Government of Canada Assistance Programs in Response to COVID-19
Canadians are facing unprecedented times. It’s important that we, as a community, work through our challenges together. In the spirit of collaboration, our team has put together a summary of the Government of Canada’s assistance programs in response to COVID-19.
Federal Credit Support to Businesses
On March 13, 2020, the Government announced the establishment of a Business Credit Availability Program (BCAP) to help Canadian businesses obtain financing during the current period of significant uncertainty. This program will support access to financing for Canadian businesses across all sectors and regions.
Through the program, Export Development Canada (EDC) and Business Development Bank of Canada (BDC) will provide C$65 billion in direct lending and other types of financial support at market rates to businesses with viable business models whose access to financing would otherwise be restricted.
By working closely with the financial institutions, this program will fill the gaps in market access and utilize additional lending by private sector institutions. Businesses interested in financing opportunities through this program must contact their financial institutions directly, which will contact BDC and/or EDC where appropriate.
+ BDC SME Loan
Overview
- Eligible businesses may apply for incremental credit amounts of up to C$6.25 million.
- Commercial interest rates and a 10-year repayment period.
- 80% of the loan will be provided by BDC, with the remaining 20% provided by a financial institution.
- Application details will be made available in the weeks to come on financial institutions’ websites.
Application Process
Any business seeking support through this program should first contact their financial institution, who can refer a business to BDC if credit needs extend beyond private sector options.
+ BDC Payment and Fee Deferral
Overview
If a business is an existing client of BDC with a total loan commitment less than C$1 million, BDC may provide postponement of payments for up to six months, free of charge.
If a business is not an existing BDC customer, but qualifies under the BCAP program, BDC will provide working capital loans of up to C$2 million with flexible repayment terms including principal postponements.
Application Process
Existing BDC clients should reach out to their account manager. New BDC clients should reach out to a BDC representative or their financial institution.
+ EDC BCAP Guarantee
Overview
Effective March 24, 2020, EDC will provide funding to financial institutions so that they can issue new operating credit and cash flow term loans of up to C$6.25 million to SMEs.
To qualify for a BCAP guarantee, a business must:
- Apply for an operating line of credit or one-year term loan less than or equal to C$6.25 million with its financial institution.
- Qualify through its financial institutions’ normal due diligence and underwriting process, including having a risk no lower than C+ (Standard, Equivalent & Poor’s) at the signature of the loan.
Application Process
Complete an online application form on the EDC website (provided by the company’s financial institution). The company’s financial institution will conduct its underwriting and due diligence processes. If qualified, the financial institution will provide access to the approved credit amount.
Terms
| Fee | Fixed 1.80% of loan amount; six-month payment deferral |
|---|---|
| Uses | Payroll and operational costs |
| Parties | Applicant deals with financial institution only (with the exception of the online application) |
+ EDC Payment and Fee Deferral
Overview
If a business is an existing client of EDC’s Export Guarantee Program or EDC’s Trade Expansion Loan Program, it is eligible for a six-month payment and fees deferral.
If a business is not an existing EDC customer, but qualifies under the EDC BCAP Guarantee, it is eligible for a six-month payment and fees deferral once the business has access to its financing.
Application Process
For existing EDC clients, it will be applied automatically. If a business has been charged EDC guarantee fees after March 23, 2020, it should reach out to its financial institution.
New clients should contact their financial institutions and must first apply to the EDC BCAP Guarantee, after which EDC will update the existing guarantee documentation to incorporate the deferral of fees and payment conditions.
+ Canada Emergency Business Account (CEBA)
Overview
This program will provide interest-free loans of up to C$40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where revenues have temporarily reduced. Businesses can apply for support from the Canada Emergency Business Account through their banks and/or credit unions.
Up to C$10,000 (or up to 25%) of the principal amount will be eligible for complete forgiveness if C$30,000 is fully repaid on or before December 31, 2022. After this date, the loan can be converted into a three-year loan with an interest rate of 5%.
Application Process
Businesses can only apply for this loan through their financial institutions’ website. The link to this application went live on April 8, 2020 on your financial institutions’ website.
Eligibility
- Have an operating company registered in Canada on March 1, 2020;
- Annual 2019 payroll of between C$50,000 and C$1 million as evidenced by the T4SUM;
- A 15-digit CRA employer number; and
- Business contact information including address and phone number.
+ Support for Indigenous Businesses
Overview
On April 18, 2020, the Government of Canada announced up to C$306 million in funding to support small and medium-sized Indigenous businesses.
Financial support to these businesses will be provided through Aboriginal Financial Institutions, and administered by the National Aboriginal Capital Corporations Association and the Métis capital corporations in partnership with Indigenous Services Canada.
The funding will allow for interest-free loans, as well as non-repayable contributions, to help Indigenous businesses unable to access the government’s existing COVID-19 support measures. Additional funding will help Aboriginal Financial Institutions cover operational expenses and help the National Aboriginal Capital Corporations Association increase its operational capacity.
These measures are expected to help 6,000 Indigenous-owned businesses get through financial challenges caused by COVID-19.
Other Federal Support to Businesses
To help prevent lay-offs, the Government has provided two wage subsidy programs:
10% wage subsidy for small employers, which is available to small businesses.
75% emergency wage subsidy for all employers, which is available to all businesses that meet a revenue decline threshold.
Small businesses can apply for both the 75% and 10% subsidy. If the business ends up qualifying for the 75% subsidy while it has already received a 10% subsidy, then the adjustment will be made accordingly. The 75% wage subsidy for qualifying businesses, for up to three months, is retroactive to March 15, 2020.
+ 75% Canada Emergency Wage Subsidy (CEWS)
Overview
The subsidy will be available to eligible employers at 75% of weekly remuneration paid to a maximum of C$847 per employee. This is equivalent to 75% of an annual salary of C$58,700.
However, determining the amount of the subsidy will take into account pre-crisis weekly remuneration (based on the average weekly remuneration paid between January 1 and March 15 inclusively). More specifically, the subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020, would be the greater of:
- 75% of the amount of remuneration paid, up to a maximum benefit of C$847 per week; and
- The amount of remuneration paid, up to a maximum benefit of C$847 per week or 75% of the employee's pre-crisis weekly remuneration, whichever is less.
A new 100% refund will be available for certain employer-paid contributions to EI, CPP, QPP, and the QPIP. The employer is eligible to claim the 75% emergency wage subsidy for an eligible employee, this refund will cover the full amount of employer-paid contributions for the employee for each week throughout which the employee is on paid leave.
In general, an employee will be considered to be on paid leave throughout a week if that employee is remunerated by the employer for that week, but does not perform any work for the employer that week. Employees who are on leave with pay for only a portion of a week will not qualify.
This refund is not subject to the weekly maximum benefit per employee of C$847 that an eligible employer may claim in respect to the 75% CEWS.
Calculating Revenue Reduction
Eligible employers have two options:
- The revenue decline can be measured by comparing the applicable month in 2020 to the same month in 2019 (i.e. comparing March 2020 to March 2019).
- Alternatively, the revenue of the applicable month in 2020 can be compared to the average of January and February 2020 revenue.
Eligibility
Eligible employers will include individuals, taxable corporations, and partnerships consisting of eligible employers, as well as non-profit organizations and registered charities. Public-sector entities, such as Governments, schools, and hospitals are excluded.
Eligible employers will be able to access the subsidy if they have suffered a drop in gross revenues of at least 15% in March, 30% in April, and/or 30% in May 2020.
Remaining 25%
All employers are expected to at least make ‘best efforts’ to top up salaries to 100%.
75% Wage Subsidy Examples
- An employee hired in January with a pre-crisis weekly pay of C$1,000 and now has weekly pay of C$800 would be eligible for a C$750 subsidy.
- An employee hired in January with a pre-crisis weekly pay of C$1,000 and now has a weekly pay of C$500 would be eligible for a C$500 subsidy.
- A new employee hired in April with a weekly pay of C$500 would be eligible for a C$375 subsidy.
+ 10% Small Business Wage Subsidy (SBWS)
Overview
The Governments’ 10% SBWS passed into law on March 25, 2020. On April 1, 2020 the Government indicated that organizations that do not qualify for the CEWS may continue to qualify for the 10% SBWS.
The subsidy will be equal to 10% of remuneration paid during the eligible period, up to a maximum subsidy of C$1,375 per employee and C$25,000 per employer. The eligible period is March 18, 2020 to June 19, 2020, inclusive.
This measure allows eligible employers to reduce the amount of payroll deductions required to be remitted to the CRA. This SBWS can be accessed as soon as April 15, for the quarterly and regular (monthly) payroll remitters.
Eligibility
- An eligible employer can be an eligible Canadian-Controlled Private Corporation (CCPC), an individual (other than a trust), a partnership (all of the members of which are individuals, eligible CCPCs, registered charities, or other eligible partnerships), a not-for-profit, or a registered charity.
- Businesses must have an existing business number and payroll account with the CRA on March 18, 2020.
- The eligibility of a CCPC to claim the 10% SBWS is directly linked to the company's business limit for small business deduction purposes. A CCPC must have a business limit of more than nil for the last taxation year ended before March 18, 2020.
- The eligibility of a CCPC will also depend on whether the taxable capital of an associated group of which it is a member, is less than C$15 million.
+ Work-Sharing Program
The Work-Sharing program provides income support to employees eligible for EI who agree to reduce their normal working hours because of developments beyond the control of their employers.
For employers and employees that are participating in a Work-Sharing program, EI benefits received by employees through the Work-Sharing program will reduce the benefit that their employer is entitled to receive under the 75% CEWS. The measure provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced work week while their employer recovers.
Due to COVID-19, the Government of Canada introduced temporary special measures that extend the maximum duration of Work-Sharing agreements from 38 weeks to 76 weeks across Canada for those businesses affected by a COVID-19 related business downturn.
The Work-Sharing program can be used alongside the emergency wage subsidy.
+ Federal Tax Deferrals
Overview
The CRA will allow businesses to defer remittance of the Goods and Services Tax/Harmonized Sales Tax (GST/HST) until June 30, 2020.
For monthly filers, this will apply to February, March, and April 2020 periods; for quarterly filers, the January to March periods; and for annual filers, to an annual return or installment due in March, April, or May 2020.
For importers, payments of customs duties and GST statements of account for March, April, and May 2020 may be deferred until June 30, 2020.
| Type of Tax | Payment Deferred Until | Additional Details |
|---|---|---|
| Corporate Income Tax | August 31, 2020 | Must submit by June 1, 2020 |
| GST/HST | June 30, 2020 | Businesses should continue to file GST/HST on time, however penalties will not be imposed so long as filing is done by June 30 |
| CPP/EI | N/A | No deferred payment or filing |
Ontario Support to Businesses
The Ontario Government is supporting businesses through the COVID-19 crisis by providing the following relief initiatives:
Provincial tax deferrals on the Employer Health Tax (EHT), Tobacco Tax, Fuel Tax, Beer Tax and Mining Tax and other provincially-administered taxes until August 31, 2020 with no interest or penalty.
WSIB premium deferrals until August 31, 2020 with no interest or penalty.
Business Education Property Tax deferrals for one payment quarter (90 days after June).
Employer Health Tax (EHT) exemption threshold increased to C$1 million for the next year.
Property tax reassessments being conducted this year for the 2021 tax year have been postponed.
Provincial Land Tax Payments are deferred from their next due date for 90 days without interest or penalty.
Provincial Tax Deferrals
| Province | Type of Tax | Payment Deferred Until |
|---|---|---|
| BC | EHT, PST, Municipal and Regional District Accommodation Tax, Tobacco Tax, Motor Fuel Tax, Carbon Tax increase | September 30, 2020 |
| AB | Corporate Income Tax, Education Property Tax, Tourism Levy | August 31, 2020 |
| SK | Provincial Sales Tax | 3 month deferral of payment after completing penalty and interest waiver request |
| MB | Retail Sales Tax | June 20, 2020 or later |
| HE Levy | June 15, 2020 | |
| ON | EHT, Tobacco Tax, Fuel Tax, Mining Tax, Beer Tax, Wine Tax, Spirits Tax, Gas Tax, Insurance Premium Tax, International Fuel Tax Agreement, Retail Sales Tax on Insurance Contract and Benefits Plans, Race Tracks Tax | August 31, 2020 |
| Business Education Property Tax deferrals for one payment quarter | 90 days after June | |
| QC | GST/QST and Customs Duty Payments | September 1, 2020 |
| For any tax balance owing to Revenue Quebec or remit installments | June 15, 2020 | |
| NB | Property Tax | N/A |
Federal Support for Unemployed Individuals
+ Canada Emergency Response Benefit (CERB)
Overview
The Canadian Government will provide a taxable benefit of C$2,000 per month for up to four months to any Canadian who has stopped working due to COVID-19, whether they are EI-eligible or not. Although taxable, no tax will be taken directly from the cheque, instead it will be payable next year.
Eligibility
The CERB will cover workers residing in Canada who:
- Have lost their job due to COVID-19;
- Are sick, quarantined, or taking care of someone who is sick with COVID-19;
- Are working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures; or
- Are still employed, but are not receiving any income because of disruptions to their work situation due to COVID-19.
Additionally, the above cases must meet the following criteria:
- Had income of at least C$5,000 in 2019 or in the 12 months prior to the date of their application; and
- Are or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period. For subsequent benefit periods, they expect to have no employment income.
The CERB will apply to wage workers, contract workers, and self-employed individuals who would not otherwise be eligible for EI (includes sole-proprietors). Canadians cannot receive EI regular and sickness benefits and CERB at the same time. Applications have been live since April 6, 2020.
+ Employment Insurance Sickness Benefits
Overview
Generally, EI sickness benefits provide up to 15 weeks of income replacement, and is available to eligible claimants who are unable to work because of illness, injury or quarantine, to allow them time to restore their health and return to work. Canadians quarantined because of COVID-19 can apply for EI sickness benefits.
Changes Due to COVID-19
Due to the COVID-19 outbreak, the Government has now announced that it will:
- Waive the one-week waiting period for EI sickness benefits for new claimants who are quarantined so they can be paid for the first week of their claim, effective March 15, 2020;
- Waive the requirement to provide a medical certificate to access EI sickness benefits;
- Establish a new dedicated toll-free phone number for enquiries related to waiving the EI sickness benefits waiting period; and
- Provide priority EI application processing for EI sickness claims for people under quarantine.
Note that EI claims of those who became eligible for EI benefits (regular or sickness) as of March 15, 2020 onward will be automatically processed through the CERB.
After four months of receiving CERB, they will still be able to apply for their regular EI benefits if they are still unemployed. Receiving CERB first will not affect their eligibility to receive EI benefits after.