An updated overview of the federal government’s support for individuals and businesses in response to COVID-19 can be found at Canada’s COVID-19 Economic Response Plan. Supports specific for businesses can be found at Support for Businesses. In addition to support for businesses, the Government of Canada is implementing measures to support financial stability, including launching an Insured Mortgage Purchase Program and lowering the Domestic Stability Buffer.
Support for businesses:
Extending the Work-Sharing Program
The Work-Sharing program is being extended from 38 weeks to 76 weeks.
The Work-Sharing program is an adjustment program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. The measure provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced work week while their employer recovers.
Work-Sharing is a three-party agreement involving employers, employees and Service Canada. Employees on a Work-Sharing agreement must agree to a reduced schedule of work and to share the available work over a specified period of time.
Providing Business with Wage Subsidies
Initially, in response to COVID-19, the government announced a 10% wage subsidy for qualifying businesses. The government has increased the wage subsidy to 75%, for up to 3 months, retroactive to March 15, 2020. This will help businesses to keep and return workers to the payroll.
If a business’s revenues have decreased by at least 30%, they will be eligible for the rescue plan. It will apply to non-profits and charities and companies big and small as the size of a company will not bear on if it qualifies for the help.
If an individual works for a company that has been affected, the government will cover up to 75% on the first $58,700 dollars that they earn, up to a maximum of $847/ week, back-dated to March 15.
Establishing a Business Credit Availability Program
A Business Credit Availability Program has been created to provide $65 billion of additional support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).
BDC and EDC are working with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation, exportation and tourism.
Business Credit Availability programs will roll out in the three weeks following March 27. Interested businesses should work with their current financial institutions.
Business Credit Availability Programs:
(1) Canada Emergency Business Account
The new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced.
To qualify, organizations need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.
(2) Loan Guarantee for Small and Medium-Sized Enterprises
Export Development Canada is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to small-mid-sized enterprises.
(3) Co-Lending Program for Small and Medium-Sized Enterprises
Business Development Bank of Canada is working with financial institutions to co-lend term loans to small to mid-size enterprises for their operational cash flow requirements.
Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program.
More time to pay income taxes
Businesses are able to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
Review Additional Support for Canadian Businesses from the Economic Impact of COVID-19 for more info on investments by the Government of Canada to support Canadian businesses.
Deferral of Customs Duty and Sales Tax for Importers
Imported goods by businesses are generally subject to the GST, at a rate of 5% as well as applicable customs duties, which vary by product and country of origin. While the vast majority of imports enter Canada duty-free, some tariffs remain, especially on consumer goods.
The Customs Act governs the levying and payment of customs duties in Canada.
Typically, payments owing for customs duties and the GST on imports are due before the first day of the month following the month in which the Statements of Accounts are issued.
Section 33.7(1) of the Customs Act allows for the timeline for accounting or payment of amounts owing to be extended.
Under this authority, payment deadlines for statements of accounts for March, April, and May are being deferred to June 30, 2020.
Businesses in need of information about their particular accounting and payment obligations on imported goods may contact the Canada Border Services Agency for more details.
Canada Emergency Response Benefit
The Government of Canada has introduced the Canada Emergency Response Benefit. The benefit will provide a taxable benefit of $2,000/ month for up to 4 months to:
- workers who must stop working due to COVID19 and do not have access to paid leave or other income support.
- workers who are sick, quarantined, or taking care of someone who is sick with COVID-19.
- working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures.
- workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work.
- wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.
Starting in early April, the benefit will be accessible through a secure web portal. Applicants will also be able to apply via an automated telephone line or via a toll-free number.