Our world today
We are living in an alien world. The reality of life currently has created enormous stresses for all, whether they are physical, financial, family-related or mental. Governments are taking rapid and significant actions to alleviate hardships for all Canadians. A number of these actions specifically provide financial support.
As support programs are announced, we are inundated with information, which is incomplete in some cases, and often confusing.
We hope that this outline will help you navigate through the maze and steer you to sources that will provide required assistance.
Only Government of Canada programs are addressed here.
Remember...
- The situation is fluid – changes daily. Your situation may also be changing
- Do you qualify? – the “nuts and bolts” of several programs are still being clarified. Qualifying provisions of a program may preclude your eligibility
- You may, however, qualify under more than one support program
- Some support programs are administered through financial and other institutions
- Temper expectations – our governments and institutions are also living in an alien world. Do not expect deliverables immediately
- We will all pay for this – the Prime Minister’s remark is very telling in this regard – “Use it if you need it. Don’t use it if you don’t need it”
Where do I start...
The Government of Canada’s support programs are under three separate categories:
- Businesses
- Individuals and Families
- Industries – not addressed in this outline
Flexibility measures, such as more time to pay income taxes, span more than one category.
Check each category, based on your needs
Flexibility Measures
Penalties and interest will not be charged on deferred payments and extended filing requirements noted below.
The provisions generally apply to amounts that become due on or after March 18 and before September 2020.
This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act.
Some of the Filing and Payment Due Dates are as follows:
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- Corporations: June 1, 2020 | September 1, 2020
- Individuals: June 1, 2020 | September 1, 2020
- Self-employed individuals: June 15, 2020 | September 1, 2020
- Trusts (Dec 2019 year-end): May 1, 2020 | September 1, 2020
- Payroll Remittances: No change in Payment due dates
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Deferral of GST/HST Payments to Jun 30 2020
Applies to all businesses, including self-employed individuals, as follows:
Monthly filers – (Feb-Mar 2020) – GST only
Quarterly filers – (Jan-Mar 2020) – GST only
Annual filers – (2019 balance owing and 2020 instalments)
1. The Canada Emergency Wage Subsidy.
- What is it – a 75% wage subsidy
- How much – the maximum subsidy per employee is $847 per week or 75% of employee’s weekly pre-crisis wages – whichever is less. No overall limit on the amount an eligible employer may claim.
- Time limits – available for 12 weeks commencing March 15 and ending June 6 2020
- Do I qualify? – YES – IF:
- You are an individual, a taxable Canadian corporation, a partnership (of eligible employers), a non-profit organization or registered charity
- AND
- Your monthly revenues have dropped at least 30%, compared to the same period in 2019. Revenue must be from arms length sources, and from a business carried on in Canada
- How to Apply – through Canada Revenue Agency’s (CRA) My Business Account or web-based application
- Compliance – if eligibility requirements are not met, the subsidy will be repaid. In addition, there may be fines, penalties, even imprisonment!
- Other points – the subsidy is reduced by any amounts claimed under the Temporary Wage Subsidy (below). A special rule applies to non-arms length
2. Temporary Wage Subsidy
- What is it – a 10% subsidy of the remuneration (wages, salaries, bonuses etc.) paid to employees. Eligible employers reduce the payroll deductions remitted to CRA.
- How much – the maximum subsidy is $1,375 per employee and $25,000 per employer. The limits are for the entire eligible period
- Time limits – the eligibility period is three months from March 18 to June 19 2020
- Do I qualify? – YES – IF you:
- are an individual (excluding trusts), a partnership (some exclusions), a Canadian-controlled private corporation (CCPC) eligible for the small business deduction, a non-profit organization or a registered charity
- have an existing Business Number and Payroll program account with CRA on March 18 2020
- AND
- pay salary, wages, bonuses to eligible employees.
Eligible Employees are individuals that are employed in Canada
- How do I Apply? – no application is required. The subsidy is deducted from the payroll remittance payment.
- How does it work? – if the wages for a period are $5,000, the subsidy is 10% or $500. Reduce the next payroll remittance (income taxes only) payment to CRA by $500.
CPP and EI amounts must be paid, as calculated normally.
- Compliance – ensure subsidy calculation details are properly documented. CRA has not clarified the reporting requirements yet.
- Other points – the subsidy is taxable income in the year received! Future payroll remittances can be reduced, if the subsidy exceeds the income tax deduction amount in a period
Note: This subsidy may be applicable to a wide range of small and owner-managed businesses.
3. Canada Emergency Business Account (CEBA)
- What is it – interest-free (up to Dec 31 2022) loans of up to $40,000 for small businesses to cover operating costs at a time of reduced revenues.
- Do I qualify? – organizations will need to demonstrate that they paid between $50,000 and $1 million in total payroll in 2019.
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- There are a number of other requirements including an agreement “to use funds from this loan to pay for operating costs that cannot be deferred, such as payroll, rent, utilities, debt service, insurance and property tax”.
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- How do I Apply? – The program will rollout by mid-April 2020 and will be implemented through financial institutions
Individuals and Families
The following is an outline of the support programs for individuals and families:
Canada Child Benefit – an extra $300 per child for 2019-20. Application is not required for those who already receive the CCB.
Special GST credit payment – a one-time special payment for low and modest income families. Additional benefit may be $400 – $600. Application not required
Note: Amounts paid under both the above programs are based on tax return information. If applicable, you should therefore file your 2019 income tax returns immediately.
Canada Emergency Response Benefit (CERB) – a taxable benefit of $2,000 per month for up to 4 months for loss of income, for eligible workers.
Note: This program will be expanded to provide coverage to a wider range of workers. Details are expected in the next several days.
Minimum withdrawals from RRIFs – reduced by 25% for 2020
Canada Student Loans – no payment required and a six-month interest-free moratorium on repayment of Canada Student Loans, effective March 30 2020
Finally
Please visit the link below to forcurrent information on the programs outlined above.
https://www.canada.ca/en/department-finance/economic-response-plan.html
Please call me if you wish to clarify or discuss any of the above programs.
