The new wage subsidy bill, the Canada Emergency Wage Subsidy (CEWS), was adopted this past Saturday, April 11th, 2020 by Parliament in hopes of adding another tool to aid the struggling Canadian economy and to support businesses, and the workers they employ, during the current COVID-19 crisis. This new bill is just the latest tool the government has deployed in helping the Canadian economy and Canadians, but it will probably not be the last.
Many questions we have been getting at Rawluk & Robert CPAs is “What do I qualify for?” or “What benefits am I entitled too?”. Whether you are an individual, a small business, a student or living abroad, our hope is to simplify all the subsidies and benefits here to help you answer those questions.
CANADA EMERGENCY RESPONSE BENEFIT - CERB
This is a taxable benefit of $2,000/month for up to four months. You can apply through My Account or through a Service Canada application process. People who are signed up for Direct Deposit have received the funds within 2 business days.
To be eligible to receive the benefit you must have had employment income or self-employed income of at least $5,000 in 2019 or in the 12 months prior to the date of the application. You also must have been or expect to be without employment, self-employment income or non-eligible dividends for at least 14 consecutive days in the initial four-week period. For subsequent benefit periods, you expect to have no employment income.
If you are normally eligible for employment insurance (EI) can continue to apply through EI and Service Canada, and they will automatically be enrolled in the CERB.
Who is Eligible?
Individuals who were forced to stop working because of the outbreak
Individuals who have been sickened by COVID-19
Individuals who are still employed but not being paid
Individuals who are quarantining or self-isolating
Individuals who are caring for someone ill
Individuals who are caring for children
Self-employed individuals who do not qualify for EI usually
TEMPORARY WAGE SUBSIDY FOR EMPLOYERS
One of the first initiatives from the federal government was the temporary wage subsidy, which would cover 10% of total remuneration paid to employees between March 18th and June 20th, 2020, up to $1,375/employee and $25,000/employer. This subsidy would not have to be shared among associated CCPCs and employers would be able to reduce the remittance of income tax paid to CRA through their regular source deductions payments. CPP and EI must be paid as normal and cannot be reduced.
This subsidy received by employers will be considered taxable income in the year it is received.
Who is Eligible?
Eligible employers include:
Non-profit organizations, registered charities, partnerships, sole-proprietorships and Canadian Controlled Private Corporations
Must have a business number and a payroll account with CRA as of March 18th, 2020
Pay salary, wages, bonuses or other remuneration to employees
CANADA EMERGENCY WAGE SUBSIDY - CEWS
The CEWS is designed to encourage employers to continue keeping employees on the payroll or encourage them to hire back employees who were laid off due to a decrease in revenue. Employers will now be able to count on direct payments from the government to cover a significant portion of most wages for the next three months. The CEWS offers businesses a 75% wage subsidy for those employers who qualify
If individuals are already receiving a subsidized salary through the CEWS, they are not eligible for the CERB.
Who is Eligible?
All businesses that have lost 30% of their revenue, or 15%, in March as a result of the COVID-19 pandemic.
This subsidy will be available for up to 12 weeks and is retroactive to March 15, 2020.
Businesses will not be able to benefit from both the Temporary Wage Subsidy for Employers and the Canada Emergency Wage Subsidy. If a business has already benefited from the 10% temporary wage subsidy, they are still eligible for the CEWS but will receive 65% as a subsidy instead of the full 75%.
CANADA EMERGENCY BUSINESS ACCOUNT
The government announced interest-free loans of up to $40,000 to eligible small businesses and non-profits. The loans will be interest free if paid back before December 31st, 2022 with $10,000 being forgiven if paid back before then. Interest will start accruing on any unpaid amounts at 5% and converted to a 1-year term loan if not paid back before December 31st, 2022.
Who is Eligible?
Small businesses and not-for-profits who have a payroll account and paid between $20,000 to $1.5 million in total payroll in 2019.
WORK-SHARING PROGRAM EXTENDED
The federal government is extending the Work-Sharing program from 38 weeks to 76 weeks. There are also no limitations on the extension to one specific sector or industry.
INCOME TAX DEFERRALS
Individuals have an extension to file their 2019 personal tax returns until June 1st, 2020. Any new income tax balances due, or instalments, are also deferred until after August 31st, 2020 without incurring interest or penalties.
All businesses can defer, until after August 31st, 2020, payment of any income tax, corporate tax and GST (Part IV tax is not included), amounts that become owing on or after March 27th and before September 2020. This includes corporate tax owing and GST payments and instalments. Any GST/HST payment that becomes owing from March 27th until the end of May can be deferred until the end of June.