SMB Support & COVID-19
In response to the COVID-19 pandemic, the Canadian federal and Ontario governments have announced numerous relief programs and legislation tailored to small and medium-sized businesses. Below is a summary of the programs which you and your business may be able to access during this crisis.
FINANCIAL SUPPORT MEASURES FOR BUSINESSES
On March 18, 2020, the federal government announced measures designed to ease the financial strain on businesses. The following is a summary of the plan:
Canada Emergency Business Account: small businesses and not-for-profits will be able to apply for interest-free loans of up to $40,000 to help cover operating costs during the pandemic. To qualify, organizations need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 may result in loan forgiveness of 25 percent (up to $10,000).
Canada Emergency Wage Subsidy: companies, not-for-profits and charities experiencing a decrease in revenues of at least 30% will be eligible for the wage subsidy. Revenues will be compared to March, April and May 2019. Applications will need to be made on a monthly basis through the CRA website. The program may cover up to 75% per cent of salary on the first $58,700, which equates up to $847.00 per week, and is retroactive to March 15, 2020.
Business Credit Availability Program: $10 billion is available to Canadian small and medium-sized businesses under the new Business Credit Availability Program, which will be coordinated between the Business Development Bank of Canada (BDC), Export Development Canada (EDC) and private lenders. Relief measures announced by BDC include:
- Working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months for qualifying businesses;
- Flexible repayment terms, such as postponement of principal payments for up to six months, for existing BDC clients with total BDC loan commitment of $1 million or less; and
- Reduced rates on new eligible loans.
GST/HST Remittance Deferral: the Minister of National Revenue will extend until June 30, 2020 the time that:
- Monthly filers have to remit amounts collected for the February, March and April 2020 reporting periods;
- Quarterly filers have to remit amounts collected for the January 1, 2020 through March 31, 2020 reporting period; and
- Annual filers, whose HST return or installment are due in March, April or May 2020, have to remit amounts collected and owing for their previous fiscal year and installments of HST in respect of the filer’s current fiscal year.
Increased Lending Capacity and Banking Support: the Office of the Superintendent of Financial Institutions’ announced major Canadian banks will be given $300 billion in additional lending space to allow banks to offer relief to personal and small business. The six largest Canadian banks, Bank of Montreal, CIBC, National Bank of Canada, RBC Royal Bank, Scotiabank and TD Bank committed to work with personal and small businesses to provide flexible solutions, including up to a six-month payment deferral for mortgages and relief on other credit products.
EASING THE TAX BURDEN:
Tax deferrals have been announced for both the income taxes and provincial taxes.
Income Tax Deferral: the Canada Revenue Agency will allow businesses to defer income tax payments until August 31, 2020 for any amount owning on or after March 18, 2020 and before September 1, 2020. No interest or penalties will accumulate on these amounts during this period.
- For self-employed individuals the deadline to pay any balance due for individual income tax has been extended to September 1, 2020;
- For trusts having a taxation year ending December 31, 2019, the due date for filing returns will now be May 1, 2020;
- For charities with a deadline between March 18, 2020 and December 31, 2020, the deadline is extended to December 31, 2020; and
- For individuals, the deadline for filing tax returns is deferred to June 1, 2020.
Provincial Tax Relief for Businesses: beginning April 1, 2020, penalties and interest will not apply to Ontario businesses that miss any filing or remittance deadline under the following provincial taxes during the five-month relief period: Employer Health Tax, Tobacco Tax, Fuel Tax, Gas Tax, Beer, Wine & Spirits Tax, Mining Tax, Insurance Premium Tax, International Fuel Tax Agreement, Retail Sales Tax on Insurance Contracts and Benefit Plans, and Race Tracks Tax.
Employer Health Tax (EHT) Exemption: retroactive to January 1, 2020, the EHT exemption is increasing from $490,000 to $1 million for the 2020 tax year.
WSIB Deferral: the Ontario government has deferred WSIB premium payments until August 31, 2020 with no interest or penalty.
SUPPORT FOR WORKERS
Employment Insurance Sickness Benefits: the benefit may provide 15 weeks of income replacement and is available to eligible claimants who are unable to work because of illness, injury or quarantine. Changes due to the pandemic include:
- waiving one week waiting period for those quarantined;
- establishing a dedicated toll-free phone number;
- waiving requirements for a medical certificate for people applying due to quarantine; and
- backdating claims to cover period of delay for people who cannot complete their claim due to quarantine.
Canada Emergency Response Benefit (CERB): the taxable benefit will provide $2000 a month for up to four months for workers who lose their income as a result of COVID-19. It will be available from March 15, 2020 until October 3, 2020. The CERB would apply to wage earners, as well as contract workers and self-employed individuals who would not otherwise be eligible for Employment Insurance. Additionally, workers who are still employed, but are not receiving income because of disruptions to their work situation due to COVID-19, may also qualify.
“ONTARIO TOGETHER” AND ESSENTIAL SUPPLY CHAINS
On March 21, 2020, the Ontario Government announced the launch a new website, “Ontario Together” (https://www.ontario.ca/page/how-your-organization-can-help-fight-coronavirus), to help business and employees work with the provincial government to remove barriers to allow Ontario manufacturing companies redeploy capacity towards production of essential equipment.
This article is provided for general information purposes and should not be considered a legal opinion. Clients are advised to obtain legal advice based on their specific situations.