Canadian Response to COVID-19
What We Know About Canada’s Emergency Wage Subsidy So Far and other program available to Canadian business impacted by COVID-19.
Updated on April 1, 2020
1. The Canada Emergency Wage Subsidy – upto 75% of wage subsidy: NOTE – it’s important to keep in mind there is no draft legislation tabled by the federal government as yet on the Canada Emergency Wage Subsidy program. So, we are still waiting for significant details and definitions around this program. However, this afternoon, the Ministry of Finance released some limited guidance on the Canada Emergency Wage Subsidy. The main highlights are as follows:
a. Eligible Employers
Eligible employers would include individuals, taxable corporations, partnerships, non-profit organizations and registered charities – excludes municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals. This subsidy would be available to eligible employers that see a drop of at least 30 per cent of their revenue.
b. Calculating Revenues
An employer’s revenue for this purpose would be its revenue from its business carried on in Canada earned from arm’s-length sources calculated using the employer’s normal accounting method.
c. Amount of Subsidy
The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:
· 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
· the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less. There would be no overall limit on the subsidy amount that an eligible employer may claim.
d. Eligible Periods
Eligibility would generally be determined by the change in an eligible employer’s monthly revenues, year-over-year, for the calendar month in which the period began.
2. Canada Emergency Business Account:
• The Canadian bank has been tasked with rolling out this program by which the federal government will guarantee loans of up to $40,000 interest-free until the end of 2022. To qualify, organizations will 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 will result in loan forgiveness of 25 percent (up to $10,000).
3. GST/HST payment due at the end of the quarter will be deferred until June.
NOTE: Deferral to June of GST/HST payments, will generally apply to remittances that become due in March, April, and May.
Businesses should contact their financial institution to apply for these loans. There is expected to be significant rush for this program – so I’d recommend reaching out to your bank ASAP to understand the application process. As always, the information in this article is for information purposes only. Please connect with a qualified accountant and/or tax professional/s (as applicable) to assess and to determine the impact on your tax position/obligation and/or accounting implication.
For further information, please reach to your CloudAct Team. Mayur@cloudact.ca or 416-985-4978.