The federal government has introduced numerous measures over the past several weeks to assist Canadian businesses during the COVID-19 crisis. This week, the government announced expanded eligibly for two of these programs, and introduced a new initiative that would assist small businesses by encouraging rent forgiveness. Here is a summary of the key new announcements:
Canada Emergency Commercial Rent Assistance *NEW*
The Canada Emergency Commercial Rent Assistance program (CECRA) was announced on April 16th. It proposes to provide loans—and/or forgivable loans—to commercial property owners in order for them to lower or forgo the rent of small business tenants for the months of April (retroactive), May and June. A partnership between the federal and provincial/territorial governments will be required before this program can be implemented, as the latter is responsible for property owner-tenant relationships. More details should be available soon.
Canada Emergency Business Account *expanded eligibility*
The Canada Emergency Business Account program (CEBA) provides government-guaranteed, interest-free loans to small businesses and not-for-profits of up to $40,000. On April 16th, the federal government expanded the eligibility requirements for this program to include businesses that paid between $20,000 and $1.5 million in total payroll in 2019. The original announcement required organizations to demonstrate a total payroll expense between $50,000 and $1 million. CEBA loans are now available through major Canadian financial institutions and credit unions.
Additional information on CEBA can be found at: https://www.canada.ca/en/department-finance/programs/financial-sector-policy/business-credit-availability-program.html
Canada Emergency Wage Subsidy *expanded eligibility and updated details*
The Canada Emergency Wage Subsidy (CEWS) was tabled and approved by the House of Commons on April 11th with expanded eligibility and some updated details. CEWS will provide eligible employers with a 75% wage subsidy on the first $58,700 of employee income, with no overall employer limit. This translates to a subsidy of up to $847 a week per employee. CEWS is available to employers across almost all sectors for the 12-week period of March 15th to June 6th, 2020.
On April 8, the revenue loss required for eligibility in the March period was reduced from 30% to 15%, and the comparison rules changed to allow employers the choice of comparing revenue using the general year-over-year approach or by comparing the period to the average of their January and February 2020 revenues. As well, now once an employer is eligible for a specific period, they automatically qualify for the next period.
See the new chart below:
Required revenue decline
|Reference period for eligibility|
March 15 – April 11
|March 2020 over March 2019 OR compared to the average of January and February 2020|
April 12 – May 9
|Eligible for Period 1 OR April 2020 over April 2019 OR compared to the average of January and February 2020|
May 10 – June 6
Eligible for Period 2 OR May 2020 over May 2019 OR compared to the average of January and February 2020
Another new CEWS feature is the 100% refund of employer-paid EI and CPP contributions for eligible employees during the weeks in which the employer is eligible to claim CEWS for these employees.
Additional information on CEWS can be found at: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html
Important to note
Smaller businesses that are Canadian Controlled, privately-owned, and claim the small business deduction still also qualify for the 10% Temporary Wage Subsidy (TWS). The TWS allows eligible employers to reduce the amount of payroll deductions they are required to remit to the CRA. TWS is capped at $1,375 per employee or $25,000 in total. If you’re eligible, you should apply the TWS first, as it will impact your cash flow more quickly. You will still be eligible for CEWS, just with a reduced amount (corresponding to your TWS claims) available to be claimed.
Additional information on TWS can be found at: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
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