Canada Emergency Wage Subsidy (CEWS)

As the Canada Emergency Wage Subsidy (CEWS) program inches towards the “live” date of Monday, April 27^th, the government has published an online calculator to help qualifying employers determine their potential wage subsidy amount. The latest information from the federal government is available here.

The information is thorough and provides a good explanation of the steps involved to determine your eligibility, and the amount of subsidy you may receive. There are also examples that address certain business situations. If you are considering applying to this program, we encourage you to review the information on this website.

If we can help you understand how the rules apply to your situation, please let us know.

As a reminder, to be eligible to receive the wage subsidy, you must:

• be an eligible employer
• have experienced an eligible reduction in revenue, and
• have had a CRA payroll account on March 15, 2020

Eligible employers include:

• individuals (including trusts)
• taxable corporations
• persons that are exempt from corporate tax (Part I of the Income Tax Act), other than public institutions:
  • non-profit organizations
  • agricultural organizations
  • boards of trade and chambers of commerce
  • non-profit corporations for scientific research and experimental development
  • labour organizations or societies
  • benevolent or fraternal benefit societies or orders
• registered charities
• partnerships consisting of eligible employers

Public institutions are not eligible for the subsidy. This includes municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals.

What is an eligible revenue reduction?

You must determine if your revenue was reduced enough to make you eligible to apply for the wage subsidy in a particular period. If you determine that you qualify for the CEWS for one claim period, you will automatically qualify for the following period.

Calculate your reduction by comparing your eligible revenue for the starting month of the claim period with your baseline revenue. Your baseline revenue is either:

• the revenue you earned in the corresponding month in 2019, or
• the average of the revenue you earned in January and February 2020

You must choose one of these baseline revenue options for your method of comparison and will not be able to change it for your subsequent calculations for the other two periods.

Eligibility periods for the Canada Emergency Wage Subsidy

Period dates	Baseline revenue	Eligibility period revenue	Required reduction
March 15, 2020 to April 11, 2020	March 2019, or Average of January and February 2020	March 2020	15%
April 12, 2020 to May 9, 2020	April 2019, or Average of January and February 2020	April 2020	30%
May 10, 2020 to June 6, 2020	May 2019, or Average of January and February 2020	May 2020	30%

Are you eligible for the Canada Emergency Business Account? The minimum payroll threshold has been reduced to $20,000, and the maximum to $1.5 million. The easiest way to determine if you fit is to check your 2019 T4 Summary, and locate box 14. That total is required during the application process.

If you are uncertain, contact your TSD representative now.  Applications are made through your financial institution and our experience shows the process to be very quick and easy.

A friendly reminder to gather your personal tax information and send it in as soon as possible. Even with the filing extension to June 1^st, time is slipping by quickly.

Updated April 21

Canada Emergency Response Benefit (CERB)

Programs designed to financially support Canadians during the COVID-19 crisis continue to evolve. Yesterday, applications for the federal government’s Canada Emergency Response Benefit (CERB) went live. Hundreds of thousands Canadians have applied for the program, and many more are expected to follow. Here is the latest information available on the CERB.

The CERB provides financial support to employed and self-employed individuals who are directly affected by COVID-19. Eligibility is fixed in four-week periods. The CERB provides a payment of $2,000 for a four-week period ($500 per week) for up to 16 weeks. Applicants will receive payment in three to five business days if they signed up for direct deposit, and within 10 business days if they did not.

To be eligible for the CERB, you must meet the following requirements:

• Reside in Canada
• Are aged 15-years-old or older when you apply
• For your first CERB application:
  • You have stopped or will stop working due to reasons related to COVID-19
  • For at least 14 days in a row for the period you are applying for, you will not receive:
    • employment income
    • self-employment income
    • provincial or federal benefits related to maternity or paternity leave
• For your subsequent CERB applications:
  • You continue to not work due to reasons related to COVID-19
  • For the four-week period you are applying for, you will not receive:
    • employment income
    • self-employment income
    • provincial or federal benefits related to maternity or paternity leave.
• You have not quit your job voluntarily
• You did not apply for, nor receive, CERB or EI benefits from Service Canada for the same eligibility period
• You earned a minimum of $5,000 income in the last 12 months or in 2019 from one or more of the following sources:
  • employment income (including dividends from a small business)
  • self-employment income
  • provincial or federal benefits related to maternity or paternity leave

There are two ways to apply:

• Online with CRA My Account
• Over the phone with an automated phone service at 1-800-959-2019 or 1-800-959-2041

Note that the CERB will be considered taxable income and that if you receive the full benefit, the potential tax liability will start at $2,000 (and could be more depending on your marginal tax rate). Any tax payments will be due in April 2021 when your 2020 income tax return is filed.

Updated April 7, 2020

Access to Credit

The government of Canada also established the Business Credit Availability Program (BCAP) to provide additional support to businesses through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). This program includes:

Canada Emergency Business Account Program (CEBA)

Eligible businesses will receive a $40,000 line of credit loan for immediate financial support to cover short term operating expenses, payroll and other business expenses which are critical to enable business continuity. Applications for the program will begin within three weeks after March 27. The program is:

• Interest free until December 31, 2022
• 25 percent (up to $10,000) of loan forgiveness provided the outstanding balance is fully paid on or before December 31, 2022
• After December 31, 2020, the line of credit will convert into a five-year term loan
• An interest rate of five percent applies on any outstanding balance after December 31, 2022, payable to the EDC, as mandated by the Government of Canada
• No mandatory payments until December 31, 2025, at which time the entire outstanding balance is due.

 The eligibility criteria are:

• You must have an existing business deposit account with your financial institution and your account was opened prior to March 1, 2020.
• The business has been a registered and operational business on or before March 1, 2020.
• The person enrolling for the Canada Emergency Business Account must have the ability and authority to bind the organization.
• Your payroll expense is between $50,000 and $1 million. To confirm this, you must provide the following information:
  • Employer account number, as reported at the top of your most recent available T4 Summary.
  • Your employment income reported in Box 14 of your most recent T4 Summary.
  • A copy of your 2019 T4 Summary, if requested.

Contact your bank to learn how they will implement this program, and what information they might need from you to streamline the process.

Updated April 2

Loan Guarantees and Co-Lending Programs for Small and Medium Sized Enterprises

EDC will work with financial institutions to issue new operating credit and cash flow term loans while BDC will work with financial institutions to co-lend term loans to SMEs intended to support operational cash flow requirements. Up to $6.25 million in credit is available through these programs.

These programs will roll out in the three weeks after March 27 and interested businesses should work with their current financial institutions.

Deferral of Sales Tax Remittance and Customs Duty Payments

Businesses, including self-employed individuals, can defer the payments of the Goods and Services Tax/Harmonized Sales Tax (GST/HST), as well as customs duties owing on their imports, until June 30, 2020.

The deferral will apply to GST/HST remittances for the February, March and April 2020 reporting periods for monthly filers and the January 1, 2020 through March 31, 2020 reporting period for quarterly filers. For annual filers, the deferral covers the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year. For GST and customs duty payments for imported goods, deferral will include amounts owing for March, April and May.

Extending the Work-Sharing Program

The maximum duration of the Work-Share program has increased from 38 to 76 weeks. The Work-Sharing program is offered to workers who agree to reduce their normal working hours because of developments beyond the control of their employers.

This is a fast-moving crisis and government programs and their requirements are changing quickly. We will continue to monitor government announcements closely, and we will provide updates.

Public health authorities are asking that we all minimize contact to reduce the spread of the COVID-19 virus. As such, please do not drop off physical records at our office. You can send them via email, through our TSD portal or by fax.

Information on these programs and changes to tax filings is available at teedsaundersdoyle.com/covid-19-update. Please reach out to your TSD representative if you have any questions on how these programs can be utilized in your particular situation. 

Stay Safe!