXPENSES

Expenses eligible for reimbursement fall under the following 3 categories:

  • Purchasing personal protective equipment such as masks, face shields and latex gloves
  • Renovating physical spaces to adhere to local, provincial or federal reopening guidelines
  • Developing or improving e-commerce capabilities for your business (including enhancements of websites)

For more information on eligible and ineligible expenses, click here.

Eligible expenses directly related to the above categories are permitted provided that purchases were made no earlier than March 15, 2020. All eligible expenses must be incremental and a direct result of adjusting operations for pandemic safety guidelines. Normal or usual ongoing business costs are not eligible.

ELIGIBILITY CRITERIA

Eligibility Criteria Include:

  • Must be incorporated, or operating as a sole proprietor/partnership in Canada, as of March 1, 2020
  • Must have less than 75 employees
  • Annual sales are at minimum $150,000 and not more than $3,000,000
  • Must have $1,000,000 of commercial general liability insurance
  • Must not be receiving other contributions from public funds toward the specific activities contained in the application
  • Must be in full compliance with all applicable government laws, rules, regulations and guidelines
  • Must be in operation after September 1, 2020
APPLICATION

The new application window will open on Monday, October 26, 2020. (New window opened February 16, 2021). Applications can be submitted at the following website, by clicking on the link related to the province in which your business is located. The application can be accessed by clicking on the application link located on your participating local or provincial Chamber of Commerce site. Only one application per ownership group can be submitted.

Applicants will be required to describe the reason they are applying to the program and explain the impact COVID-19 has had on operations, including the possible economic hardship, temporary closure, etc. Further, applicants must attach all necessary receipts and invoices, accompanied with proof of payment to their application. Applicants must also submit the company’s sales tax (GST/HST) registration document or a recent sales tax (GST/HST) filing and one of the following documents:

    • Proof of business registration
    • Business license
    • Articles of incorporation or letters patent
    • For partnerships: articles of incorporation or letters patent for each corporate partner

These documents must show official stamp, logo or other official identifying details from the issuing agency.

For more information, refer to the program guidelines and the pre-application check-list.

 


UPDATE: February 9, 2021 – Government of Canada announces interest relief on 2020 income tax debt due to COVID-19 related income support

The Government of Canada announced that it will provide targeted interest relief to Canadians who received COVID-related income support benefits. Once individuals have filed their 2020 income tax and benefit return, they will not be required to pay interest on any outstanding income tax debt for the 2020 tax year until April 30, 2022. This will give Canadians more time and flexibility to pay if they have an amount owing.

To qualify for targeted interest relief, individuals must have had a total taxable income of $75,000 or less in 2020 and have received income support in 2020 through one or more of the following COVID-19 measures:

  • the Canada Emergency Response Benefit (CERB);
  • the Canada Emergency Student Benefit (CESB);
  • the Canada Recovery Benefit (CRB);
  • the Canada Recovery Caregiving Benefit (CRCB);
  • the Canada Recovery Sickness Benefit (CRSB);
  • Employment Insurance benefits; or
  • similar provincial emergency benefits.

The Canada Revenue Agency (CRA) will automatically apply the interest relief measure for individuals who meet these criteria.

Additionally, any CRA-administered credits and benefits normally paid monthly or quarterly, such as the Canada Child Benefit and the goods and services tax/harmonized sales tax credit will not be applied to reduce individuals’ tax debt owing for the 2020 tax year. Canadians are strongly encouraged to file their tax returns by the filing deadline to ensure that their benefit payments continue without interruption.

 


UPDATE: February 9, 2021 – Government of Canada addresses CERB repayments for self-employed individuals

The Government of Canada announced that self-employed individuals who applied for the Canada Emergency Response Benefit (CERB) and would have qualified based on their gross income will not be required to repay the benefit, provided they also met all other eligibility requirements. The same approach will apply whether the individual applied through the Canada Revenue Agency or Service Canada.

This means that, self-employed individuals whose net self-employment income was less than $5,000 and who applied for the CERB will not be required to repay the CERB, as long as their gross self-employment income was at least $5,000 and they met all other eligibility criteria.

Some self-employed individuals whose net self-employment income was less than $5,000 may have already voluntarily repaid the CERB. The CRA and Service Canada will return any repaid amounts to these individuals. Additional details will be available in the coming weeks.

 


UPDATE January 26, 2021 – Highly Affected Sectors Credit Availability Program launched.

 On January 26, 2021, the Government announced the details of the Highly Affected Sectors Credit Availability Program (HASCAP).

Through HASCAP, the Business Development Bank of Canada (BDC) will work with participating Canadian financial institutions to offer government-guaranteed, low-interest loans of up to $1 million. Hard-hit businesses, like a chain of hotels or restaurants with multiple locations under one related entity, could be eligible for up to $6.25 million.

HASCAP is available to businesses across the country, in all sectors, that have been hit hard by the pandemic. This includes restaurants, businesses in the tourism and hospitality sectors, and those that rely on in-person service.

To be eligible, Canadian-based businesses need to show they have:

  • a year-over-year revenue decline of at least 50% in three months, within the eight months prior to their application;

  • previously applied for and received payments from either CEWS or CERS; and

  • been financially stable and viable pre-COVID

Loan funds must be used to continue or resume operations and cannot be used to pay or refinance existing debt.

Terms of loans include low (4%) interest with a repayment term of up to 10 years and up to a 12 month postponement of principal payments. The HASCAP guarantee is available until June 30, 2021.

Eligible businesses can start applying as early as February 1 at principal financial institutions and more widely by February 15. Interested businesses should contact their primary lender to get more information and to apply. More information is available at www.bdc.ca/hascap.

 


UPDATE January 11, 2021 – Non-essential international travel will affect access to the Canada Recovery Benefits.

On January 11, 2021, the Government of Canada announced that they will propose legislation to change the eligibility rules so that, retroactive to January 3, 2021, all international travelers who need to quarantine upon return to Canada will not be eligible to receive support from the Canada Recovery Sickness Benefit, the Canada Recovery Caregiving Benefit and the Canada Recovery Benefit for the period of their mandatory quarantine.  Individuals who are exempt from the mandatory quarantine requirements under the Quarantine Act will be eligible to apply following their return to the country.

Once they have served the mandatory quarantine period, individuals would be able to claim the recovery benefits for subsequent periods if they meet the eligibility criteria.

The Canada Revenue Agency (CRA) will update the application process for the three recovery benefits on Monday, January 11. For claims covering a period beginning on or after January 3, 2021, applicants will need to indicate whether they were self-isolating or in quarantine due to international travel. Over the coming weeks, the CRA will delay processing claims for individuals who are self-isolating or in quarantine because of international travel until the legislative process is complete to ensure those who receive the benefit meet the latest eligibility criteria.

 


UPDATE January 6, 2021 – CEWS and CERS information released for periods 11-13.

On January 6, 2021, additional information was released relating to periods 11-13 in respect of CEWS, and the corresponding periods for CERS, as follows:

  • the maximum CEWS claim will be 75% of applicable remuneration. The maximum base subsidy rate remains at 40% and maximum top-up subsidy rate is 35%
  • the maximum base CERS claim will be 65% of applicable expenses. The top-up for CERS lock-down support remains at 25%
  • the reference periods to be used for determining period 11 claims are the same as for period 10, which use December or November revenues
  • the maximum subsidy amount for employees on leave with pay is $595

UPDATE January 3, 2021 – Canada Summer Jobs 2021 program applications open.

Applications are now open for the Canada Summer Jobs (CSJ) 2021 program. Applications must be submitted by January 29, 2021.

The CSJ program provides wage subsidies to employers from not-for-profit organizations, the public sector and private sector organizations with 50 or fewer full-time employees, to create quality summer work experiences for young people aged 15 to 30 years. Funded employers are not restricted to hiring students — all youth aged 15 to 30 years may be eligible participants.

The CSJ 2021 program will continue to offer the temporary flexibilities in response to the COVID-19 pandemic, previously introduced for the 2020 CSJ program. The following temporary flexibilities will be in place for CSJ 2021:

  • Wage subsidies: Funded public and private sector employers will be eligible to receive a wage subsidy reimbursement of up to 75% of the provincial or territorial minimum hourly wage. Under regular rules, private and public sector employers are only eligible to receive up to 50% of the provincial or territorial minimum wage.
  • Part-time employment: All funded employers may offer part-time placements (for example, fewer than 30 hours per week). Under regular rules, all CSJ-funded employment has to be full time (a minimum of 30 hours per week).
  • Employment period: All funded employers may offer job placements between April 26, 2021 and February 26, 2022. Under regular rules, all CSJ-funded positions have to be completed during the summer months.
  • Changes to project and job activities: All funded employers may amend project and job activities if the proposed project is impacted by COVID-19 restrictions after an agreement is signed. In such cases, the employer should contact Service Canada to discuss potential amendments. All changes must be approved by Service Canada.

Applications can be submitted using an online fillable application, through Grants and Contributions Online Services (GCOS), in person, or by mail. For more information on the CSJ program, visit their website.

 


UPDATE December 21, 2020 – Ontario Small Business Support Grant announced amidst news of December 26th province-wide lockdown.

The Ontario government is imposing a Provincewide Shutdown  which will go into effect as of Saturday, December 26, 2020, at 12:01 a.m. The government also announced that it is providing grants of up to $20,000 to small businesses impacted by new public health measures. In January 2021, applications will open for the new Ontario Small Business Support Grant, which will help small businesses that are required to close or significantly restrict services under this new Provincewide Shutdown.

Grant amount

Starting at $10,000 for all eligible businesses, the grant will provide businesses with dollar for dollar funding to a maximum of $20,000 to help cover decreased revenue expected as a result of the Provincewide Shutdown. The business must demonstrate they experienced a revenue decline of at least 20 per cent when comparing monthly revenue in April 2019 and April 2020. This time period was selected because it reflects the impact of the public health measures in spring 2020, and as such provides a representation of the possible impact of these latest measures on small businesses.

Businesses will be able to use the support in whatever way makes the most sense for them. For example, some businesses will use the support to pay employee wages, while others will need support maintaining their inventory.

Eligibility

To receive the grant, a small business must:

  • Be required to close or restrict services subject to the Provincewide Shutdown effective 12:01 a.m. on December 26
  • Have fewer than 100 employees at the enterprise level
  • Have experienced a minimum of 20 per cent revenue decline comparing April 2020 to April 2019 revenues

Examples of eligible small businesses include: restaurants and bars, fitness centres and gyms, conference and convention centres, personal care services relating to the hair or body (with exception of oxygen bars), in person teaching and instruction, retail required to close for in-person shopping, shopping malls, personal services, photography services, outdoor sports and recreation facilities/amenities, safety, medical and assistive devices retail, rental and leasing services, lawn care and landscaping services, domestic services, vehicle and equipment repair services, veterinary services, cell phone and computer providers & repairs, and media industries including film and television production. For more examples of eligible businesses, click here.

Businesses that are not eligible include those that were already required to close prior to the introduction of modified Stage 2 measures, and essential business permitted to operate with capacity restrictions (e.g., discount and big box stores selling groceries, supermarkets, grocery stores, convenience stores, pharmacies, and beer, wine and liquor stores).

For small businesses not in operation in April 2019 or April 2020, eligibility criteria will be announced in January 2021.

Further details about the grant, including how to apply, will be available in January 2021.

 


UPDATE December 21, 2020 – Government announces the 2021 automobile deduction limits and expense benefit rates for businesses and temporary adjustments due to COVID-19.

Today, the Department of Finance Canada announced the automobile income tax deduction limits and expense benefit rates that will apply in 2021.

Most of the limits and rates that applied in 2020 will continue to apply in 2021, with one change taking effect as of January 1, 2021:

  • The general prescribed rate used to determine the taxable benefit of employees relating to the personal portion of automobile expenses paid by their employers will be decreased by one cent to 27 cents per kilometre. For people who are employed principally in selling or leasing automobiles, the rate used to determine the employee’s taxable benefit will be decreased by one cent to 24 cents per kilometre.

The following limits from 2020 will remain in place for 2021:

  • The limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes will remain at 59 cents per kilometre for the first 5,000 kilometres driven, and 53 cents per kilometre for each additional kilometre. For the Northwest Territories, Nunavut and Yukon the allowance is 4 cents higher, and will remain at 63 cents per kilometre for the first 5,000 kilometres driven, and 57 cents per kilometre for each additional kilometre.
  • The ceiling for capital cost allowances (CCA) for passenger vehicles will remain at $30,000, before tax, for non zero-emission passenger vehicles, and at $55,000, before tax, for eligible zero-emission passenger vehicles. These ceilings restrict the cost of a vehicle on which CCA may be claimed for business purposes.
  • The maximum allowable interest deduction for new automobile loans will remain at $300 per month.
  • The limit on deductible leasing costs will remain at $800 per month, before tax for new leases entered into. For automobiles valued over $30,000, a separate restriction will continue to prorate deductible lease costs.
temporary adjustment to standby charge

In light of the impact COVID-19 lockdowns and public health measures have had on how employees use their employer-provided vehicles, the government is also proposing temporary adjustments to the automobile standby charge. For the 2020 and 2021 taxation year, it is proposed that employees be allowed to use their 2019 automobile usage to determine eligibility for the reduced standby charge. Only employees with an automobile provided by the same employer as in 2019 would be eligible for this option. For more information, please refer to the related backgrounder.

 


UPDATE December 15, 2020 – Details regarding claiming home office expenses deductions on personal tax returns for the 2020 tax year were announced.

The Minister of National Revenue announced the highly-anticipated details regarding home office expenses deductions, which we have summarized.

The Canada Revenue Agency (CRA) has made the home office expenses deduction available to more Canadians and simplified the way in which employees can claim these expenses on their personal income tax returns for the 2020 tax year. Employees who have worked from home due to the pandemic, for more than 50% of the time over a period of a least four consecutive weeks in 2020 will now be eligible to claim the home office expenses deduction for 2020. The use of a shorter qualifying period will ensure that more employees can claim the deduction, than would otherwise have been possible under longstanding practice. To learn more about home office expenses deductions see our article, New Home Office Expenses Guidance Released.

 


UPDATE December 4, 2020 – The Canada Emergency Business Account program has been expanded.

As of December 4, 2020, Canada Emergency Business Account (CEBA) loans for eligible businesses have increased from $40,000 to $60,000. Applicants who have received the $40,000 CEBA loan may apply for the $20,000 expansion, which provides eligible businesses with an additional $20,000 in financing. All applicants have until March 31, 2021 to apply for the $60,000 CEBA loan or the $20,000 expansion.

Applicants with a $40,000 CEBA loan may apply for the $20,000 expansion by contacting the financial institution that provided the original CEBA loan. You will need to submit a new application and attestation to the financial institution that provided you with your original CEBA loan. You will not need to resubmit your original application, or re-upload expense documents. If you have already repaid your original CEBA loan, you may apply for the $20,000 expansion at the financial institution that provided you with your original CEBA loan. Once a financial institution begins to offer the $60,000 loan, you may no longer apply for solely the $40,000 loan.

Once you have applied at your financial institution, uploaded all necessary supporting documents (if applicable) and if pre-funding eligibility validation is successful, you should expect to receive funding within 10-15 business days.

CEBA repayment terms apply to all CEBA loans (original loan and expansion loan).

Terms of Forgiveness

  • If you borrowed $40,000 or less: Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).
  • If you borrowed more than $40,000 and up to $60,000: If you received a $40,000 loan and subsequently received the $20,000 expansion, the terms of your forgiveness have changed as follows: Repaying the outstanding balance of the loan (other than the amount available to be forgiven) on or before December 31, 2022 will result in a single tranche of loan forgiveness up to $20,000 based on a blended rate of 25 percent on the first $40,000 plus 50 percent on amounts above $40,000 and up to $60,000.
  • If you fully repaid your original $40,000 loan, claimed forgiveness and thereafter received the $20,000 expansion: Repaying the outstanding balance of the $20,000 expansion (other than the amount available to be forgiven) on or before December 31, 2022 will result in loan forgiveness of 50 percent (up to $10,000).

For more information, visit our Covid-19 Hub and the CEBA website.

 


UPDATE November 30, 2020 – The Minister of Finance and Deputy Prime Minister Chrystia Freeland delivered the 2020 Fall Economic Statement.

We have outlined select highlights related to the economic support for individuals and businesses in our article, Fall Economic Statement 2020.

To read the article, click here.

 


UPDATE November 20, 2020 – The application for the new Canada Emergency Rent Subsidy program will be available on November 23.

Today, the Government of Canada announced that the application for the new Canada Emergency Rent Subsidy (CERS) will be accessible through CRA on November 23, 2020.

Measures adopted as part of Bill C-9, which received Royal Assent on November 19, 2020, include the following:

  • The new CERS program, which provides tenants and property owners assistance with rent and mortgage interest payments until June 2021. The new program is set to support charities, businesses and non-profit organizations that have experienced a drop in revenue by providing support up to a maximum of 65% of eligible expenses until December 19, 2020. Claims can be made retroactively to September 27, 2020.
  • The new Lockdown Support, which will provide an additional 25% through CERS to qualifying organizations subject to lockdown procedures, should they be required to shut their doors or restrict their activities significantly under a public health order issued under the laws of Canada, a province or territory (including orders made by a municipality or regional health authority under one of those laws).
  • The extension of the Canada Emergency Wage Subsidy (CEWS) until June 2021. CEWS will remain at the current rate of up to 65% of eligible wages until December 19, 2020.

The new CERS attestation form (RC665) is now available. To add, the government also reaffirms its intention to formalize rent payable as an eligible expense for purposes of the CERS, as of September 27, 2020. Qualifying organizations will be able to take advantage of the rent subsidy on this basis once the application portal is launched.

For more information on the new CERS, visit our COVID-19 Hub.

 


UPDATE November 3, 2020 – New measures to help Canadian small businesses access global markets amid COVID-19 are announced.

The government has announced new actions to help Canadian businesses grow while navigating the challenges of the COVID-19 pandemic in the global marketplace.

The Government of Canada launched the CanExport SMEs program, delivered through the Trade Commissioner Service in 2016. This program has helped small business owners and entrepreneurs break into new international markets with funding of up to $75,000 to cover travel costs and other expenses.

With international travel restricted due to COVID-19, the CanExport SMEs program is pivoting to help small businesses:

  • develop and expand their e-commerce presence by covering partial costs associated with online sales platforms and digital strategy consulting, as well as advertising and search engine optimization
  • attend virtual trade shows and other business-to-business events
  • navigate new COVID-19-related trade barriers by helping pay for new international market certifications and requirements

These new measures will also provide dedicated support for Indigenous and women-owned small businesses, which have been disproportionately impacted by the COVID-19 crisis.

This new support will help small businesses in the coming months explore new opportunities to sell their world-class Canadian products and services in the international marketplace, grow their businesses and create good jobs for Canadians. Small business owners and entrepreneurs are encouraged to apply for CanExport SMEs program funding. Click here to view application guidelines.

 


UPDATE November 3, 2020 – The Ontario government is providing property tax and energy cost rebates to eligible businesses.

The Ontario government is providing property tax and energy cost rebates to eligible businesses required to significantly restrict their services or close their doors as a result of provincial public health restrictions. Through Ontario’s Property Tax and Energy Cost Rebates program, the government is building on its collaboration with federal partners and dedicating $300 million to ensure eligible businesses receive the financial help they require.

The rebates will include municipal and education property taxes and energy costs, including electricity and natural gas (or where natural gas is not available, propane and heating oil). The funding will cover the entire length of time that regionally targeted public health restrictions are in place. Property tax rebates will be net of any federal support in respect of property taxes provided through the new Canada Emergency Rent Subsidy (CERS), so as to cover costs beyond those already covered by CERS. Details about applying for CERS are expected to be forthcoming from the Government of Canada.

 

Eligibility Criteria

Eligible businesses must be located in areas subject to modified Stage 2 public health restrictions (Ottawa, Peel, Toronto, and York Region), or going forward, in areas that fall under ‘Control’ or ‘Lockdown’ categories.

Types of businesses that are eligible for support include:

  • restaurants and bars
  • gyms, facilities for indoor sports and recreational fitness activities
  • performing arts and cinemas
  • bingo halls, gaming establishments, casinos, conference centres and convention centres
  • community centres, multi-purpose facilities, and museums
  • personal care services (with exception of oxygen bars)
  • racing venues
  • meeting or event space
  • in-person teaching and instruction

 

Application

Beginning November 16, eligible businesses will be able to apply for temporary property tax and energy cost rebates directly to the province through a single, online application portal. Many businesses can expect to receive their rebate payments within a few weeks of finalizing and submitting their application.

You will need to submit proof of costs and information related to your business’ revenue decline, that is consistent with the information you submit as part of your CERS application.

For property tax rebates, this includes your property tax bills (or proof of costs associated with property taxes).

For energy cost rebates, this includes a digital copy of the first energy bill you received (including electricity, natural gas, propane or other) on or after the day Stage 2 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.

For questions about property tax and energy bill rebates, please contact the Stop the Spread Business Information Line at 1-888-444-3659

 


UPDATE October 26, 2020 – The Canada Emergency Business Account will be available to businesses operating out of a non-business banking account.

The government announced that the Canada Emergency Business Account (CEBA) will be available to businesses that have been operating out of a non-business banking account.

To be eligible, businesses must have been operating as a business as of March 1, 2020, must successfully open a business account at a Canadian financial institution that is participating in CEBA and meet the other existing CEBA eligibility criteria. The deadline to apply for CEBA is December 31, 2020.

 


UPDATE October 26, 2020 – The government extends the deadline to apply for the Disability Tax Credit. 

The deadline to apply for the Disability Tax Credit (DTC) to receive the one-time payment has been extended from September 25, 2020, to December 31, 2020. This non-taxable and non-reportable payment of up to $600 is intended to support Canadians with disabilities and help them with additional expenses incurred during the pandemic.

The one-time payment will help persons with disabilities with the following expenses:

  • expenses related to hiring personal support workers and accessing other disability supports;
  • paying for increased costs for medical supplies and medication;
  • purchasing personal protective equipment;
  • higher costs associated with physical distancing and working from home; anincreased use of transportation and home delivery services to obtain groceries and prescriptions.

Most eligible Canadians will begin to receive their payments on October 30, 2020, through direct deposit and by mail, using information collected from existing government programs. These are individuals who had an existing valid Disability Tax Credit (DTC) certificate at the time the information for the one-time payment was collected (September 2020), or were a beneficiary as at July 1, 2020 of:

  • Canada Pension Plan Disability; and/or
  • Quebec Pension Plan Disability Pension; and/or
  • one of the disability supports provided by Veterans Affairs Canada (VAC).

In order to increase and expand access, payments will go out in a phased approach. Using information collected in November 2020, a payment will be made in January 2021 to individuals who, at the end of September 2020, had not yet received a decision about their eligibility for one of the eligible programs, or did not have accurate direct deposit or mailing information on file. A payment may follow in the spring of 2021 for those who submit their application by December 31, 2020 and are determined to be eligible; or those who receive a decision about their eligibility for one of the eligible programs by the end of February 2021.

 


UPDATE October 20, 2020 – New relief grant for small businesses.

The federal government is investing $12 million into the Canada United Small Business Relief Fund (CUSBRF), to support small businesses through the coronavirus pandemic. The CUSBRF provides eligible small businesses with relief grants of up to $5,000, to be used for pandemic recovery efforts. The grant provides a reimbursement of costs incurred in order to allow a safe reopening and the adoption of digital technologies, in relation to COVID-19.

The CUSBRF is part of the #CanadaUnited nationwide campaign, which encourages Canadians to support local businesses by buying, dining and shopping local. The CUSBRF will be managed by the Ontario Chamber of Commerce, on behalf of the national Chamber network in support of other chambers and partners. Applicants for the relief grant do not need to be members of the Ontario Chamber of Commerce (OCC).

Qualifying entities include small to medium-sized (SME) companies from any sector and from all regions of Canada who meet the eligibility criteria. Both for-profit and not-for-profit organizations are eligible to apply, although government organizations, municipalities, charities and the chamber of commerce network are not eligible. Considerations will be made to ensure the fund is distributed broadly, to all Canadian regions. Priority applicants for consideration will include businesses owned by Indigenous Peoples, women, visible minorities, LGBTQ2+ and persons with disabilities.

 

Eligible Expenses

Expenses eligible for reimbursement fall under the following 3 categories:

  • Purchasing personal protective equipment such as masks, face shields and latex gloves
  • Renovating physical spaces to adhere to local, provincial or federal reopening guidelines
  • Developing or improving e-commerce capabilities for your business (including enhancements of websites)

For more information on eligible and ineligible expenses, click here.

Eligible expenses directly related to the above categories are permitted provided that purchases were made no earlier than March 15, 2020. All eligible expenses must be incremental and a direct result of adjusting operations for pandemic safety guidelines. Normal or usual ongoing business costs are not eligible.

 

Eligibility Criteria

Eligibility Criteria Include:

  • Must be incorporated, or operating as a sole proprietor/partnership in Canada, as of March 1, 2020
  • Must have less than 75 employees
  • Annual sales are at minimum $150,000 and not more than $3,000,000
  • Must have $1,000,000 of commercial general liability insurance
  • Must not be receiving other contributions from public funds toward the specific activities contained in the application
  • Must be in full compliance with all applicable government laws, rules, regulations and guidelines
  • Must be in operation after September 1, 2020

 

Application

The new application window will open on Monday, October 26, 2020. Applications can be submitted at the following website, by clicking on the link related to the province in which your business is located. The application can be accessed by clicking on the application link located on your participating local or provincial Chamber of Commerce site. Only one application per ownership group can be submitted.

Applicants will be required to describe the reason they are applying to the program and explain the impact COVID-19 has had on operations, including the possible economic hardship, temporary closure, etc. Further, applicants must attach all necessary receipts and invoices, accompanied with proof of payment to their application. Applicants must also submit the company’s sales tax (GST/HST) registration document or a recent sales tax (GST/HST) filing and one of the following documents:

    • Proof of business registration
    • Business license
    • Articles of incorporation or letters patent
    • For partnerships: articles of incorporation or letters patent for each corporate partner

These documents must show official stamp, logo or other official identifying details from the issuing agency.

To get ahead of the curve, see the program guidelines and the pre-application check-list.

 


UPDATE October 9, 2020 – Government announces new, targeted support to help businesses through pandemic.

The Government of Canada announced its intention to introduce new, targeted supports to help hard-hit businesses and other organizations experiencing a drop in revenue. The government plans to introduce legislation to provide new and expanded support, including:

Canada Emergency Rent Subsidy 

  • The new Canada Emergency Rent Subsidy (CERS), which would provide rent and mortgage support until June 2021 for qualifying organizations affected by COVID-19.
  • The rent subsidy would be provided directly to tenants, while also providing support to property owners.
  • The new rent subsidy would support businesses, charities, and non-profits that have suffered a revenue drop, by subsidizing a percentage of their expenses, on a sliding scale, up to a maximum of 65% of eligible expenses until December 19, 2020.
  • Organizations would be able to make claims retroactively for the period that began September 27 and ends October 24, 2020.
  • A top-up CERS of 25% for organizations temporarily shut down by a mandatory public health order issued by a qualifying public health authority, in addition to the 65% subsidy.

Canada Emergency Wage Subsidy

  • The extension of the Canada Emergency Wage Subsidy (CEWS) until June 2021.
  • The subsidy would remain at the current, period 8, subsidy rate of up to a maximum of 65% of eligible wages until December 19, 2020. The maximum was previously set to reduce to 45% for period 9.

Canada Emergency Business Account

  • An expanded Canada Emergency Business Account (CEBA), which would enable businesses, and not-for-profits eligible for CEBA loans—and that continue to be seriously impacted by the pandemic—to access an interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000.
  • Half of this additional financing would be forgivable if repaid by December 31, 2022.
  • Additionally, the application deadline for CEBA is being extended to December 31, 2020.
  • Further details, including the launch date and the application process will be announced in the coming days. An attestation of the impact of COVID-19 on the business will be required to access the additional financing.

 


UPDATE October 9, 2020 – Ontario imposes stricter temporary measures in Ottawa, Toronto, and Peel Region.

Ontario is tightening restrictions in three major areas including Toronto, Peel Region and Ottawa in an effort to curb the spread of COVID-19. The modified Stage 2 restrictions go into effect Saturday, October 10, for a period of 28 days, and include:

  • Closure of:
    • indoor dining at restaurants and bars
    • gyms
    • movie theatres
    • casinos
    • performing arts
    • racing venues
  • Personal care services where masks must be removed are prohibited, as are team sports games and scrimmages;
  • Capacity limits are reduced to 10 people indoors for tours, real estate open houses and meeting and event spaces. Physical distancing must be maintained; and
  • Wedding receptions will be limited to 10 people indoors or 25 people outdoors effective 12:01 a.m. on Oct. 13.

The government is also asking people in these areas to leave their homes only for essential purposes. Travel to other regions in the provinces should also be limited. Schools and child-care centres will remain open as part of the plan.

The government announced $300 million to support businesses amid the closures.

 


UPDATE October 2, 2020 – Legislation to support Canadians through new Recovery Benefits has passed.

On October 2, Royal Assent was received for Bill C-4, which enacts the Canada Recovery Benefit (CRB), the Canada Recovery Caregiving Benefit (CRCB), and the Canada Recovery Sickness Benefit (CRSB). A new web page has been launched to provide instructions for transferring from CERB to EI or other benefits.

New webpages were released for each of the new benefits: CRB, CRCB , CRSB. Applications for CRB open October 12, 2020 and applications for CRCB and CRSB open October 5, 2020.

 


UPDATE September 25, 2020 – The government is proposing to extend the current treatment of furloughed employees under the wage subsidy program.

The Minister of Finance is proposing to extend the current treatment of furloughed employees under the wage subsidy program for the upcoming four-week period, from September 27 to October 24, 2020.

This means employers who qualify for the wage subsidy would be able to continue to claim up to a maximum benefit of $847 per week per employee, to support remuneration of their furloughed workers until October 24, 2020.

For the following periods, the government will review the wage subsidy program in light of ongoing progress in fighting COVID-19 as well as any adjustments needed to facilitate the extension of the wage subsidy into 2021, as committed in the Speech from the Throne.

 


UPDATE September 24, 2020 – The government introduces legislation to support Canadians through Recovery Benefits.

On September 24, the government announced the introduction of Bill C-2, to create three new temporary Recovery Benefits to support Canadians unable to work for reasons related to COVID-19. The details were originally announced on August 20. The legislation differs slightly from the original announcement, in particular, the payments under the Canada Recovery Benefit increased from $400 per week to $500 per week. The EI weekly minimum also increased from $400 per week to $500 per week.

Subject to this legislation receiving Royal Assent, the new benefits would provide income support to Canadians and specifically, the legislation includes:

  • A Canada Recovery Benefit (CRB) of $500 per week for up to 26 weeks, to workers who are self-employed or are not eligible for EI and who still require income support. This Benefit would support Canadians who have not returned to work due to COVID-19 or whose income has dropped by at least 50%. These workers must be available and looking for work, and must accept work where it is reasonable to do so;
  • A Canada Recovery Sickness Benefit (CRSB) of $500 per week for up to two weeks, for workers who are sick or must self-isolate for reasons related to COVID-19. This Benefit supports our commitment to ensure all Canadian workers have access to paid sick leave; and
  • A Canada Recovery Caregiving Benefit (CRCB) of $500 per week for up to 26 weeks per household, for eligible Canadians unable to work because they must care for a child under the age of 12 or a family member because schools, day-cares or care facilities are closed due to COVID-19, or because the child or family member is sick and/or required to quarantine.

Canadians will be able to apply for the CRB, CRSB, and CRCB through the Canada Revenue Agency (CRA) for one year up until September 25, 2021.

As announced on August 20, temporary measures to help Canadians access EI benefits more easily are effective September 27, 2020, for one year. These changes will also establish a minimum weekly benefit rate of $500 for new EI recipients, at the same level as the CRB.

More detailed eligibility criteria can be found here.

For further details, also see our article.

 


UPDATE September 23, 2020 – The Honourable Governor General delivered the Speech from the Throne.

During the Throne Speech, the Honourable Governor General announced several measures aimed at alleviating some of the hardships Canadians are experiencing with respect to the pandemic. This article outlines a select set of economic measures pertaining to individuals and businesses that may be of interest to you.

The government’s approach to meet the challenges Canadians are faced with has four foundations; Protecting Canadians from COVID-19, Helping Canadians Through the Pandemic, Building Back Better – A resiliency agenda for the middle class, and Canada We Are Fighting For.


Protecting Canadians from COVID-19

• Canada Emergency Wage Subsidy (CEWS) will be extended through to the next summer 2021.
• Canada Emergency Business Account (CEBA) will be expanded.
• Business Credit Availability Program (BCAP) will be increased.
• The EI system will become the sole delivery mechanism for employment benefits, including for Canadians who did not qualify for EI prior to the pandemic.
• A campaign to create 1 million jobs will be launched, including direct investment, immediate training and incentives for employers to hire.
• The stock option deduction will be limited for wealthy individuals at large, established corporations.
• Corporate tax avoidance by digital giants will be addressed by the government.
• Special sectors such as travel and tourism, hospitality and cultural industries like the performing arts will be supported.

Building back better – A resiliency agenda for the middle class

• The First-Time Home Buyer Incentive will be enhanced.
• Old Age Security (OAS) will be increased once individuals reach the age of 75. Higher Canada Pension Plan (CPP) survivor benefits will become available.
• Automatic tax filing for simple returns will be implemented.
• The corporate tax rate will be cut in half for certain clean energy generation industries.
• A Disability Inclusion Plan will be brought forward:

• A new Canadian Disability Benefit will be modelled after the Guaranteed Income Supplement for seniors;
• A robust employment strategy for Canadians with disabilities will be introduced; and
• A better process to determine eligibility for government disability programs and benefits will be implemented.

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The government will release an update to Canada’s COVID-19 Economic Response Plan later this fall. This update will outline the government’s economic and fiscal position, provide fiscal projections and set out new measures to implement the items in this Throne Speech.

For a full text of the government’s speech and other significant measures within all the foundations, see the following link: https://bit.ly/32VT3rk 

 


UPDATE September 11, 2020 – The Canada Revenue Agency has extended the SR&ED deadlines.

Under the Time Limits and Other Periods Act (COVID-19), the Canada Revenue Agency has received a ministerial order to extend certain deadlines imposed under the Income Tax Act. Some reporting deadlines for scientific research and experimental development (SR&ED) claims have been extended as shown below.

The SR&ED reporting deadlines affected by this ministerial order include any that occurred on or after March 13, 2020. No SR&ED reporting deadlines are extended past December 31, 2020.

CORPORATIONS

Corporations have been extended by six months or to December 31, 2020, whichever date comes first. Corporations with tax year ends from September 13, 2018, to December 31, 2018, that had an SR&ED reporting deadline from March 13, 2020, to June 30, 2020, are extended by six months. Corporations with tax year-ends from January 1, 2019, and to June 29, 2019, that would usually have an SR&ED reporting deadline from July 1, 2020, to December 29, 2020, are extended to December 31, 2020.

INDIVIDUALS

Individuals have been extended by six months to December 15, 2020. This only applies to individuals who operated a sole proprietorship with a December 31, 2018, tax year-end and who had an SR&ED reporting deadline of June 15, 2020.

TRUSTS

Trusts have been extended by six months or to December 31, 2020, whichever date comes first. Trusts with tax year-ends from December 13, 2018, to April 1, 2019, that would usually have an SR&ED reporting deadline from March 13, 2020, to June 30, 2020, are extended by six months. Trusts with tax year-ends of April 2, 2019, to October 1, 2019, that would usually have an SR&ED reporting deadline of July 1, 2020, to December 30, 2020, are extended to December 31, 2020.

Your usual SR&ED reporting deadline

To determine your usual SR&ED reporting deadline, see section 6.0 of the SR&ED Filing Requirements Policy.
To avoid interest and penalties, you must file your tax return by the filing due date. If you are making an SR&ED claim, we encourage you to include it with this filing, even though the usual SR&ED reporting deadline is 12 months after the tax return filing due date.

For more information, see the following link.

 


UPDATE September 8, 2020 – The government announces an extension to the Canada Emergency Commercial Rent Assistance program for Small Businesses.

Today, the government announced that the Canada Emergency Commercial Rent Assistance (CECRA) program for small businesses will be extended by one month to help eligible small businesses pay rent for September. All provinces and territories continue to participate in this initiative and collaborate with the federal government, to provide rent supports to those small businesses most in need. Current CECRA application deadlines will also be extended to accommodate this extension.

Across the country, thousands of small businesses that were forced to close or were especially hard hit have been able to use CECRA to help cover rent and position themselves to reopen as the economy reopens. As of September 7, 2020, over 106,000 small business tenants have been supported, representing 994,000 employees, for a total of over $1.32 billion in rent support.

Property owners are encouraged to continue to make use of CECRA for eligible tenants and to work to provide flexibility where possible to their tenants as they recover from the crisis. The federal government also continues to support the provincial banning of commercial evictions during the pandemic.

This will be the final extension to CECRA, as the government explores other options to support small businesses facing the challenges of the COVID-19 pandemic — including the challenges of fixed costs at a time when health concerns and precautions prevent many businesses from operating at full capacity. The federal government will continue to ensure Canadian small businesses have the support they need.

 


UPDATE September 3, 2020 – Canada Revenue Agency increases flat rate amount for meal claims, and reasonable amount for meal benefits and allowances.

Today, the Minister of Transport announced that the Canada Revenue Agency (CRA) has increased the amount that employers can use to determine whether an overtime meal or allowance, or the meal portion of a travel allowance is taxable, from $17 to $23. The CRA has also increased the rate at which transport employees and other individuals can claim meal expenses, using the simplified method (a flat rate per person), from $17 to $23 per meal. These increases are effective immediately and retroactive to January 1, 2020.

Since the beginning of the pandemic, essential workers across Canada have been working tirelessly to ensure Canadians are kept safe while still having access to goods and services they require. Increasing the amount for meal claims and meal benefits or allowances ensures that all employees, including our essential workers, can access meals that meet today’s inflation as they continue to provide services that support Canadians through this pandemic.

The CRA’s policies on taxable benefits and allowances allows an employer to exclude the value of an overtime meal or allowance, or certain travel allowances (including a meal portion), from an employee’s income as long as the value is reasonable (in addition to other conditions). If all the conditions are met, the employer does not need to report the value of the meal or allowance on the employee’s T4 slip.

When claiming meal expenses on a personal income tax and benefit return, the CRA allows transport employees, and individuals claiming moving expenses, medical expenses, or the northern residents deduction, to calculate their meal expenses claim using the simplified method. This method is the easiest way to calculate meal expenses, as it is based on a flat rate and individuals do not have to keep receipts for their meals.

The $17 value in these policies was last updated in 2009. These increases provide more flexibility and now accurately represent the average cost of a meal today, ensuring Canadian taxpayers can benefit from of their meal benefit, allowance or claim fully.

More information on the increased amounts and how they impact employers and/or employees, will be made available in the coming weeks, including in the following publications:

Guide T4130, Employer’s Guide – Taxable Benefits and Allowances – for information on calculating taxable benefits and allowances for overtime meals or allowances, or travel allowances. Employers may also use this guide for instructions on how to report these benefits or allowances on their employee’s T4 slips.

Guide T4044, Employment Expenses – for information on the simplified method for claiming meal expenses.

 


UPDATE September 3, 2020 – The government announces over 1,000 new projects in support of seniors impacted by COVID-19.

As seniors ensure their safety by staying home during the COVID-19 pandemic, it is critical to provide additional support to them and reduce their social isolation, which can take a toll on their mental health.

Today, the government announced over 1,000 new projects delivered by community organizations across the country to support seniors during the pandemic. These projects are funded through an investment of $20 million in funding through the New Horizons for Seniors Program (NHSP).

Organizations will receive up to $25,000 in funding to offer immediate COVID-19 relief or recovery activities to seniors. The projects will include:

  • promoting computer literacy and virtual activities, such as exercise classes among seniors;
  • supporting the delivery of food and medication or personalized monitoring of seniors by phone or videoconference;
  • assisting seniors with essential activities, such as visits to the doctor;
  • hiring staff to replace a loss of volunteerism capacity due to the outbreak;
  • providing information to seniors regarding how to care for themselves in light of experiences relating to the pandemic; and
  • providing training on disease prevention and use of personal protective equipment.

Shubh Helping Hands in Missisauga, Ontario will receive $25,000 to design and facilitate physical distancing activities through virtual meetings including dance, exercise, yoga, and supportive educational training such as using personal protective equipment and supporting mental health in relation to COVID-19 isolation.

These additional projects will help ensure more communities will be able to reduce seniors’ isolation, improve their quality of life and help them maintain a social support network.

 


UPDATE August 31, 2020 – The application deadline for the Canada Emergency Business Account has been extended.

The government has announced that the application deadline for the Canada Emergency Business Account has been extended to October 31, 2020. In addition, the government is exploring ways to make the program available to those with qualifying payroll or non-deferrable expenses, who have not been able to apply as a result of operating from a business banking account. Further details regarding these changes will be released in the coming days and will include information about a new business account opening process, through which qualifying businesses will be able to apply.

 


UPDATE August 27, 2020 – The government announces new T4 filing requirements for the 2020 tax year. 

The Canada Revenue Agency (CRA) will be introducing additional reporting for the T4 slip, Statement of Remuneration Paid, for the 2020 tax year. Additional reporting requirements will apply to all employers and will help the CRA validate payments under the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB).

In addition to reporting employment income in Box 14 or Code 71, use the new information codes below when reporting employment income and retroactive payments in the following periods for the 2020 tax year:

•    Code 57: Employment income – March 15 to May 9
•    Code 58: Employment income – May 10 to July 4
•    Code 59: Employment income – July 5 to August 29
•    Code 60: Employment income – August 30 to September 26

Eligibility criteria for the CERB, CEWS, and CESB is based on employment income for a defined period. The new requirement means employers should report income and any retroactive payments made during these periods. For example, if you are reporting employment income for the period of April 25 to May 8, payable on May 14, use code 58.

 


UPDATE August 26, 2020 – The Government of Canada announces the opening of a Canada Emergency Business Account call centre.

If you have applied for Canada Emergency Business Account (CEBA) and have questions, please contact the new CEBA Call Centre at 1-888-324-4201 to receive a status update on your CEBA application. The CEBA call centre is open Monday to Friday from 8:00 am to 9:00 pm EST and can address the following types of questions:

What is the status of my application?
Why was my application declined?
Why was my submitted document rejected?

 


UPDATE August 24, 2020 – The government announces a four-week extension to the Canada Emergency Wage Subsidy for furloughed employees. 

The Canada Emergency Wage Subsidy (CEWS) has supported more than 3 million Canadians since the beginning of the pandemic and provided support to businesses so they can keep workers, including furloughed workers, on their payroll.

To help support workers and provide certainty for employers, Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland, announced that the government proposes to extend the current treatment of furloughed employees under the CEWS program by 4 weeks (from August 30 to September 26).  This would mean employers who qualify for the CEWS program would be able to continue to claim up to a maximum benefit of $847 per week to support remuneration for each of their furloughed workers. Further details about the calculation of CEWS for furloughed workers for remaining periods of the program will be announced in the coming weeks.

 


UPDATE August 20, 2020 – The government provides details on the transition out of Canada Emergency Response Benefit into a simplified and enhanced EI program and into new benefit programs. 

The government has announced new measures to support Canadian workers through the next phase of recovery. The Canada Emergency Response Benefit (CERB) is a temporary response benefit to support Canadians who had to stop working due to the pandemic. The Government will be transitioning to a simplified Employment Insurance (EI) program, effective September 27, 2020, to provide income support to those who remain unable to work and are eligible, and introducing a new suite of temporary and taxable recovery benefits to further support workers. For further details, see the following article.

 


UPDATE August 17, 2020 – The Canada Revenue Agency temporarily shuts down its online services after cyberattacks compromised thousands of accounts.

The Canada Revenue Agency (CRA) has temporarily shut down its online services after being targeted by three cyberattacks that compromised thousands of accounts linked to these services. The agency has confirmed that approximately 9,000 accounts have been affected by the separate attacks. Although the security breaches have been contained, services connected to My Account on the CRA website have been disabled as an additional safety measure.

Individuals attempting to apply for emergency COVID-19 benefits, such as the Canada Emergency Response Benefit (CERB) or the Canada Emergency Student Benefit (CESB), will be unable to do so until further notice. Annette Butikofer, Chief Information Officer at CRA, has stated that CRA hopes to have its online services for individuals back up and running by mid-week. CRA also temporarily cut off access to its My Business Account and Represent a Client this Sunday, although Butikofer has confirmed My Business Account is back online with additional safety measures, so employers can apply for the 5th period of the emergency wage subsidy.

Over the last few weeks, Canadians began to report that email addresses associated with their CRA accounts were changed, their direct deposit information had been altered and CERB payments had been issued in their name, even though they had not applied for the benefit.

“The CRA quickly identified the impacted accounts and disabled access to these accounts to ensure the safety and security of the taxpayer’s information,” CRA spokesperson Christopher Doody wrote in an email. “The CRA is continuing to analyze both incidents. Law enforcement assistance has been requested from RCMP and an investigation has been initiated.”

Marc Brouillard, Acting Chief Information Officer for the Treasury Board of Canada stated that these incidents are known as “credential stuffing”. He further explained, “These attacks, which used passwords and usernames collected from previous hacks of accounts worldwide, took advantage of the fact that many people reuse passwords and usernames across multiple accounts.”

The CRA will send letters to those affected by the incidents, explaining how to confirm their identities and reclaim control of their accounts. Individuals phoning the agency may select the “report suspected fraud or identity theft” option to speak with a representative more promptly. Canada’s cyber intelligence agency recommends that anyone affected by the breach update their passwords immediately and choose a password they have not used in the past and will not use for any other account.

 


UPDATE August 17, 2020 – The Government of Canada has made significant changes to the Canada Emergency Wage Subsidy program for claim period 5 and onward.

Applications for the Canada Emergency Wage Subsidy (CEWS) claim period 5 (July 5 to August 1) open as of today. The significant changes to the CEWS program announced on July 17 and enacted into legislation on July 27, 2020, apply to claim period 5 and onward.

Changes to CEWS as of claim period 5 include:

  • the subsidy rate varies, depending on how much your revenue dropped
  • the subsidy rate is made up of two parts: a base subsidy rate and a top-up subsidy rate
  • if your revenue drop was less than 30% you can still qualify, and keep getting the subsidy as employees return to work and your revenue recovers
  • employers who were hardest hit over a period of three months get a higher amount
  • employees who were unpaid for 14 or more days can now be included in your calculation
  • use the current period’s revenue drop or the previous period’s, whichever works in your favour
    • for periods 5 and 6, if your revenue dropped at least 30%, your subsidy rate will be at least 75%
  • even if your revenue has not dropped for the claim period, you can still qualify if your average revenue over the previous three months dropped more than 50%
  • the maximum base subsidy rate is 60% in claim periods 5 and 6
  • the maximum base subsidy rate will begin to decline in claim period 7, gradually reducing to 20% in period 9

CRA has released new and updated guidance and tools for the application for CEWS for periods 5 and onwards, including updated FAQs, online step by step description, and a new calculator. Visit the CRA website and our COVID HUB for more information.

 


UPDATE July 31, 2020 – The Government of Canada has further extended the Canada Emergency Commercial Rent Assistance program.

The Canada Emergency Commercial Rent Assistance (CECRA) program has been further prolonged by one month, through to the end of August.

Those who qualified for CECRA for small businesses based on existing program parameters will be able to apply for the additional 1 month based on having a 70% revenue decline for April, May and June (for example, without reassessing whether they continue to have a 70% revenue decline in August). Participation in the one-month extension is voluntary. Both existing applicants to CECRA for small businesses and new applicants are able to apply for the August rent reduction.

 


UPDATE July 27, 2020 – The Canada Revenue Agency announces an extension to the payment deadline and offers interest relief on outstanding tax debts. 

In addition to measures already announced, the CRA is extending the payment deadline and applying relief to interest on existing debt.

The CRA is extending the payment due date for current year individual, corporate and trust income tax returns, including instalment payments, from September 1, 2020, to September 30, 2020. Penalties and interest will not be charged if payments are made by the extended deadline of September 30, 2020. This includes the late-filing penalty as long as the return is filed by September 30, 2020.

The CRA is also waiving interest on existing tax debts related to individual, corporate and trust income tax returns from April 1, 2020, to September 30, 2020 and from April 1, 2020, to June 30, 2020, for goods and services tax/harmonized sales tax (GST/HST) returns.

The previously extended filing due dates for individual, corporate and trust income tax returns remain unchanged. However, the CRA will not impose late-filing penalties where a current year individual, corporation, or trust return is filed late provided that it is filed by September 30, 2020.

To ensure Canadians continue to receive their benefits and credits during the COVID-19 pandemic, the CRA temporarily suspended interruptions for those who were unable to file their income tax and benefit returns by the June 1 deadline. Currently, if a 2019 individual tax return has not been assessed, the CRA is calculating benefits and/or credits for the July to September 2020 payments based on information from 2018 tax returns. However, if 2019 individual tax returns are not received and assessed by early September 2020, estimated benefits and/or credits will stop in October 2020 and individuals may have to repay the amounts that were issued as of July 2020.

 


UPDATE July 27, 2020 – The 10% Temporary Wage Subsidy reporting feature now available.

After the eligibility period of the 10% Temporary Wage Subsidy (TWS) program ended on June 19, 2020, eligible employers are required to complete a self-identification form for each payroll program account, where remittances were reduced by an amount of the subsidy.

This self-identification form is now available for reporting. The reporting of the 10% wage subsidy claim and related election is now available through “Represent a Client” and “My Business Account”. Reporting can be done in the Payroll section by selecting “10% Temporary Wage Subsidy”.

Eligible employers who did not reduce their remittances must also complete this form, to allow the CRA to credit their payroll program account by the amount of the subsidy that they are eligible for.

If you elected for the 10% Temporary Wage Subsidy for Employers to be equal to a lower percentage of the remuneration you paid, you must indicate on your self-identification form that you reduced your remittances by a lower amount than what you were entitled to. If you fail to do so, you will be credited for the entire 10% subsidy and your CEWS claim may be reduced and recovered if necessary.

The CRA will use the information reported to reconcile the subsidy with your payroll program account. If you have a credit in your payroll program account after the subsidy is applied and your account is reconciled, the CRA will pay the amount to you or transfer it to your next year’s remittance.

 


UPDATE July 27, 2020 – The Canada Revenue Agency is experiencing processing delays.

CRA is experiencing delays in processing paper income tax and benefit returns.

CRA advises taxpayers to:

  • file your 2019 taxes online as soon as possible and register for direct deposit to get refunds faster and avoid interruptions to benefit and credit payments.
  • submit your requests for changes electronically, using Change My Return in My Account or ReFILE. If you have already submitted a request to change your return by mail that has not been processed yet, you may be able to submit it again electronically.

Temporary measure for paper returns

If you have already filed a 2019 paper return that has not been processed yet, you can file it again online using NETFILE certified tax software. This does not include returns that the software says must be paper-filed or returns that are excluded from electronic filing.

 


UPDATE July 24, 2020 – Additional guidance has been issued for Canada Emergency Business Account eligibility.

The Canada Emergency Business Account (CEBA) program was first made available for eligible entities that had total employment income paid in the 2019 calendar year between $20,000 and $1,500,000. Later, the program was expanded to include eligible entities with $20,000 or less in total employment income paid in the 2019 calendar year, provided these entities meet additional conditions; among them is that they have Eligible Non-Deferrable Expenses between $40,000 and $1,500,000. Additional guidance regarding the calculation of Eligible Non-Deferrable Expenses has recently been released.

An eligible entity’s total incurred and projected Eligible Non-Deferrable Expenses, used to determine whether such expenses are between $40,000 and $1.5 million, are measured as they stood on March 1, 2020. Under all expense categories, the amounts to be included in the total are those actually paid in January and February 2020, as well as those for which a legal or contractual obligation existed on March 1, 2020, for the applicant to pay the expense within the remainder of 2020 and which cannot be avoided or deferred beyond 2020, even during a period of shut down and depressed revenues as a result of COVID. For periodic or indefinite contracts that renew or continue with the passage of time absent intervention by the parties, such as a monthly phone contract, assume that the contract continues on the same terms beyond March 1 such that payments related to the later periods in 2020 are included as obligations provided for in contract as at March 1.

For example, assume your business signed an insurance policy on February 1, 2020. As at March 1, the business had paid the monthly insurance expense for February and a contractual obligation then existed providing for payments of the expense for the subsequent months of 2020. All 11 monthly insurance payments would be included in the total Eligible Non-Deferrable Expenses.

CEBA is intended to support businesses by providing financing for their expenses that cannot be avoided or deferred as they take steps to safely navigate a period of shutdown, thereby helping to position businesses for successful relaunch when the economy reopens.

For more information, visit our COVID-19 Hub.

 


UPDATE July 17, 2020 – The Government of Canada releases details on the redesigned Canada Emergency Wage Subsidy program.

The government has announced proposed changes to the CEWS that would broaden the reach of the program and help provide better targeted support. The draft legislative proposals would allow the extension of the CEWS until December 19, 2020, including redesigned CEWS program details until November 21, 2020.

The changes outlined in the draft legislative proposals would apply to Period 5 (beginning July 5) and subsequent periods. The same eligibility criteria for the initial three claim periods (March 15 to June 6, 2020) would continue to apply for Period 4 (June 7 to July 4, 2020). Effective July 5, 2020, the CEWS would consist of two parts:

  • base subsidy available to all eligible employers that are experiencing a decline in revenues, with the subsidy amount varying depending on the scale of revenue decline; and
  • top-up subsidy of up to an additional 25 per cent for those employers that have been most adversely affected by the COVID-19 crisis.

The two-part CEWS would apply with respect to the remuneration of active employees. A separate CEWS rate structure would apply to furloughed employees (as described further below). In addition, a safe harbour would be available to ensure that, through August 29 (periods 5 and 6), employers would have access to a CEWS rate that is at least as generous as they would have had under the initial CEWS structure, as described further below (see Safe harbour rule for Periods 5 and 6).

Base Subsidy for All Employers Impacted by the Crisis

The base CEWS amount for active employees would be a specified rate, applied to the amount of remuneration paid to the employee for the eligibility period, on remuneration of up to $1,129 per week. The rate of the base CEWS would now vary depending on the level of revenue decline, and its application would be extended to employers with a revenue decline of less than 30 per cent (see Table 1). This expansion would mean that all eligible employers with a revenue decline would now qualify for CEWS support.

The specified rate would be determined based on the change in an eligible employer’s monthly revenues, as described further below (see Reference Periods for the Drop-in-Revenues Test).

The maximum base CEWS rate would be provided to employers with a revenue drop of 50 per cent or more. Employers with a revenue drop of less than 50 per cent would be eligible for a lower base CEWS rate, as shown in Table 1. The maximum base CEWS rate would be gradually reduced from 60 per cent in Periods 5 and 6 (July 5 to August 29) to 20 per cent in Period 9 (October 25 to November 21).

 

Table 1 – Rate Structure of the Base CEWS

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Top-up Subsidy for the Most Adversely Affected Employers

A top-up CEWS of up to 25 per cent would be available to employers that were the most adversely impacted by the pandemic. Generally, an eligible employer’s top-up CEWS would be determined based on the revenue drop experienced when comparing revenues in the preceding 3 months to the same months in the prior year. Under the alternative approach to the calculation of baseline revenues, an eligible employer’s top-up CEWS would be determined based on the revenue drop experienced when comparing average monthly revenue in the preceding 3 months to the average monthly revenue in January and February 2020.

Employers that have experienced a 3-month average revenue drop of more than 50 per cent would receive a top-up CEWS rate equal to 1.25 times the average revenue drop that exceeds 50 per cent, up to a maximum top-up CEWS rate of 25 per cent, which is attained at a 70‑per‑cent revenue decline. As with the base CEWS rate, the top-up CEWS rate would apply to remuneration of up to $1,129 per week. The top-up CEWS rate for selected average revenue drop levels is illustrated in Table 2 below.

 

Table 2 – Top-up CEWS Rates for Selected Levels of Average Revenue Drop Over the Preceding Three Months

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The overall CEWS rate would be equal to the top-up CEWS rate plus the base CEWS rate. Table 3 shows the combined base and top-up CEWS rates for Periods 5 to 9 for the most adversely affected employers.

 

Table 3 – Rate Structure of the Combined Base CEWS and the Top-up CEWS for the Most Affected Employers (those that experienced an average revenue drop of 70% or more in the preceding 3 months)

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Table 4 illustrates the interaction of the 3-month drop in revenue test for the top-up CEWS and the month-over-month revenue test for the base CEWS for Periods 5 and 6. For example, an employer that is recovering with a revenue drop of 20 per cent in Period 5 and a preceding 3-month average revenue drop of 60 per cent would benefit from a base CEWS rate of 24 per cent and a top-up CEWS rate of 12.5 per cent, which would provide a combined CEWS rate of 36.5 per cent.

 

Table 4 – Rate Structure of the Combined Base CEWS and the Top-up CEWS for Periods 5 and 6* Average Revenue Drop in the Preceding 3 Months

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Safe Harbour Rule for Periods 5 and 6

For Periods 5 and 6, an eligible employer would be entitled to a CEWS rate not lower than the rate that they would be entitled to if their entitlement were calculated under the CEWS rules that were in place for Periods 1 to 4. This means that in Periods 5 and 6, an eligible employer with a revenue decline of 30 per cent or more in the relevant reference period would receive a CEWS rate of at least 75 per cent or potentially an even higher CEWS rate using the new rules outlined above for the most adversely affected employers (up to 85 per cent).

CEWS for Furloughed Employees

For Periods 5 and 6, the subsidy calculation for a furloughed employee would remain the same as for Periods 1 to 4. It would be the greater of:

  • For arm’s-length employees, 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
  • 75 per cent of the employee’s pre-crisis weekly remuneration up to a maximum benefit of $847 per week or the amount of remuneration paid, whichever is less.

Beginning in Period 7, CEWS support for furloughed employees would be adjusted to align with the benefits provided through the Canada Emergency Response Benefit (CERB) and/or Employment Insurance (EI). This would ensure equitable treatment of employees on furlough between both programs, provide greater clarity to workers as to their compensation as compared to a changing subsidy rate based on their employer’s revenue in a given month and, when combined with draftlegislative changes to the interaction with the CERB (i.e., the elimination of the 14-days rule, as discussed below), make it easier to transition employees on to CEWS so that they are reconnected with their employer.

For Period 5 and subsequent periods, the CEWS for furloughed employees would be available to eligible employers that qualify for either the base rate or the top-up for active employees in the relevant period.

The employer portion of contributions in respect of the Canada Pension Plan, Employment Insurance, the Quebec Pension Plan, and the Quebec Parental Insurance Plan in respect of furloughed employees would continue to be refunded to the employer.

Eligible Remuneration

No changes are proposed to the definition of eligible remuneration.

For active arm’s-length employees, the amount of remuneration would be based solely on actual remuneration paid for the eligibility period, without reference to the pre-crisis remuneration concept used for earlier CEWS periods. A modified special rule would apply to active employees that do not deal at arm’s length with the employer. For Period 5 and subsequent periods, the wage subsidy for such employees would be based on the employee’s weekly eligible remuneration or pre-crisis remuneration, whichever is less, up to a maximum of $1,129. The subsidy would only be available in respect of non-arm’s-length employees that were employed prior to March 16, 2020.

For Period 4, the pre-crisis remuneration of an employee would be based on the average weekly remuneration paid to the employee from January 1 to March 15, 2020; from March 1, 2019 to May 31, 2019; or from March 1, 2019 to June 30, 2019. For Period 5 and subsequent periods, the pre-crisis remuneration of an employee would be based on the average weekly remuneration paid to the employee from January 1 to March 15, 2020 or from July 1, 2019 to December 31, 2019. In all cases, the calculation of average weekly remuneration would exclude any period of 7 or more consecutive days without remuneration. Employers can choose which period to use on an employee-by-employee basis.

Eligible Employees

Effective July 5, 2020, the eligibility criteria would no longer exclude employees that are without remuneration in respect of 14 or more consecutive days in an eligibility period.

Calculating Revenues – Reference Periods for the Drop-in-Revenues Test

For the purpose of the base CEWS, eligibility would generally be determined by the change in an eligible employer’s monthly revenues, year-over-year, for the applicable calendar month. Table 5 below outlines each claiming period and the relevant period for determining an eligible employer’s change in revenue. For Period 5 and all subsequent periods, an eligible employer would be able to use the greater of its percentage revenue decline in the current period and that in the previous period for the purpose of determining its qualification for the base CEWS and its base CEWS rate in the current period. This would provide certainty and be a continuation of the rules for Periods 1 to 4 that allowed an employer that met the revenue test in one period to automatically qualify for the following period.

Employers that have elected to use the alternative approach for the first 4 periods would be able to either maintain that election for Period 5 and onward or revert to the general approach. Similarly, employers that have used the general approach for the first 4 periods would be able to either continue with the general approach or elect to use the alternative approach for Period 5 and onward. Whichever approach they choose would apply for Period 5 and onward and would apply to the calculation of the base CEWS and the top-up CEWS. This would provide flexibility for employers to adjust their approach in light of new circumstances they may be experiencing as the CEWS is extended.

 

Table 5 – Reference Periods for the Base CEWS

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For the purpose of the top-up CEWS, eligibility would generally be determined by the change in an eligible employer’s revenues for a 3-month period. Table 6 below outlines each claiming period and the relevant period for determining an eligible employer’s average change in revenue.

 

Table 6 – Reference Periods for the Top-up CEWS

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Legislative Amendments

The government has shared draft legislative proposals to make the changes to the CEWS described in this backgrounder as well as changes in response to feedback received from stakeholders. These proposed changes, which would generally apply as of March 15, 2020, include:

  • providing an appeal process based on the existing procedure for notices of determination that allows for an appeal to the Tax Court of Canada;
  • providing continuity rules for the calculation of an employer’s drop in revenues in certain circumstances where the employer purchased all or substantially all the assets used in carrying on business by the seller;
  • allowing prescribed organizations that are registered charities or non-profit organizations to choose whether to include government-source revenue for the purpose of computing their reductions in qualifying revenue; and
  • allowing entities that use the cash method of accounting to elect to use accrual based accounting to compute their revenues for the purpose of the CEWS.

The government is also proposing to move forward with previously released legislative changes, including relieving changes for calculating pre-crisis “baseline” remuneration, for corporations that have amalgamated and for eligible entities that use payroll service providers. The government is also proposing to move forward with the amendment that would align the treatment of trusts and corporations for the purposes of the CEWS. Some of these proposed measures can be found in the May 15, 2020 backgrounder entitled Extending eligibility for the Canada Emergency Wage Subsidy.

 

Full details of the draft legislative proposals can be found in the Backgrounder.

 


UPDATE July 17, 2020 – The Government of Canada announces support for persons with disabilities.

Last month, the government announced a series of measures to help Canadians with disabilities navigate the effects of the outbreak, including a one-time, tax-free, non-reportable payment of $600 to assist with additional expenses incurred during the pandemic. The government intends to propose legislation that would make the benefit available to more people and expand the one-time payment to include Canadians with disabilities, who are recipients of any of the following programs or benefits:

  • A Disability Tax Credit certificate provided by the Canada Revenue Agency;
  • Canada Pension Plan disability benefit or Quebec Pension Plan disability benefit; and
  • Disability supports provided by Veterans Affairs Canada.

If the draft legislative proposals are enacted, eligible Canadians would receive the payment automatically. Additionally, Canadians with disabilities who are eligible for the Disability Tax Credit but have not yet applied, would have a 60-day window of opportunity to do so after Royal Assent.

Seniors who are eligible for the one-time payment to persons with disabilities would receive a total of $600 in special payments. The one-time payment to persons with disabilities would be adjusted to provide a top-up for eligible seniors, including:

  • $300 for Canadians who are eligible for the Old Age Security pension and who received the
    one-time seniors payment of $300; or
  • $100 for Canadians who are eligible for the Old Age Security pension and the Guaranteed Income Supplement or Allowances and who received the one-time senior’s payment of $500.

 


UPDATE July 13, 2020 – The Government of Canada will extend the Canada Emergency Wage Subsidy program until December.

The government has announced it will extend the Canada Emergency Wage Subsidy (CEWS) program until December. This is the second extension of the CEWS program since it was launched. The first extension was for an additional 12 weeks, to August 29. Potential adjustments (including the 30% revenue decline threshold) to the extended program are expected to be made. Further details to come.


 

UPDATE July 2, 2020 – The Government of Canada introduces draft Regulations Providing Relief for Registered Pension Plans.

Finance Minister Bill Morneau announced the release of draft regulations that would help employers who sponsor a Registered Pension Plan (RPP) or salary deferral leave plan for their employees to manage and maintain their benefit obligations through the crisis. It will also assure employees who participate in salary deferral leave plans that suspending their leave of absence (e.g., via a recall to essential-service work), or deferring their scheduled leave for up to one year, will not put their plan at risk.

The proposed draft regulations would support the effective administration of such plans through the COVID-19 pandemic, providing temporary relief from various registration rules and other conditions that must be complied with under the Income Tax Regulations by:

  • adding temporary stop-the-clock rules to the conditions applicable to salary deferral leave plans for the period of March 15, 2020 to April 30, 2021;
  • removing restrictions that prohibit an RPP from borrowing money;
  • extending the deadline for decisions to retroactively credit pensionable service under a defined benefit plan or to make catch-up contributions to money purchase accounts;
  • permitting catch-up contributions to RPPs to be made in 2021 to the extent that 2020 required contributions had been reduced;
  • setting aside the 36-month employment condition in the definition “eligible period of reduced pay” for the purpose of using prescribed compensation to determine benefit or contribution levels; and
  • allowing wage rollback periods in 2020 to qualify as an eligible period of reduced pay for prescribed compensation purposes.

 


UPDATE June 28, 2020 – The Government of Canada has extended the Canada Emergency Commercial Rent Assistance program.

The Canada Emergency Commercial Rent Assistance (CECRA) program has been prolonged by one month, through to the end of July.

Those who qualified for CECRA for small businesses based on existing program parameters  will be able to apply for the additional 1 month based on having a 70% revenue decline for April, May and June (for example,  without reassessing whether they continue to have a 70% revenue decline in July). Participation in the one-month extension is voluntary. Both existing applicants to CECRA for small businesses and new applicants are able to apply for the July rent reduction.

 


UPDATE June 26, 2020 – Applications are now open for the expanded Canada Emergency Business Account.

Applications are now open for the expanded Canada Emergency Business Account (CEBA) program. This means that more small businesses can access it.

As of June 26, 2020, businesses eligible for CEBA now include owner-operated small businesses that do not have a payroll, sole proprietors receiving business income directly, as well as family-owned corporations remunerating in the form of dividends rather than payroll. Applicants will have to demonstrate having eligible non-deferrable expenses between $40,000 and $1,500,000 in 2020. The expanded CEBA program is being made available gradually by more than 230 financial institutions across the country, starting with the larger banks. Other participating financial institutions will start offering the program over the coming weeks.

 


UPDATE June 18, 2020 – The Government of Canada has delayed the launch of the Canada Emergency Business Account program.

Finance Minister Bill Morneau has announced that the expanded Canada Emergency Business Account (CEBA) program will no longer launch on June 19th, as previously planned. According to Mr. Morneau, work continues around the clock to ensure the program can securely launch across over 230 financial institutions, and the goal is to launch it as quickly as possible.

 


UPDATE June 16, 2020 – The Government of Canada has extended the Canada Emergency Response Benefit program for an additional 8 weeks.

The Canada Emergency Response Benefit (CERB) program has been extended by 8 weeks and is now available for a maximum of 24 weeks. You would continue to apply as you have for prior CERB periods, either through CRA if you are not EI eligible, or through Service Canada if you are EI eligible.

Note, the 24 weeks do not have to be taken consecutively. For example, you could receive the CERB benefit for a 4 week period, take a break from the program if you find employment, and then reapply a few months later based on your situation. The 24 week count does not restart each time you reapply for the Canada Emergency Response Benefit after taking a break from the program. If you received 4 weeks of CERB, took a break and then reapplied, you would only have 20 out of the 24 weeks of the CERB program available to you.

 


UPDATE June 15, 2020 – The Government of Canada has announced that applications for the expanded eligibility Canada Emergency Business Account program will open Friday, June 19, 2020.

The government has provided additional details regarding the expanded eligibility criteria for the Canada Emergency Business Account (CEBA) loan program, which allows an eligible entity with $20,000 or less in total employment income paid in the 2019 calendar year to qualify, if it also meets certain additional conditions.

A new CEBA application stream is available for those that meet the expanded criteria: termed the Non-Deferrable Expense Stream. This stream is for businesses with total employment income paid to employees in 2019 of $20,000 or less and 2020 Eligible Non-Deferrable Expenses (subject to adjustments for support or subsidies under other Government of Canada COVID response programs) greater than $40,000 and less than $1,500,000.

CEBA applications under the 2020 Eligible Non-Deferrable Expenses Stream will follow a two-step process:

Step 1: Businesses will initiate applications directly at their primary financial institution where they hold their primary business chequing / operating account. The financial institution will then direct applicants to Step 2 of the application process.

Step 2: Following the initial application through the financial institution, applicants will be directed to a CEBA website to provide supporting documentation of the 2020 Eligible Non-Deferrable Expenses and to complete the application. Supporting documentation includes electronic or paper copies of receipts / invoices / agreements to be uploaded as evidence of 2020 Eligible Non-Deferrable Expenses.

The Government of Canada will assess application information submitted via financial institutions in Step 1 together with the supporting documentation and information provided in Step 2. If successful, the Government of Canada will notify the financial institution and provide funding for the CEBA loan.

Applications for the expanded eligibility CEBA program open June 19, 2020. If approved, funds can be expected to be received within 10-15 business days after all supporting documentation is received by the Government of Canada.

Visit our COVID-19 Hub for full details.

 


UPDATE June 11, 2020 – The Government of Canada has provided new details about payments resulting from amended Canada Emergency Wage Subsidy claims and added a new question to the program’s application.

Receiving Funds and Paying Owed Balances Resulting from Amendments to Canada Emergency Wage Subsidy (CEWS) Claims

Based on the CRA’s instructions, when a claimant or advisor selects ‘adjustment to a prior claim’ through My Business Account or Represent a Client, the CEWS interface will show the data originally filed and ask them to enter the amended data, not the adjustment amounts. If the change increases the CEWS amount, the claimant will receive the cash the same way they did when they originally filed. If there is an over-payment, the CRA recommends that the claimant repay the overpaid amount immediately. My Business Account has been updated to allow claimants to ‘view and repay CEWS balance’. The CRA  website will soon provide more information regarding other options for CEWS repayments.

Also, the CRA has updated their website with further information about how it plans to review claims that may involve calls or letters from the CRA. The CRA offers advice on how claimants can verify that such CRA calls are legitimate.

Finally, the CRA indicates that any suspected misuse or abuse of the CEWS program can now be reported through the CRA’s Leads program.

A New Question in the CEWS Application: Revenue Calculation Elections

A new question has been added to the application for the second period of the CEWS program (May 10th – June 6th): “Has the employer made one or more elections or choices regarding revenue calculation under subsection 127.5(4) of the CEWS program rules?”

To answer this question, you must first examine whether you have made any of the elections (or choices) listed in Part 2 of the Attestation for owner/managers and/or senior employees form: CEWS Program Rules Elections. If any of the elections apply to you, the answer to the above question should be “yes” and if they do not, the answer should be “no”.

The elections are as follows:

1. joint election, along with each other member of the group that prepares consolidated financial statements, under paragraph 125.7(4)(a) of the Income Tax Act – revenue determined on a non-consolidated basis for members of the employer’s group.

2. a joint election, along with each other member of the affiliated group, under paragraph 125.7(4)(b) of the Income Tax Act – revenue determined on a consolidated basis for the employer’s group.

3. an election under paragraph 125.7(4)(c) of the Income Tax Act – joint venture election.

4. a joint election, along with each person or partnership with which the employer does not deal at arm’s length and from whom the employer earns all or substantially all of its qualifying revenue under paragraph 125.7(4)(d) of the Income Tax Act – non-arm’s length revenue.

5. an election under paragraph 125.7(4)(e) of the Income Tax Act – cash method. If you have chosen to calculate your revenue decrease when compared to a prior period using the cash method, this applies to you.

6. an election under subparagraph (b)(ii) of the definition “prior reference period” in subsection 125.7(1) of the Income Tax Act (prior reference period election). If you have chosen to calculate your revenue decrease by comparing to your average revenue of January 2020 and February 2020, this applies to you.

7. an election under subparagraph (a)(ii) or (b)(ii) of the definition “qualifying revenue” in subsection 125.7(1) of the Income Tax Act – election by registered charity or not-for-profit to exclude government funding. If you are a registered charity or not-for-profit organization and you choose to exclude government funding from your decrease in revenue calculation, this applies to you.

 


UPDATE June 1, 2020 – The Government of Canada has announced a mechanism to make adjustments to previously filed Canada Emergency Wage Subsidy claims.

The mechanism to make adjustments to your previously filed Canada Emergency Wage Subsidy (CEWS) claim is now available (Note – you cannot correct a CEWS claim by adjusting a subsequent CEWS claim – you need to make an adjustment to the original claim). See below:

https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-after-apply.html#change

To Change a Claim You Submitted

You may request adjustments to applications you have already submitted. To change a previous wage subsidy claim, visit:

My Business Account or
Represent a Client

If you applied using the Web Forms application and need to change your claim, you may call CRA’s business enquiries phone number.

You will need to make sure you continue to meet eligibility requirements for any updated claims and keep records supporting your wage subsidy claim adjustment.
When completing the adjustment, you will need:

• your payroll program account number (123456789RP0001, for example)
• to know which claim period you are adjusting
• all of the information necessary to change the amount on each line(s) you would like to adjust

Representatives who are changing a claim on behalf of an employer must be authorized at level 2 or 3. You will need to have an updated Attestation for owner/managers and/or senior employees form to support the amended application.

 


UPDATE May 19, 2020 – The Government of Canada has announced an expansion to the eligibility criteria for the Canada Emergency Business Account.

The Canada Emergency Business Account (CEBA) loans program will be expanded to:

  • sole proprietors receiving income directly from their businesses
  • businesses that rely on contractors
  • family-owned corporations that pay employees through dividends rather than payroll

As well, the government is working on potential solutions to modify CEBA so as to become available to new businesses (those which have never filed a tax return) and businesses which do not have “business accounts” at the bank, but operate through personal accounts.

To qualify under the expanded eligibility criteria, applicants with payroll lower than $20,000 would need:

  • a business operating account at a participating financial institution;
  • a Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return; and
  • eligible non-deferrable expenses between $40,000 and $1.5 million. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities and insurance.

More details, including the launch date for applications under the new criteria, will follow in the days to come.

 


UPDATE May 15, 2020 – The Government of Canada has announced an extension to the Canada Emergency Wage Subsidy.

The Canada Emergency Wage Subsidy (CEWS) program will be extended an additional 12 weeks, to August 29. Further modifications are being considered to make the extended program more widely accessible, including a review of the 30% revenue decline test.

In addition, CEWS eligibility has been extended to the following groups:

  • Partnerships that are up to 50% owned by non-eligible members
  • Indigenous government-owned corporations that are carrying on a business
  • Registered Canadian Amateur Athletic Associations
  • Registered Journalism Organizations
  • Non-public colleges and schools, including institutions that offer specialized services, such as arts schools, driving schools, language schools and flight schools

As well, the following amendments will be proposed:

  • Provide flexibility for employers of existing employees who were not regularly employed in early 2020, such as seasonal employees. This includes a proposal that an option would be added to calculate baseline remuneration as the average weekly remuneration paid to the employee from March 1 to May 31 of 2019;
  • Ensure that the CEWS applies appropriately to corporations formed on the amalgamation of two predecessor corporations; and
  • Better align the treatment of trusts and corporations for the purpose of determining CEWS eligibility.

Visit our COVID-19 Hub for full details.

 


UPDATE May 15, 2020 – The government of Canada has opened applications for Canada Emergency Student Benefit.

Applications are open for the the Canada Emergency Student Benefit (CESB), which provides financial support to post-secondary students, and recent post-secondary and high school graduates who are unable to find work due to COVID-19.

Visit our COVID-19 Hub for full details.

 


UPDATE May 15, 2020 – The government of Canada has announced an extension to certain support benefits and support measures for seniors.

May 15 – GST/HST credit and Canada Child Benefit payments will continue to the end of September even if 2019 returns have not been filed. Payment amounts will be based on information from 2018 tax returns (if the 2019 tax return is not yet assessed). Individuals are encouraged to file returns by June 1, 2020.

May 12 – Additional support for seniors will be made available through a one-time tax-free payment of $300 for seniors eligible for the Old Age Security pension, with an additional $200 for seniors eligible for the Guaranteed Income Supplement (GIS).

GIS and Allowance payments will be temporarily extended if seniors’ 2019 income information has not been assessed. To avoid an interruption in benefits, seniors are encouraged to submit their 2019 income information as soon as possible and no later than by October 1, 2020.

 


UPDATE May 14, 2020 – The Government of Canada has made updates to the Canada Canada Emergency Rent Assistance Program.

Updated information on the Canada Emergency Commercial Rent Assistance (CECRA) program was released, including who is eligible, how the program will work, information requirements for application, and an FAQ section.

Applications are expected to open in the second half of May. If you intend to apply for the program, you are advised to begin compiling your documents. More program details will be provided soon.

Visit our COVID-19 Hub for full details.

 


UPDATE May 14, 2020 – The Government of Canada has released details about the Regional Relief and Recovery Fund.

Details were released on nearly $1 billion in funding for regional business relief through the Regional Relief and Recovery Fund (RRRF). Generally, this initiative will provide interest-free loans to businesses not eligible for the Canada Emergency Business Account or other related funding.

The Regional Relief and Recovery Fund helps businesses and organizations continue their operations, including paying their employees. It will also help support projects by businesses, organizations and communities to prepare now for a successful recovery. This initiative, implemented by the six regional development agencies in collaboration with the national network of Community Futures Development Corporations, is targeted to support businesses that are unable to access other government relief measures. The RRRF has two components:

  • $675 million to support regional economies, businesses, organizations and communities in regions across Canada
  • $287 million to support the national network of Community Futures Development Corporations to provide funding and support to small businesses and the rural communities in which they operate

For more information, follow the links below on the region applicable to you:

Atlantic

Quebec

Northern

Western

Southern Ontario

Northern Ontario

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UPDATE April 26, 2020 – The Government of Canada has provided further information with respect to the Canada Emergency Wage Subsidy application and the Canada Emergency Commercial Rent Assistance Program.

Release of the Canada Emergency Wage Subsidy Application Guide

A newly released application guide for the Canada Emergency Wage Subsidy (CEWS) is now available. The application guide provides detailed line-by-line instructions on how to apply for the long-awaited subsidy.

As well, a CEWS Frequently Asked Questions update has also been released, answering 35 key questions related to the CEWS program.

Additional Details on the Canada Emergency Commercial Rent Assistance Program

On April 24, Prime Minister Justin Trudeau provided further information with respect to the Canada Emergency Commercial Rent Assistance (CECRA) program.

The federal government has reached an agreement in principle with all provinces and territories to implement the CECRA for small businesses. This program will lower rent by 75% for small businesses that have been affected by COVID-19. Further details on the program are as follows, with additional details expected in mid-May:

  • The program will provide forgivable loans to qualifying commercial property owners to cover 50% of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.
  • The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75% for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25% of the rent.
  • Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID-19 revenues.
  • This support will also be available to non-profit and charitable organizations.

 


UPDATE April 22, 2020 – The Government of Canada has provided further guidance with respect to the Canada Emergency Wage Subsidy application and information about new support programs for students.

Preparation for the Canada Emergency Wage Subsidy Application

Registration for the Canada Emergency Wage Subsidy (CEWS) will begin on April 27, 2020. Payments are targeted to begin on May 5.

If you intend to apply for the CEWS, you are advised to follow these important preparatory steps in advance:

  • CALCULATE YOUR SUBSIDY AMOUNT: A revised CEWS website and new calculator is now available to help businesses determine the subsidy amount to expect from the CEWS program. If you intend to apply for the CEWS, you are advised to follow the guidance in this calculator.
  • SET UP CRA MY BUSINESS ACCOUNT: Eligible employers will be able to apply for the CEWS through the Canada Revenue Agency’s My Business Account portal as well as a web-based application. If you intend to apply for the CEWS, you are advised to ensure your My Business Account is properly set up and your direct deposit information is updated with CRA. For more information on how to do this, refer to our article, Preparation for the Canada Emergency Wage Subsidy Application.

For more information on the CEWS, refer to our updated article, COVID-19 Canada Emergency Wage Subsidy.

New Student Support Programs

On April 22, Prime Minister Justin Trudeau announced $9 billion in additional support programs for post-secondary students and recent graduates. These programs include:

Canada Emergency Student Benefit

The Canada Emergency Student Benefit will provide support to students and new graduates who are not eligible for the Canada Emergency Response Benefit. This benefit will provide $1,250 per month for eligible students or $1,750 per month for eligible students with dependents or disabilities. The benefit will be available from May to August 2020. Eligible students will include those who are post-secondary students right now, going to college in September or who graduated in December 2019. The benefit will be available even if the eligible student was earning up to $1,000 per month. Payments will be delivered through the Canada Revenue Agency.

Canada Student Service Grant

For students who choose to do national service and serve their communities, the new Canada Student Service Grant will provide up to $5,000 for their education in the fall.

Job Creation for Students

Existing federal employment, skills development, and youth programming will be expanded to create up to 116,000 jobs, placements, and other training opportunities to help students find employment and develop valuable skills this summer and over the coming months.

Student Grants and Other Support

  • The Canada Student Grant will be doubled for all eligible full-time students, to a maximum of $6,000 and $3,600 for part-time students in 2020-21. The Canada Student Grant for Students with Permanent Disabilities and Students with Dependents would also be doubled.
  • Eligibility for student financial assistance will be broadened by removing the expected student’s and spouse’s contributions in 2020-21.
  • The Canada Student Loans Program will be enhanced by raising the maximum weekly amount that can be provided to a student in 2020-21 from $210 to $350.
  • Additional support will be made available for First Nations, Inuit, and Métis Nation students pursuing post-secondary education.
  • Extensions will be made to expiring federal graduate research scholarships and postdoctoral fellowships, as well as supplementation of existing federal research grants, to support students and post-doctoral fellows.

 


UPDATE April 16, 2020 – The Government of Canada has introduced a new rent relief measure for businesses, as well as new criteria for the Canada Emergency Business Account, Canada Emergency Response Benefit and Canada Emergency Wage Subsidy.

Canada Emergency Commercial Rent Assistance

On April 16, Prime Minister Justin Trudeau announced a new rent assistance program for businesses. The new Canada Emergency Commercial Rent Assistance (CECRA) program will help small businesses cover their rents for April, May, and June. The assistance is being rolled out in collaboration with the provinces and territories.

Canada Emergency Business Account

On April 16, Prime Minister Justin Trudeau announced the eligibility criteria for the Canada Emergency Business Account is being expanded. The Canada Emergency Business Account (CEBA) program provides interest-free loans of up to $40,000 to small businesses and not-for-profit organizations, to help cover their operating costs due to the economic impact of the COVID-19 virus. To qualify, previous criteria required these organizations to demonstrate they paid between $50,000 – $1 million in total payroll in 2019. New criteria requires these organizations to demonstrate they paid between $20,000 and $1,500,000 in total payroll last year. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25% (up to $10,000). Small businesses and not-for-profit organizations should contact their financial institutions to apply for these loans. Access to the CEBA application was made available on April 9..

Canada Emergency Response Benefit & Other Support

On April 15, Prime Minister Justin Trudeau announced further changes to expand the eligibility rules for the Canada Emergency Response Benefit (CERB) to:

  • Allow individuals to earn up to $1,000 per month while collecting the CERB. The $1,000 threshold includes income from employment and/or self employment income, and includes tips earned while working, non-eligible dividends, honoraria, and royalties. Pension, student loans and bursaries are not employment income and should not be included in the $1,000.
  • Extend the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.
  • Extend the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.

Trudeau also announced a wage boost for COVID-19 essential workers who make less than $2,500 per month. Additional support measures for students and those paying commercial rent are expected soon. The Prime Minister also announced the launch of a web portal and app, called Wellness Together Canada, offering mental health resources for Canadians who need support during the COVID-19 pandemic.

Canada Emergency Wage Subsidy

On April 11, the Canada Emergency Wage Subsidy (CEWS) legislation was passed. The final legislation included some changes to earlier announced provisions, including future eligibility criteria (once an employer is found eligible for a specific period, the employer automatically qualifies for the next period) and special rules for corporate groups.

This program will provide a 75% wage subsidy (75% of remuneration paid, up to a maximum benefit of $847 per week) to eligible employers, for up to 12 weeks, retroactive to March 15, 2020. Eligible employers include individuals, taxable corporations, partnerships consisting of eligible employers, not-for-profit organizations and registered charities. This subsidy will be available to eligible employers who see a drop of at least 15% of their revenue in March 2020 and a 30% drop for the following months.

 


UPDATE April 9, 2020 – The Government of Canada has introduced changes to the Canada Emergency Wage Subsidy, a new refund of certain payroll contributions and new student supports.

Canada Emergency Wage Subsidy Eligibility

The eligibility criteria for businesses to access the Canada Emergency Wage Subsidy (CEWS) were expanded to address the realities faced by the not-for-profit sector, high growth companies and new businesses. The government proposed the following additional flexibility:

To measure their revenue loss, all employers have the flexibility to compare their revenue of March, April and May 2020 to:

-that of the same month of 2019; or
-an average of their revenue earned in January and February 2020.

For March, a reduction to the 30% benchmark to 15%. Employers are allowed to measure revenues either on the basis of:

-accrual accounting (as they are earned); or
-cash accounting (as they are received).

Registered charities and non-profit organizations are allowed to choose to include or exclude government funding in their revenues for the purpose of applying the revenue reduction test. Where an option is provided for revenue loss calculation / measurement methods, the selected method would be required to be used for the entire duration of the program. Special rules would also be provided to address issues for corporate groups, non-arm’s length entities and joint ventures.

Refund of Certain Payroll Contributions

As well, the government proposed that employers eligible for the CEWS be entitled to receive a 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. This refund would apply to the entire amount of employer-paid contributions in respect of remuneration paid to furloughed employees in a period where the employer is eligible for the CEWS.

Support for Students

‘The government also introduced enhancements to the Canada Summer Job Program, including:

  • 100% subsidy for students;
  • Extend job placements to winter to consider jobs starting later; and
  • Extend program to allow for part-time workers.

 

 

 

 

 

This article has been written in general terms to provide broad guidance only. It should not be relied upon to cover specific situations and you should not act upon the information contained herein without obtaining specific professional advice.  Please contact our office to discuss this information in the context of your specific circumstances. We accept no responsibility for any loss or damage resulting from your reliance on the information in this article.

 


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