The federal and provincial governments continue to announce new measures to combat the impact of COVID-19. The following is an updated summary of the most recent key government initiatives concerning COVID-19 and your business. We will do our best to summarize and share relevant new information with you as it becomes available, as we are committed to helping you successfully navigate your business through this challenging time.
Temporary Wage Subsidy (TWS)
The TWS is a measure provided under Canada’s COVID-19 Economic Response Plan to help businesses avoid layoffs through the provision of financial support. The TWS allows eligible employers to reduce their remittance of payroll income tax withholdings to the Canada Revenue Agency. Eligible employers include Canadian Controlled Private Corporations with taxable capital in the preceding taxation year of less than $15 million, non-profit organizations and registered charities. The subsidy is only available to employers with an existing payroll account, who pay salaries, wages, or bonuses (collectively “salaries”) between March 18th, 2020 and June 20th, 2020.
The TWS is manually calculated and equal to 10% of salaries paid—up to $1,375 per employee and a maximum of $25,000 per employer. Once the TWS has been calculated for the applicable pay period, an employer can reduce their payroll remittance by the exact amount of the TWS, to a maximum of $25,000. This government subsidy will be considered taxable income to the employer.
Example: Assuming your regular payroll cycle is semi-monthly and your next payroll is scheduled to be paid on March 31st with a corresponding payroll remittance due on April 3rd—your April 3rd remittance is your first opportunity to claim the TWS.
Non-essential businesses
Non-essential businesses will be mandated to close in Ontario beginning Tuesday, March 24th at midnight. For a list of essential businesses that are exempt, please refer to:
Supplemental Benefits – EI “Top-up” plans
We have been working with clients who anticipate a number of temporary layoffs to create EI top-up plans for their employees. The maximum EI benefit is only $573 per week and so supplemental benefits can provide much-needed support during the crisis. The amount paid to employees under a plan is subject to income tax and CPP withholding, but not EI withholding. Such plans may be registered or unregistered, and registration is either with Service Canada or the Minister of National Revenue. Note that the plan must meet certain criteria in order to ensure that payments are not deducted from an employee’s EI benefits.
We anticipate certain businesses will need to make some hard decisions in response to the non-essential business shutdown. Recent experience suggests employers are laying off employees rather than implementing Work Sharing arrangements available under the EI program. Note that Work Sharing arrangements require an application to be filed 30 days in advance of the start of the program, which may not be practical in the circumstances.
Tax filing and payment deadlines
Personal tax returns are now due on June 1st, 2020. The regular filing deadline for self-employed tax filers, June 15th, remains unchanged. Related personal tax liabilities will now be due on September 1st, 2020.
Corporate tax filing deadlines are unchanged but again, any tax instalments or final tax payments due on March 18th, 2020, or thereafter, can be deferred and are now due September 1st, 2020.
There is currently no relief for GST/HST instalments or GST/HST balances due.
S+C Partners is OPEN FOR BUSINESS
S+C Partners is committed to helping our clients, our staff, and our community during this difficult time and our team is ready to assist you with navigating the challenges posed by this crisis.
Please call us at 905-821-9215 or email us at tax@scpllp.com with any questions.