Over the course of the last several days, the Government of Canada has released the details related to the new Wage Subsidy program being offered to employers. While the specific legislation in respect of this wage subsidy has yet to be released, you will find below a summary of the details currently available.
- Wage subsidy for qualifying businesses, for up to 3 months, retroactive to March 15, 2020.
- The wage subsidy will cover 75% of an employee’s wages, up to $58,700. That amount will be as much as $847 a week per employee.
- Eligibility criteria includes demonstrating a 30% decline in revenue because of the COVID-19 pandemic. The decline in revenue will need to be demonstrated between the months of March 2020 and March 2019.
- An employer’s revenue for this purpose would be its revenue from its business carried on in Canada earned from arm’s length sources. Revenue would be calculated using the employer’s normal accounting method, and would exclude revenues from extraordinary items and amounts on account of capital.
- A special rule will apply to employees who do not deal at arm’s length with the employer. The subsidy amount for such employees will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration.
- Employers will be required to reapply for the wage subsidy each month.
- Eligible businesses will be able to apply through a CRA online portal which will be up and running in approximately 3-6 weeks.
- Funds will be available in approximately 6 weeks.
Other measures proposed and announced over the course of the last several days:
The CRA will allow all businesses to defer, until the end of June 2020, any GST/HST payments or remittances that become owing on or after March 27, 2020, and before June 2020. This means that no interest will apply if your payments or remittances are made by the end of June 2020. The deadline for businesses to file their returns is unchanged. Those who are able to, should continue to file their GST/HST returns on time reporting their net tax for the reporting period to help facilitate tax compliance and administration. However, recognizing the difficult circumstances faced by businesses, the CRA won’t impose penalties where a return is filed late provided that it is filed by June 30th.
Canada Emergency Business Account
The New Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced. To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.
Loan Guarantee for Small and Medium-Sized Enterprises
EDC (Export Development Canada) is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to small and medium sized enterprises.
The above information contains general information only and is not a substitute for professional advice or services.
For additional information on COVID-19 economic measures, please contact our office.