UPDATE May 19, 2020 – The Government of Canada has announced an expansion to the eligibility criteria for the Canada Emergency Business Account (CEBA).
The 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 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 returnannopus 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 (OAS) 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. 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 (RRRF) 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:
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.
UDPATE 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.