| Hello All,
As promised here is our recap and update of all of the information we have thus far on the resources and support for you and your business. We’ve concentrated on the CERB and the Wage Subsidy in this newsletter.
We were trying to get this out on Wednesday. However, the government kept releasing more information so we wanted to get it all in here. Please let us know if you have any further questions that are not answered here.
Corporate Businesses
When we’re discussing with corporate business owners, we are initially talking about their people and ensuring they have been looked after. At this time, there are two options:
- Lay off your employees or cease to pay your employees so they can access EI or CERB (detailed below). Usually, EI will be a better option than the CERB because of a higher payout. But it is not available for everyone and the payout will be different for everyone; or
- Keep your employees and use the Emergency Wage Subsidy or Temporary Wage Subsidy. This would usually mean more cash in the hands of your people but it is going to require your business to pay out more cash upfront which is detailed below.
The second discussion is about business owners and their families. At this time, if you are taking a salary, the Emergency Wage Subsidy is available to those owners and other non-arm’s length employees. However, there are some conditions which are discussed below.
Every business will be different because of salary, cash flow, and other factors. Hence, our recommendation will be different for every business. If you are unsure about how to proceed, we would recommend booking a consulting call with us to figure out the best option for you are your business.
Federal
- EI – Typically the first option for your employees.
- If employees lose their job, the first step would be applying for EI. This will only work if the employee has enough hours and contributions. For example, the minimum number of hours required in the lower mainland is around 700. Also, the maximum amount per week is $573 which is based on insurable earnings of $54,200.
- You can receive EI from 14-45 weeks which is based on the unemployment rate in the region, the number of insurable hours in the last 52 weeks or since your last claim.
- You will need an ROE from the employer.
- https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit.html
- CERB – For people who can’t get EI or are sick, quarantined, or on self-isolation.
- The taxable benefit of $2000 a month for up to 4 months for:
- workers who must stop working due to COVID-19 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. (potential to get it with being let go); and
- wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.
- Worker – means a person who is at least 15 years of age, who is resident in Canada and who, for 2019 or in the 12-month period preceding the day on which they make an application under section 5, has a total income of at least $5,000 — or, if another amount is fixed by regulation, of at least that amount — from the following sources:
- employment;
- self-employment;
- benefits paid to the person under any of subsections 22(1), 23(1), 152.04(1) and 152.05(1) of the Employment Insurance Act; and
- allowances, money or other benefits paid to the person under a provincial plan because of pregnancy or in respect of the care by the person of one or more of their new-born children or one or more children placed with them for the purpose of adoption.
- Eligibility – The last day of pay is important, refer below.
- A worker is eligible for an income support payment if:
- the worker, whether employed or self-employed, ceases working for reasons related to COVID-19 for at least 14 consecutive days within the four-week period in respect of which they apply for the payment; and
- they do not receive, in respect of the consecutive days on which they have ceased working;
- subject to the regulations, income from employment or self-employment;
- benefits, as defined in subsection 2(1) of the Employment Insurance Act;
- allowances, money or other benefits paid to the worker under a provincial plan because of pregnancy or in respect of the care by the worker of one or more of their new-born children or one or more children placed with them for the purpose of adoption; or
- any other income that is prescribed by regulation.
- Apply through a secure web portal starting on the week of April 6th and based on their month of birth:
- January, February, March – April 6;
- April, May, June – April 7th;
- July, August, September – April 8th; and
- October, November, December – April 9th.
- In order to access this benefit, the employee doesn’t need to be laid off. They just need to be without employment income for at least 14 days in the initial four-week period and no employment income in subsequent periods.
- People already receiving EI benefits will stay on EI. Do not apply for CERB. If your EI benefits run out before October 3, 2020, then apply for CERB once your EI benefits cease.
- The benefit is paid every four weeks and will be available from March 15, 2020, until October 3, 2020. No application after December 2, 2020.
- https://www.canada.ca/en/services/benefits/ei/cerb-application.html
- https://www.canada.ca/en/department-finance/news/2020/03/introduces-canada-emergency-response-benefit-to-help-workers-and-businesses.html
- https://www.parl.ca/DocumentViewer/en/43-1/bill/C-13/royal-assent
- Emergency Wage Subsidy (75%) / Temporary Wage Subsidy (10%)
- Emergency Wage Subsidy – 75% Subsidy:
- A wage subsidy of 75% for up to 3 months from March 15 onwards to a maximum of 75% of a $58,700 salary ($847 per week);
- Available to businesses whose gross arm’s-length revenue dropped by 30% when compared to the same month last year. For newer businesses, likely comparing monthly revenues;
- The business will have to apply every month and it appears that the amount will be refunded back to the business after the month is completed;
- A special rule will apply to employees that do not deal at arm’s length with the employer (owner’s). The subsidy amount for such employees will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week or 75 percent of the employee’s pre-crisis weekly remuneration; and
- Claim periods:
- March 15 – April 11 – Reference revenue from March 2020 over March 2019;
- April 12 – May 9 – Reference revenue from April 2020 over April 2019; and
- May 10 – June 6 – Reference revenue from May 2020 over May 2019.
- https://www.canada.ca/en/department-finance/news/2020/04/the-canada-emergency-wage-subsidy.html
- Temporary Wage Subsidy – 10% Subsidy:
- If the business can’t receive the 75% subsidy, it appears that the 10% wage subsidy will be available to them;
- You are an eligible employer if you:
- are a non-profit organization, registered charity, or a Canadian-controlled private corporation (CCPC);
- have an existing business number and payroll program account with the CRA on March 18, 2020;
- pay salary, wages, bonuses, or other remuneration to an employee;
- There is a max of $1,375 per employee or max of $25,000 per employer whichever is lower;
- You pay your employees upfront and the subsidy is taken away from your withholdings payment to the government in the following month; and
- If the subsidy exceeds the payment of the withholding, the credit moves forward to the next month.
- https://www.canada.ca/en/department-finance/news/2020/04/the-canada-emergency-wage-subsidy.html
- https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
Provincial
- BC Emergency Benefit for Workers
- Tax-free $1,000 payment to British Columbians whose ability to work has been affected by COVID-19; and
- The benefit will be a one-time payment for B.C. residents who receive federal Employment Insurance (EI), or the new Canada Emergency Response Benefit.
Self Employed
In the below information, we’ve only discussed points that were different from above. Overall, most self-employed individuals will be applying for the CERB which they are eligible for. But, please refer to the conditions above and, in particular, on the limit to earning income.
Federal
- Filing Deadlines
- No change for a self-employed personal tax return or GST return, June 15th, 2020.
- The change to June 1st, 2020, only applies to individuals without self-employment income.
- Payment Deadlines
- Income Tax – Deferred to August 31st, 2020.
- Payroll – Wage Subsidy.
- GST/HST – Deferred to June 30th, 2020.
Loan Support
- Canada Emergency Business Account (Private Financial Institutions – Small Business)
- Interest-free loans in the form of lines of credit of up to $40,000 to businesses with payrolls of less than $1 million. A quarter of this loan (up to $10,000) is eligible for complete forgiveness.
- To cover operating costs but you need to demonstrate that you paid between $50,000 to $1 million in total payroll in 2019.
- From RBC but should be similar for other financial institutions:
- No interest until January 1, 2023;
- If you pay 75% of the balance on or before December 31, 2022, the remaining balance of the loan will be forgiven; and
- Will roll out in three weeks after March 27th.
- https://pm.gc.ca/en/news/news-releases/2020/03/27/prime-minister-announces-support-small-businesses-facing-impacts
- Business Credit Availability Program (BDC – Medium size business)
Links
https://www.canada.ca/en/department-finance/economic-response-plan.html
https://news.gov.bc.ca/releases/2020PREM0013-000545
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