COVID-19

Help for Canadian businesses and employees, including 75% wage subsidy

This summary provides the latest details available up to April 1, 2020 for the programs announced by the Canadian government to help Canadian businesses and employees.

Although some high-level details are available, the detailed rules remain outstanding. We summarized the details based on what we know to date. Outstanding details are required for some of the new or amended measures.

All of these announcements require legislation and parliamentary approval to move forward.  We understand that parliament is in the process of being recalled.

 

Canada Emergency Wage Subsidy (CEWS)

What we know What we don’t know
  • Equal to 75 percent of eligible remuneration on the first $58,700 per employee, maxing out at $847 per week. There is no overall limit that the employer can claim.
  • Applies to “eligible employers” which includes individuals, taxable corporations, and partnerships with partners who are eligible employers as well as NPOs and registered charities. It appears that Canadian subsidiaries of foreign-controlled companies may also be eligible.
  • Requires at least a 30% decrease in revenues from a business carried on in Canada earned from arm’s length sources, comparing the current month to the same month in the previous year.
  • The CEWS would be claimed against wages in three claiming periods: March 15-April 11; April 12-May 9; May 10-June 6 for each of March, April and May, respectively.
  • Employers are required to reapply each month.
  • Employers must pay the employee wages first, then apply for the CEWS through the CRA’s My Business Account portal. Payment will be received through direct deposit, if possible. Employers must keep records of both their arm’s length revenues and employee remuneration.
  • It is estimated that the funds for the CEWS will be available in 3-6 weeks
  • Employers will be asked to attest they are doing “everything they can” to pay the other 25% of employee wages. However, it is not required.
  • The CEWS will be taxable to the employer as government assistance.
  • There will be serious consequences for businesses that try to “game” the system, which can include fines and possibly imprisonment.
  • Funds for the program are expected to be available in 6 weeks.
  • Expected overall cost of the program: $71 billion.
  • Will any limits be placed on the type of business that applies? Would non-resident businesses also be eligible?
  • How will businesses be required to prove a 30% decline if they cannot compare to the previous year (e.g. a startup with no prior year operations)?

 

Canada Emergency Business Account (CEBA)

What we know What we don’t know
  • Up to $40,000 interest-free loan for small businesses and not-for-profit organizations.
  • If repaid by Dec 31, 2022, up to 25% is forgivable (up to $10,000).
  • Organizations that paid between $50,000 and $1 million in payroll for 2019.
  • Organizations that have had their revenues temporarily reduced.
  • Loans obtained through your financial institution, in cooperation with Export Development Canada.
  • How is “small business” defined?
  • What minimum length of time must revenues be reduced for to qualify?
  • By how much must revenues be reduced in order to qualify?

 

Deferral of GST/HST and duties

QST is expected to adopt same measures but are still to be confirmed

What we know
  • All businesses, including self-employed individuals can defer remittances of GST/HST, customs duties and GST on import until June 30.
  • Deferral of the payments apply to the following months/periods:
    • Monthly filers - Feb, Mar, Apr remittances
    • Quarterly filers - remittances for Jan 1-Mar 31 reporting period.
    • Annual filers -  instalments or amounts due in Mar, Apr or May.
    • Customs duties and GST on imports for Mar, Apr, May
  • GST/HST returns should still be filed on time

 

Loans to small and medium enterprises (SMEs) through Export Development Canada (EDC) 

What we know What we don’t know
  • SMEs will be able to obtain operating credit and cash flow term loans up to $6.25M
  • Loans would be obtained through the SME’s financial institution
  • Loans would be guaranteed by EDC
  • What would qualify as an SME?
  • What are the loan and repayment terms?
  • When will this program become available?

 

Loans to businesses through Business Development Bank of Canada (BDC)

What we know What we don’t know
  • Canadian businesses can obtain incremental credit amounts up to $6.25M
  • Loans would be obtained through the business’s financial institution
  • Loans are provided through a co-lending program between the business’s financial institution and BDC
  • Which Canadian businesses would qualify?
  • What are the loan and repayment terms?
  • When will this program become available?

 

These new measures provide a significant lifeline to Canadian businesses and their workers to help manage the economic uncertainty caused by the COVID-19 pandemic. We anticipate that when additional details are provided, these measures will prove to be broad and far-reaching – in addition - easy to administer and obtain for Canadian businesses.  If the press releases provided by Prime Minister Trudeau and Minister Morneau are any indication, this is the intent.

Further details will be provided on these new programs as they become available.

Additional information can be found at: Additional support for Canadian businesses

We are here to help

We understand that you want to be agile and responsive as the situation unfolds. Having access to experts, insights and accurate information as quickly as possible is critical—but your resources may be stretched at this time.

We’re here to support you as you navigate through the impacts of coronavirus on your business and your investments.