Last update: December 7, 2020, 2:47 p.m.
WHAT YOU NEED TO KNOW
Support for Businesses
- Canada Emergency Wage Subsidy (CEWS) of up to 75% to 85% for qualifying businesses for up to 9 months until November 21, 2020. The program was recently extended to June 2021 but details have yet to be announced. Businesses can apply for the subsidy through the CRA My Business Account site. Deadline to file a claim for the 1st to 5th claiming periods is January 31, 2021.
- Businesses, large or small, are eligible if revenues have fallen by 30% (15% for the month of March) or more due to the COVID-19 situation for the months of March to June. Thereafter, for the months of July to November, any decrease in the revenues would qualify a business.
- Not for profits and Registered Charities are also eligible.
- The subsidy covers the first 75% of salaries up to a maximum annual salary of $58,700 (the maximum subsidy is $847 per employee per week for those earning $1,129 per week or higher).
- Employers may also claim contributions paid on eligible remuneration paid to furloughed employees.
- Enterprises can use cash or accrual accounting to determine their revenues.
- Enterprises can use as reference period to calculate the revenue decline either the comparable 2019 month of the average of January and February 2020. Once an approach is selected, it has to remain the same until period 4.
- Qualifying for the subsidy in one period automatically qualifies the entity for the next period.
- The 75% wage subsidy overlaps with the 10% temporary wage subsidy.
- Businesses, large or small, NPOs and Registered charities experiencing a decrease in the revenues would qualify a business.
- The base subsidy rate is a direct function of the decline in revenues – the more significant the decline in revenues, the higher the subsidy rate and vice versa. The base subsidy rate is slowly reducing (from 60% in July to 40% in November on a maximum gross salary of $1,129) as the program is approaching November 2020.
- There is an additional top-up subsidy for businesses suffering a more significant loss of revenues (50% average for the previous 3 months). The top-up subsidy may represent up to 25%.
- The maximum subsidy rate is as follows:
- 85% for the month of July 2020 (including the 25% top-up)
- 85% for the month of August 2020 (including the 25% top-up)
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- 75% for the month of September 2020 (including the 25% top-up)
- 65% for the month of October 2020 (including the 25% top-up)
- 65% for the month of November 2020 (including the 25% top-up)
- Employers may also claim contributions paid on eligible remuneration paid to furloughed employees.
- An eligible entity cannot change the accounting approach for the purpose of calculating its revenue decline and must pursue using the same methodology than for the months of March to June 2020 (i.e. cash or accrual approach).
- An eligible entity may elect to change the reference period for the purpose of calculating its revenue decline, but must use the same reference period for periods 5 to 9.
- The revenue decline in a given month will be the greater of the revenue decline of the current month or the revenue decline of the preceding month.
- An eligible entity cannot change the accounting approach for the purpose of calculating its revenue decline and must pursue using the same methodology than for the months of March to June 2020 (i.e. cash or accrual approach).
- An eligible entity may elect to change the reference period for the purpose of calculating its revenue decline, but must use the same reference period for periods 5 to 9.
- Special rules for periods 8 to 10 regarding the top up rate: the top-up revenue drop is the higher of the following:
- The revenue drop used for calculating the base rate (greater of current month decline or preceding month)
- The average revenue drop from the 3 months prior to the claim period
The revenue decline in a given month will be the greater of the revenue decline of the current month or the revenue decline of the preceding month.
- The maximum subsidy rate is as follows:
- 75% for the month of January 2021 (including the 35% top-up)
- 75% for the month of February 2021 (including the 35% top-up)
- 75% for the month of March 2021 (including the 35% top-up)
- Revenue decline based on the greater of the current month decline or the preceding month
- Base rate up to 40% as follows: 80% of revenue decline
- Top up rate up to 35% as follows – (Revenue decline – 50%) * 1.75X
- Maximum subsidy per employee per week of $847.
- Furloughed employees : alignment with EI based on the lesser of :
- The amount of eligible remuneration paid in respect of a week; and
- The greater of:
- $500 and;
- 55% of the pre-crisis remuneration for the employee, up to a maximum subsidy of $595.
- The above are proposed changes which have yet to obtain approval from House of Commons and royal ascent from the Senate.
Government has yet to announce details for this period.
- Employment Insurance (EI) Work Sharing Program: enhanced by extending eligibility to 76 weeks, easing requirements and streamlining the application process. Provides EI benefits to workers who reduce their normal working hours due to conditions beyond control of the employer.
See RELATED: COVID-19 EMPLOYERS FAQ below.
- Introduction of the Large Employer Emergency Financing Facility program (LEEFF): For large corporations with annual revenues over $300M. Government to provide bridge financing, minimum of $60M, in cooperation with the applicant’s financial institution.
- Quebec relief for businesses in red zones forced to cease operations during October 2020:
- Measure targeted for businesses forced to close for at least 10 days during October 1 – 28, 2020 such as restaurants, bars, cinemas and museums.
- Assistance consists of the forgiveness (covering 80% of eligible fixed expenses to a maximum of $15,000) on a loan issued under the CTAPB.
- Eligible fixed expenses includes rent, insurance, mortgage interest, property taxes and utilities for the period October 1 to 28, 2020.
- Available with Investissement Quebec.
- Introduction of the Canada Emergency Rent Subsidy (CERS): This program replaces the CECRA which was terminated on September 30, 2020. It supports eligible business, charities and NPOs who have experienced a revenue decline and have eligible expenses:
- Maximum base subsidy rate up to 40% (80% of revenue decline) plus a top-up rate up to 25% (1.25% X (revenue decline – 50%)) for a total of 65%.
- Possible additional 25% lockdown support for eligible entities that were compelled to shut down or significantly reduce their activities because of a public health order.
- Maximum eligible expenses per location up to $75,000 per claiming period.
- Maximum eligible expenses for group of affiliated entities claiming the CERS of $300,000 per claiming period.
- Eligible expenses must be paid or will be paid within 60 days.
- For tenant:
- Eligible expenses are comprised of rent
- Sub-leasing revenues from arm’s length parties must be deducted from eligible expenses
- Amounts paid to non–arm’s length parties are ineligible
- For landlord:
- Eligible expenses are comprised of :
- Interest on commercial mortgage (certain conditions apply)
- Property taxes
- Property insurance
- Eligible expenses are comprised of :
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- Sub-leasing revenues from arm’s length parties must be deducted from eligible expenses.
- Amounts paid to non arm’s length parties are ineligible.
- Deadline to file an application is 180 days after end of a given claiming period.
- Proposed rules are similar to those in place for periods 1 to 3 of the CEWS.
The above are proposed changes which have yet to obtain approval from House of Commons and royal ascent from the Senate.
- CECRA Quebec Top Up – 12.5% Subsidy : Property owners of a commercial property located in the Province of Quebec will receive an additional 12.5%. That amount equals to 25% of the total CECRA funding already obtained. No additional information is required. Deadline to apply is December 18, 2020.
- Highly Affected Sectors Credit Availability Program (HASCAP): Provides for extra financing to resume or continue operations up to $1M ($6.25M in some instances for multi-location business) at low interest rate with a 10-year term. Applicants must have suffered a year over year revenue decline of 50% or more over 3 months in the 8 months before filing an application. Deadline to file an application is June 30, 2021.
Financial and Loan Programs for Businesses and Not-For-Profits
- The Canada Emergency Business Account (CEBA) will provide interest free loans of up to $40,000 to small businesses and not-for-profits to help cover their operating costs. Eligible organizations are those who paid between $20,000 and $1.5M in total payroll in 2019 OR between $0 and $20,000 (in cases where employees are paid through dividends) as long as the applicant demonstrates having non-deferrable expenses between $40,000 and $1,500,000 in 2020. 25% of the loan to a maximum of $10,000 would be forgiven if the loan is repaid by December 31, 2022. The loan will be provided by financial institutions and is currently available.
Note: The CEBA program has been extended to provide an additional interest-free loans of up to $20 000 (in addition to the original $40,000. The extended program application deadline is December 31, 2020. More details are to be made available by the Canadian government in the coming weeks. - The new Co-Lending Program will allow banks and the Business Development Bank of Canada to co-loan term loans to SMEs of up to $60M for their operational cash flow requirements. Businesses should contact their financial institutions for more information.
- Export Development Canada can provide loan guarantees to eligible businesses of up to $80M to ensure companies have access to cash. Businesses should contact their financial institution for more information.
- Business Credit Availability Program: the Business Development Bank of Canada and Export Development Canada will provide more than $10 billion in support and work with private sector lenders to coordinate credit solutions for businesses.
- Businesses in Quebec, with some exceptions, also have access to the ESSOR loan program sponsored by Investissement Quebec for amounts in excess of $50,000 for businesses that are having temporary cash-flow issues due to the COVID-19.
- The Concerted Temporary Action Program for businesses (CTAPB), providing emergency financing for businesses whose liquidity are impacted by COVID-19.
For businesses whose liquidities are affected by the repercussions of COVID-19
This new emergency funding measure provides ad hoc and exceptional support for businesses affected by the repercussions of COVID-19.
Eligible Businesses
This financial assistance is available to businesses operating in Québec, including cooperatives and other social economy enterprises with commercial activities. Eligible businesses are those that find themselves in a precarious situation and temporary difficulty as a result of COVID-19. They must show that their financial structure offers realistic prospects for profitability.
Eligible Projects
Businesses must show that their cash flow issues are temporary and that the liquidity shortage stems from:
- A problem involving the supply of raw materials or products (goods or services)
- An inability, or a substantially decreased ability, to deliver goods, products or services
Applications will be reviewed on a case-by-case basis, according to the business’s circumstances and Investissement Québec’s management practices.
Eligible Industries
All industries are eligible, except for the following:
- Weapons manufacturing or distribution
- Games of chance and gambling, combat sports, racing and other similar activities
- Production and sale of tobacco and drugs along with services related to their use, except for projects involving pharmaceutical-grade products approved by
- Health Canada and having a DIN, or their ingredients, as well as R&D projects licensed by Health Canada
- Any activity whose main purpose is protected by the Canadian Charter of Rights and Freedoms (religion, politics, human rights advocacy, etc.)
- Any other activity that may offend public morals.
Details of Financial Assistance
- A loan guarantee is the preferred form of financing. Financing can also take the form of a loan from Investissement Québec.
- Investissement Québec aims to work in close cooperation with financial institutions and federal authorities in order to share risks
- The minimum funding amount is $50,000.
- Refinancing is prohibited.
- This measure is designed to shore up the business’s working capital.
Special conditions may apply.
- The CTAPB/Emergency Assistance Program for Small and Medium-Sized Businesses (EASMSB) supplement for October 2020, to help businesses, located in a red zone, forced to cease their operations between October 1 and October 28, 2020 because of the pandemic. Includes restaurants, bars and museums, amongst others.
RELATED: COVID-19 EMPLOYERS FAQ
Support for Not-for-Profit Organisations and Charities
- Form T3010 “Registered Charity Information return” due between March 18, 2020 and December 31, 2020: filing deadline extended to December 31, 2020.
- Form TP-985.22V “Quebec Information Return for Registered Charities and Other Donees”due between March 1, 2020 and December 31, 2020: filing deadline extended to December 31, 2020.
- The extended Canada Emergency Business Account: see Financial and Loan Programs for Businesses and Not-For-Profits section above.
- The 75% wage subsidy (CEWS) is available for Not-for-Profit and Registered Charities. See Support for Businesses section above.
Support for Individuals
- Registered Retirement Income Fund (RRIF): minimum withdrawal for 2020 can be reduced by 25% in recognition of volatile market conditions.
- Canadian banks will offer mortgage support to Canadians facing financial hardships due to the COVID-19 including flexibility for a mortgage deferral. Contact your financial institution for more information.
- The Canada Emergency Response Benefit (“CERB”) which provided a taxable payment of $2,000 per month starting mid March ended on September 26, 2020, although late applications can be filed for the last 4-week period. The CERB is replaced with the programs below:
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- Employment Insurance (EI): with enhanced benefits for 1 year from September 27, 2020:
- Reduction of hours needed to qualify EI to 120 insured hours in the last 52 weeks.
- Minimum pre-tax EI benefit of $500 per week or $300 per week for extended parental benefits.
- The 52-week period to accumulate insured hours will be extended if you were claiming the CERB.
- This benefit is obtained through Service Canada
- Canada Recovery Benefit (CRB): available online October 12, 2020
- For those not eligible for EI, applications can be made through the CRA My Account portal for the CRB.
- The CRB will pay $1,000 every 2 weeks ($900 after taxes) for a maximum of 26 weeks.
- Eligibility to the CRB are for those not working for reasons relating to COVID-19 or have had a 50% reduction in average weekly income compared to the previous year due to COVID-19 and meet the following requirements, namely:
- You reside in Canada with a valid social insurance number
- You did not apply for or receive the Canada Recovery Sickness Benefit (see below), the Canada Recovery Caregiving Benefit (see below), short term disability benefits, workmen’s’ compensation benefits, EI and Quebec parental leave benefits.
- You are 15 years old or more when you apply
- You have not quit your job or reduced your hours voluntarily on or after September 27, 2020
- You are seeking work either as an employee or in self-employment during the period.
- You did not turn down reasonable work during the 2-week period being applied for the CRB.
- You earned a minimum of $5,000 income in the last 12 months, in 2019 or in 2020 from one or more of the following sources:
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- employment income
- Net self-employment income
- provincial or federal benefits related to maternity or paternity leave
- Canada Recovery Caregiving Benefit (CRCB)
- Applications for the CRCB were available online as of the week of October 4 for the first week period starting September 27, 2020, through the CRA My account portal.
- The program is available for a total of 26 weeks during the 1-year period ending September 25, 2021. Applications apply for 1 week at a time.
- The CRCB payment is $500 per week ($450 after taxes withheld).
- The CRCB is available if you are unable to work at least 50% of your scheduled work week since you are caring for a family member, or
- You are caring at home for a child under 12 years old and the school, or daycare facility is closed or unavailable due to COVID-19, or
- You are caring at home for a family member who needs supervised care and the care facility is closed or unavailable due to COVID-19, and the person is sick with COVID-19, self-isolating due to COVID-19 or at risk of serious health complications if they get COVID-19.
- You did not apply or receive the CRB, the Canada Recovery sickness Benefit, short term disability benefits, workmen’s’ compensation benefits, EI or the Quebec Parental leave benefit.
- You reside in Canada with a valid SIN and are at least 15 years old and meet the income test described above for the CRB.
- You are the only one in the household making the claim and are not receiving paid leave from your employer
- Canada Recovery Sickness Benefit (CRSB)
- Employment Insurance (EI): with enhanced benefits for 1 year from September 27, 2020:
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- Applications for the CRSB were available online as of the week of October 4 for the first week period starting September 27, 2020 through the CRA My Account portal.
- The program is available for a total of 2 weeks during the 1-year period ending September 25, 2021.
- The CRSB provides a benefit of $500 per week for a maximum of 2 weeks.
- You are eligible for the CRSB if you are not eligible to work for at least 50% of your scheduled work week because you are self-isolating since you are sick with COVID-19, were advised to self-isolate or have underlying health condition that puts you at greater risk.
- Many of the other requirements applicable to the CRCB apply here as well.
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UNITED STATES
US Stimulus Package in a Nutshell
- Taxpayers to receive up to $1,200, with joint filers eligible to receive as much as $2,400 with an additional $500 for every child. Payments will be gradually phased out for individuals who make more than $75,000 and joint filers that make more than $150,000. Payments are completely phased out for individuals who make more than $99,000 and joint filers that earn more than $198,000.
- $300 Billion for loan guarantees for small businesses
- $150 Billion for large businesses excluding airlines
- $50 Billion in loan guarantees for passenger air carriers, and
- $8 Billion for cargo air carriers
- Individuals can defer filing their 2019 personal tax returns until July 15th,2020.
- Individuals and corporations may defer making estimated tax payments until October15th,2020.
- Penalties on early withdrawals up to $100,000 from qualified retirement plans for coronavirus related distributions will be waived.
- Increased incentives for making charitable contributions in 2020.
- Employers may defer payroll tax payments until 2021 and 2022.
- Businesses will be permitted to carry back losses to offset against five years of prior taxable income.
- Limitations on interest deductions will be relaxed.
US Resource Centre
