• Robert Balazs

COVID-19 Economic Support Measures



Over the months since the start of the worldwide COVID-19 outbreak, we've been staying on top of and providing updates on the various government economic support that's being rolled out to Canadian businesses and individuals during the COVID-19 pandemic. Here's an overview of what's been announced or passed through the senate so far.


Individuals


EI Benefit


Employment Insurance (EI) provides regular benefits to individuals who lose their jobs through no fault of their own (for example, due to shortage of work, seasonal or mass lay-offs) and are available for and able to work, but can't find a job

  • A minimum unemployment rate of 13.1% applies to all regions across Canada starting August 9, 2020

- If your region’s unemployment rate is higher than 13.1%, the higher

actual rate will be used to calculate your benefits

- This means you can receive at least 26 weeks of regular benefits

  • You only need 120 insured hours to qualify for benefits because you’ll get a one-time credit of 300 insured hours to help you meet the required 420 insured hours of work

  • You’ll receive at least $500 per week before taxes but you could receive more

  • If you received the CERB, the 52-week period to accumulate insured hours will be extended

Eligible applicants must:

  • Have been employed in insurable employment;

  • Have lost their job through no fault of their own;

  • Have been without work and without pay for at least seven consecutive days in the last 52 weeks;

  • Have Worked for the required number of insurable employment hours in the last 52 weeks or since the start of your last EI claim, whichever is shorter

  • Be ready, willing and capable of working each day;

  • Be actively looking for work (you must keep a written record of employers you contact, including when you contacted them).

For more information on eligibility and specific situations, see: https://www.canada.ca/en/services/benefits/ei/ei-regular-benefit/eligibility.html


Canada Emergency Response Benefit (CERB)

*REPLACED* by Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiving Benefit (CRCB).


Canada Recovery Benefit (CRB)

  • $1000 per 2 weeks in support

  • Up to a maximum of 26 weeks between September 27th, 2020 and September 25th, 2021.

  • Taxable, but source deductions will be withheld.

  • Apply through online portal

  • All recipients must submit bi-weekly reports showing their continued eligibility, including their availability to work


Applicants must meet all the following conditions for the 2-week period they're

applying for:

  • Cannot have been employed or self-employed for reasons related to COVID-19 OR had a 50% reduction in average weekly income compared to the previous year due to COVID-19.

  • Cannot have applied for or received any of the following:

- Canada Recovery Sickness Benefit (CRSB)

- Canada Recovery Caregiving Benefit (CRCB)

- Short-term disability benefits

- Workers' compensation benefits

- EI Benefits

- Quebec Parental Insurance Plan benefits

  • Not eligible for regular EI benefits

  • Reside in Canada

  • Have been present in Canada during the claim period

  • Have a valid SIN

  • At least 15 years of age

  • Cannot have quit your job or reduced your hours voluntarily on or after September 27th, 2020, unless it was reasonable to do so

  • Were seeking work during the period, either as an employee or in self-employment

  • Did not turn down reasonable work during the 2-week period being applied for

  • Eligible applicants must have earned at least $5,000 or more within the last 12 months or in the 2019 or 2020 tax year. This includes:

- Employment income

- Net self-employment income

- Maternity or parental benefits


For more details and info on how to apply for the CRB, see:

https://www.canada.ca/en/revenue-agency/services/benefits/recovery-benefit/crb-how-apply.html



Canada Recovery Sickness Benefit (CRSB)


The Canada Recovery Sickness Benefit (CRSB) gives income support to employed and self-employed individuals who are unable to work because they are sick or need to self-isolate due to COVID-19, or have an underlying health condition that puts them at greater risk of getting COVID-19. The CRSB is administered by the Canada Revenue Agency (CRA).


If you are eligible for the CRSB, you can receive $500 ($450 after taxes withheld) for a 1-week period.


If your situation continues past 1 week, you will need to apply again. You may apply up to a total of 2 weeks between September 27, 2020 and September 25, 2021.


Eligibility criteria:


  • You are unable to work at least 50% of your scheduled work week because you're self-isolating for one of the following reasons:

- You're sick with COVID-19 or may have COVID-19

- You are advised to self-isolate due to COVID-19

- You have an underlying health condition that puts you at greater risk of

getting COVID-19

  • You did not apply for or receive any of the following for the same period:

- Canada Recovery Benefit (CRB)

- Canada Recovery Caregiving Benefit (CRCB)

- Short-term disability benefits

- Workers' compensation benefits

- EI Benefits

- Quebec Parental Insurance Plan benefits

  • You reside in Canada

  • You were present in Canada during the claim period

  • You are at least 15 years old

  • You have a valid SIN

  • Eligible applicants must have earned at least $5,000 or more within the last 12 months or in the 2019 or 2020 tax year. This includes:

- Employment income

- Net self-employment income

- Maternity or parental benefits

  • You are not receiving paid leave from your employer for the same period

For more details and info on how to apply for CRSB, see:

https://www.canada.ca/en/revenue-agency/services/benefits/recovery-sickness-benefit/crsb-how-apply.html



Canada Recovery Caregiving Benefit (CRCB)


The Canada Recovery Caregiving Benefit (CRCB) gives income support to employed and self-employed individuals who are unable to work because they must care for their child under 12 years old or a family member who needs supervised care. This applies if their school, regular program or facility is closed or unavailable to them due to COVID-19, or because they are sick, self-isolating, or at risk of serious health complications due to COVID-19. The CRCB is administered by the Canada Revenue Agency (CRA).


If you are eligible for the CRCB, your household can receive $500 ($450 after taxes withheld) for each 1-week period.


If your situation continues past 1 week, you will need to apply again. You may apply up to a total of 26 weeks between September 27, 2020 and September 25, 2021.


Eligibility criteria:

  • You are unable to work at least 50% of your scheduled work week because you are caring for a family member

  • You are caring for your child under 12 years old or a family member who needs supervised care because they are at home for one of the following reasons:

- Their school, daycare, day program, or care facility is closed or unavailable to

them due to COVID-19

- Their regular care services are unavailable due to COVID-19

- The person under your care is:

- sick with COVID-19 or has symptoms of COVID-19

- at risk of serious health complications if they get COVID-19, as advised by

a medical professional

- self-isolating due to COVID-19

  • You did not apply for or receive any of the following for the same period:

- Canada Recovery Benefit (CRB)

- Canada Recovery Sickness Benefit (CRSB)

- Short-term disability benefits

- Workers' compensation benefits

- EI Benefits

- Quebec Parental Insurance Plan benefits

  • You reside in Canada

  • You were present in Canada during the claim period

  • You are at least 15 years old

  • You have a valid SIN

  • Eligible applicants must have earned at least $5,000 or more within the last 12 months or in the 2019 or 2020 tax year. This includes:

- Employment income

- Net self-employment income

- Maternity or parental benefits

  • You are the only person in your household applying for the benefit for the week

  • You are not receiving paid leave from your employer for the same period

For more details and info on how to apply for CRCB, see:

https://www.canada.ca/en/revenue-agency/services/benefits/recovery-caregiving-benefit/crcb-how-apply.html


Canada Child Benefit


  • $300 extra per child

  • Payment scheduled with CCB for April



GST Credits


  • Up to $400 for individuals and $600 for couples

  • Payments will arrive in May

  • For low and modest income families

  • Must have filed 2018 tax return



Mortgage & Car Loans


  • Up to 6 months payment deferral

  • Case by case based with associated lenders



Personal Income Tax Returns


  • Filing deadline pushed to September 1st, 2020

  • Tax payments deferred to September 30th, 2020



Student Loans


  • Payments pushed by 6 months

  • No interest accrued for 6 months

  • Effective March 30th, 2020



Canada Emergency Student Benefit




Other Support for Students


  • Canada Student Service Grant

- Students volunteering instead of working will be eligible for $1,000 to $5,000 based on the work done

  • 76,000 student jobs will be created

  • Student grants will be doubled for the 2020-2021 school year. Additional funding will be made available to Inuit, Metis and First Nations students

  • Canada Student Service Grant for post-secondary students and recent graduates volunteering

- One-time payment of between $1,000 and $5,000 based on the number of

hours they serve



Canada Summer Jobs Program


  • Canada Summer Jobs (CSJ) employers will receive a subsidy of up to 100% to cover the costs of hiring students.

  • Available to those who applied for the CSJ program by February 28th, 2020



Reduced Minimum RRIF Withdrawals


The required minimum withdrawals from Registered Retirement Income Funds (RRIFs) will be reduced by 25% for 2020. Similar rules would apply to individuals receiving variable benefit payments under a defined contribution Registered Pension Plan.


Indigenous Communities


$305,000,000 Support Fund


  • Allocated by province

  • Funds can be used for measures including, but not limited to:

- Support for Elders and vulnerable community members

- Measures to address food insecurity

- Educational and other support for children

- Mental health assistance and emergency response services

- Preparedness measures to prevent the spread of COVID-19



$100,000,000 For Areas of Federal Responsibility


  • Purpose of funds is to:

- Respond to identified needs for updating and/or activating pandemic plans

- Support effective allocation of public health and primary health care capacity to respond to the COVID-19 outbreak

- Align response efforts with scientific evidence as determined by a medical officer of health

- Address immediate needs in the short term


Businesses


Temporary Wage Subsidy


  • 10% of payroll remittances from March 18, 2020 to June 19, 2020

  • Maximum of $1,375 per employee and $25,000 per employer.

  • Calculated manually and taken off payroll tax remittances.

  • Your business may be eligible for the Temporary Wage Subsidy if you:

- Are a non-profit organization, registered charity, or a Canadian-Controlled Private Corporation (CCPC);

- Have an existing business number and payroll program account with the CRA on March 18, 2020; and Pay salary, wages, bonuses, or other remuneration to an employee.


CCPCs are only eligible for the subsidy if their taxable capital within Canada in the preceding taxation year is less than $15 million. This is calculated on an associated group basis.



Canada Emergency Wage Subsidy (CEWS)


Periods 1 - 4 (March 15th - July 4th, 2020):

  • 75% of remuneration paid

  • Maximum of $847 per week

  • Includes salaries, wages and other remuneration like taxable benefits

  • Eligibility:

- Must have suffered a drop in revenues of at least 15% in March 2020 compared to March 2019 OR compared to January and February of 2020. Or,

- suffered a drop in revenues of at least 30% in April and May.


Periods 5 and 6 (July 5th - August 29th)

  • Up to 85% of remuneration paid

  • Any decline in revenue qualifies


Employers eligible for the CEWS are also entitled to receive a 100% refund for certain employer contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan paid in respect of employees who are on leave with pay.


For more detailed information about the Canada Emergency Wage Subsidy, see:

https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html



Canada United Small Business Relief Fund


On October 21st, the minister of Small Business, Export and International trade announced the Canada United Small Business Relief Fund.


This will allow eligible small businesses to apply for grants of up to $5,000 to cover the costs of personal protective equipment, make physical modifications to their businesses to meet local health and safety requirements, and enhance their digital or e-commerce capabilities.


Eligibility requirements are:

  • Must be incorporated or operating as a sole proprietorship/partnership in Canada as of March 1st, 2020

  • Can't have more than 75 employees

  • Must have a minimum annual sales of $150,000 and not more than $3,000,000

  • Must have a minimum of $1,000,000 of commercial general liability insurance.

  • Cannot be receiving any other contributions from public funds toward the specific activities contained in the funding application.

  • Must be in full compliance with all applicable government laws, rules, regulations, guidelines and other legally binding measures (self declaration)

  • Must be in operation after September 1st, 2020



Extension of Work-Sharing Program


The Work-Sharing program helps employers who need to temporarily reduce employees' hours by providing EI benefits to employees who agree to reduce their normal working hours and share the available work while the employer recovers.


Effective March 15th, 2020 to March 14th, 2021, here are some temporary special measures to help support employers and employees affected by COVID-19:

  • Max duration extended from 38 weeks to 76 weeks

  • Mandatory waiting period between agreements waived

  • Previous requirements for a recovery plan is reduced to a single line in application form

  • Eligibility of employers expanded to accept businesses that have been in business for 1 year rather than 2.

  • Requirement to provide sales/production figures waived

  • Eligibility expanded to cover Government Business Enterprises and not-for-profit organizations.

  • Extended eligibility for certain employees



Tax Deferrals

  • Income tax amounts that become owing on or after March 18th 2020 can be deferred until September 30th, 2020

  • Businesses can defer GST/HST payments that become owing between March 27th and May 31st until June 30th. This also goes for customs duty owing on their imports.



Access to Credit


We've known about the Business Credit Availability Program for a while now, which provided small and medium-sized businesses with $40 billion of additional support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).


This includes a loan guarantee from EDC and a co-lending program from BDC. These programs were rolled out in late April.


The Canada Emergency Business Account (CEBA) provides businesses with up to $40,000 loans:

  • Interest free until December 31st, 2022

  • $25 Billion in support

  • 25% may be forgiven

  • For businesses who had between $20,000-$1,500,000 in payroll in 2019. (Previously between $50,000 and $1,000,000)

  • Available since April 9th

  • Must have been operating as a business since March 1st, 2020

  • Businesses without a business banking account may open one and apply for the loan as long as they have been operating as a business since March 1st, 2020.


In May, CEBA was expanded to cover:

  • Sole owner-operators;

  • Those who depend on contractors

  • Family businesses that pay employees by dividends rather than payroll.

  • Will become available to new businesses

To qualify under the expanded eligibility criteria, applicants with payroll lower than $20,000 would need:

  • A business operating account at a participating financial institution

  • A Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return; and

  • Eligible non-deferrable expenses between $40,000 and $1.5 million. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. These expenses must have been binding through agreements signed prior to March 1st.

An additional loan was announced on October 9th:

  • An additional interest-free loan of up to $20,000 will be available (in addition to the original CEBA loan of $40,000). Half of this additional financing would be forgivable if repaid by December 31, 2022

  • Additionally, the application deadline for CEBA is being extended to December 31, 2020

  • Eligibility requirements remain the same as for the initial $40,000 loan.

  • Further details, including the launch date and application process will be announced in the coming days. An attestation of the impact of COVID-19 on the business will be required to access the additional financing.


Canada Emergency Commercial Rent Assistance

*Replaced* by the Canada Emergency Rent Subsidy (CERS)


On April 16th, Prime Minister Justin Trudeau announced the Canada Emergency Commercial Rent Assistance (CECRA) program, which was implemented to help businesses cover their rents in April, May and June.


The program provides forgivable loans to qualifying commercial property owners to cover 50% of rent for 6 months for eligible tenants.


  • Eligible tenants must have a monthly rent of less than $50,000

  • 75% rent reduction

  • 50% covered by government, 25% covered by lessor. If lessor does not cover at least 25%, they will not be eligible for loan forgiveness on the 50%.

  • Tenant will cover the remaining 25%

  • Eligible tenants must have experienced at least a 70% drop in pre-COVID-19 revenues

  • Also available to non-profits and charitable organizations


The online application process will include both fillable fields and templates of the documents required. Property owners will need to provide information to prove eligibility including:


  • Proof of an existing rent reduction agreement

  • Moratorium on eviction, and

  • Small business tenant financial hardship (i.e. attestation of 70% decline in revenue)


Canada Emergency Rent Subsidy (CERS)


The Canada Emergency Rent Subsidy was proposed on October 9th to provide direct relief to businesses, non-profits, and charities that continue to be economically impacted by the COVID-19 pandemic. The new rent subsidy would be available retroactive to September 27, 2020, until June 2021.


With the introduction of the new rent subsidy, qualifying organizations that have suffered any revenue drop would be eligible for a subsidy on eligible expenses. The maximum base rate subsidy would be 65 per cent, and available to organizations with a revenue drop of 70 per cent or more.


The base rate would then decline to a rate of 40 per cent for organizations with a revenue drop of 50 per cent, and would then gradually reduce to zero for those not experiencing a decline in revenues. This structure mirrors the Canada Emergency Wage Subsidy rate structure.


Eligible expenses are:

  • Commercial rent

  • Property taxes (including school taxes and municipal taxes

  • Property insurance

  • Interest on commercial mortgages, less any subleasing revenues

Payments made between non-arm's-length entities would not be eligible expenses. Mortgage interest expenses in respect of a property primarily used to earn, directly or indirectly, rental income from arms-length entities would not be eligible.


Expenses for each qualifying period would be capped at $75,000 per location and be subject to an overall cap of $300,000 that would be shared among affiliated entities.


We will continue to update this article and keep you informed on the most recent developments regarding economic support measures pertaining to individuals and businesses in Canada as a result of COVID-19.


Sources:

canada.ca

videotax.com

occ.ca

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