The Government of Canada is taking immediate, significant and decisive action to support Canadians and businesses facing hardship as a result of the global COVID-19 outbreak.
In regard to relief for employers, the Government of Canada has several programs in place, and is continuing to review and enhance relief options for businesses. These relief programs provide access to credit, payment deferrals and financial stimulus to avoid employee layoffs and encourage rehiring.
While the scope of these programs is wide-ranging, this communication is a high-level overview of several cash flow and tax relief considerations available to our valued customers.
Financial Assistance and Loans
The Canada Emergency Wage Subsidy (CEWS)
- To prevent further job losses, and encourage employers to rehire workers previously laid off as a result of COVID-19, CEWS provides a 75% wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020 (up to $847/week per associate)
- Eligible employers include individuals, taxable corporations, partnerships, nonprofit organizations and registered charities
- This subsidy is available to eligible employers that attest to a drop of at least 15% of their revenue in March 2020 and 30% in April and May
- Interaction with 10% wage subsidy – for employers that are eligible for both the CEWS and the 10% wage subsidy (mentioned next in this communication), any benefit from the 10% wage subsidy for wages paid in a specific period would generally reduce the amount available to be claimed under the CEWS in that same period
- Eligible employers apply for the CEWS through the Canada Revenue Agency's My Business Account portal
10% Wage Subsidy
- Eligible employers are Canadian-controlled private corporations (incorporated) eligible for the small business deduction or nonprofit organizations, registered charities; and have an existing business number and payroll program account with CRA on March 18; and pay salary, wages or bonuses to an employee
- Eligible period: for salaries paid from March 18 to June 20, 2020
- It is a 10% subsidy, so if you have two employees that you pay $1,500 each, every two weeks, the subsidy is $150 x 2 = $300
- Over the 90-day period, the limit is $1,375 per employee and $25,000 per employer
- How to receive the subsidy? Simply reduce your remittance of federal, provincial or territorial income tax that is sent to the CRA by the amount of the subsidy
Business Credit Availability Program (BCAP)
- Provides $40 billion of additional support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) who are working with private sector lenders to coordinate credit solutions for individual businesses. This includes:
- Loan Guarantee for Small and Medium-Sized Enterprises – EDC is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million
- Co-Lending Program for Small and Medium-Sized Enterprises – BDC is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements. Eligible businesses may obtain incremental credit amounts of up to $6.25 million
- The programs will roll out in mid-April and interested businesses should work with their current financial institutions
$40,000 Canada Emergency Business Account
- Banks provide interest-free loans (for the first year) of up to $40,000 to employers with $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)
- Small businesses and not-for-profits should contact their financial institution to apply for these loans
Farm Credit Canada (FCC) COVID-19 Support Program
- An additional $5 billion in lending to producers, agribusinesses and food processors to ensure they can remain focused on business-critical functions rather than worrying about how to access funds to keep operating through COVID-19
- FCC has put in place a deferral of principal and interest payments up to six months for existing loans; or a deferral of principal payments up to 12 months, and access to an additional credit line up to $500,000, secured by general security agreements or universal movable hypothec (Québec only)
Delayed Payment of Income Taxes
- Allowing all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020
- No interest or penalties will accumulate on these amounts
Deferral of Sales Tax Remittance and Customs Duty Payments Until June
- Allowing businesses, including self-employed individuals, to defer until June 30, 2020, payments of the sales tax remittance, as well as customs duty owing on their imports
- Any sales tax payment that becomes due from March 27 until the end of May can be deferred until the end of June
- For customs duty payments for imported goods, deferral will include amounts owed for March, April and May
Financial Assistance by Province
The Canadian Federation of Independent Business (CFIB) has established a small business help center with numerous resources to navigate the COVID-19 pandemic, including a guide to the financial assistance by province
Canadian companies should review the legislation, determine your eligibility and seek guidance from your accounting, tax and finance professionals.
Helpful links are provided below.
As your business partner, Penske will continue to monitor and provide timely updates on developments as they arise.
Key Website Links for Coronavirus Financial Guidance
Government of Canada:
Canada’s COVID-19 Economic Response Plan:
Canadian Federation of Independent Business (CFIB):
Financial Assistance by Province / Territory: