More Government Updates
Dear Valued Clients,
Hope you are all staying safe and well!
As you know from our recent updates, the Government of Canada is continuously trying to introduce or refine benefits to support businesses, workers, and families. There have been several challenges along the way as they piece together these unprecedented actions and processes. We are sharing what we know in the hopes that it will make your search for information easier.
Canada Emergency Wage Subsidy (CEWS)
This temporary wage subsidy amount for a given employee on eligible remuneration paid for the period between March 15, 2020 and June 6, 2020 would be the greater of either:
- 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week;
• the amount of remuneration paid, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration (whichever is less).
If employers are eligible for both the CEWS and the 10% wage subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the CEWS in that same period.
If employers and employees are participating in a Work-Sharing program, EI benefits received by employees through the Work-Sharing program will reduce the benefit that their employer is entitled to receive under the CEWS.
Eligible Wage Subsidy Periods & Claim Requirements
Businesses claiming the wage subsidy should be prepared to illustrate their decrease in revenues. Employers should have a designated individual who is in control of this application and review process. Revenues can be calculated on either an accrual or cash basis.
Claiming Period 1: March 15 to April 11, 2020 (required to prove a reduction in revenue of 15%)
- Businesses will need to compare their revenue for the month of March 2020 with their revenue from March 2019 or with an average of revenue generated from January and February 2020.
Claiming Period 2: April 12 to May 9, 2020 (required to prove a reduction in revenue of 30%)
- Businesses will need to compare their revenue for the month of April 2020 with their revenue from April 2019 or with an average of revenue generated from January and February 2020.
Claiming Period 3: May 10 to June 6, 2020 (required to prove a reduction in revenue of 30%)
• Businesses will need to compare their revenue for the month of May 2020 with their revenue from May 2019 or with an average of revenue generated from January and February 2020.
Abusing the Wage Subsidy Program
There will be significant penalties with respect to abusing any aspect of this program:
- If a business is deemed ineligible or if an honest mistake is made with the declarations submitted by a business, the government will request repayment of the issued wage subsidy amounts.
• If an entity tries to take advantage of this subsidy by manipulating transactions, there will be a 25% penalty added on to the subsidy amount to be repaid.
- Fines may be imposed along with criminal charges resulting in up to 5 years of imprisonment.
Refund for Payroll Contributions
Our government also proposed the introduction of a 100% refund for certain employer-paid contributions for the following programs: Employment Insurance; Canada Pension Plan; Quebec Pension Plan; Quebec Parental Insurance Plan.
Employers must still collect and remit employer/employee contributions for these programs and then they will need to apply for their refund. This refund would cover 100% of employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay and for which the employer is eligible to claim the Canada Emergency Wage Subsidy for those employees. There would be no overall limit on the refund amount that an eligible employer may claim. How this benefit for employers will be administered is still being determined by our government.
Canada Emergency Business Account (CEBA)
The purpose of the CEBA is to provide interest-free loans of up to $40,000 to small businesses and not-for- profits, to help with operating costs during this period where revenues have temporarily decreased. Eligible businesses will need to prove that they paid between $50,000 to $1 million in total payroll in 2019. The loan would be interest-free, and 25% of the loan is forgivable (up to $10,000) if the organization repays the loan on or before December 31, 2022. If the loan is not repaid by that date, the resulting loan terms would be determined by each financial institution. The online application portals are expected to be available by April 9, 2020, and business owners should contact their current financial institutions for assistance.
Canada Emergency Response Benefit (CERB)
As of April 6, 2020, you can apply for the CERB online and you must register for the “CRA My Account” to facilitate the process. This provides employed and self-employed individuals who have basically lost their income as a result of the COVID-19 pandemic with $500 per week ($2000 per month). Please be sure to check out the eligibility criteria and note that you can reapply for this benefit multiple times over the fixed 4-week eligibility periods, for a maximum of 16 weeks.
It is best to use the recommended day of the week to apply online based on your month of birth. It is also suggested that you register for direct deposit to avoid delays in receiving your payments if you are eligible for this and other benefits. The information you need to get started can be found here: https://www.canada.ca/en/revenue-agency/services/b...
Special Goods and Services Tax Credit
This one-time supplementary credit payment will start being issued by the CRA on April 9, 2020 for low to modest income families. You will automatically receive your payment if you usually receive the GST/HST credit. It will be mailed to you or deposited into your bank account if you are set up for direct deposits.
Your banking institutions have been permitted to offer you the opportunity to defer your mortgage payments for up to 6 months (principal and interest payments). You are encouraged to reach out to your own financial institution for these options. Please click here to find your bank’s dedicated COVID-19 page for mortgage support: https://cba.ca/mortgage-deferral-to-help-canadians-experiencing-financial-hardship-due-to-covid-19?l=en- us
You should also contact your financial institutions to discuss payment relief options for credit cards and lines of credit. Many of them are offering support which can include reduced interest rates or payment deferrals to help your families during these difficult times.
Canada Child Benefit (CCB)
Our government is providing you with up to an extra $300 per child to assist with supporting your children while they are at home with you. This benefit amount will vary based on your income and it will be delivered as part of your scheduled payment in May 2020.
Those who already receive the CCB do not need to reapply. However, if you recently had a child/children and have not already applied, please visit this site to review the requirements and submit your application: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit- overview/canada-child-benefit-apply.html
Canada Summer Jobs Programs
Canada’s small businesses rely on employing young Canadians to keep costs down. In the coming months, small businesses will likely hire these workers for executing their essential services. Our communities’ youth will in turn be employed while they are out of school for the summer and be able to help employers keep their businesses running through these unprecedented times. It is hoped that the temporary changes in the program will help create up to 70,000 jobs for youth between 15 and 30 years of age to stay in touch with the labour market.
The temporary changes include the following:
- job placements could run from May 11, 2020 and be extended to February 28, 2021;
• an increased wage subsidy will be available so that private and public sector employers can also receive up to 100% of the minimum hourly wage for each employee;
• employers will be permitted to hire part-time staff, not just full-time summer employees;
• employers will be able to adjust their projects to support essential services.
This newsletter and the details provided are solely shared for informational purposes and does not constitute legal, tax, or financial advice or opinions. Please do not hesitate to reach out to your manager with any questions.
Pramen Prasad CPA, CA, CMA Managing Partner
Prasad & Company LLP