Since our last update on March 21, 2020, we’ve seen several changes to the government assistance being offered. We’ve done our best to summarize these below. Please note, this is general information, not legal advice, and is based on information current only to April 3, 2020 and is specific to Ontario.
Topics covered:
- Canada Emergency Response Benefit
- Canada Emergency Wage Subsidy
- Canada Emergency Business Account
- Additional Benefits
1) Canada Emergency Response Benefit
What is it?
- $500 weekly payments.
- Replaces previously announced Canada Emergency Support Benefit and Canada Emergency Care Benefit.
How long does it last?
- 16 weeks (i.e. March 15 to October 3, 2020).
What are the eligibility criteria?
- Stopped working (not quit) for at least 14 days due to COVID-19;
- Earned $5,000 in income in 2019 or in the 12 months before applying for the CERB;
- Expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period;
- Reside in Canada; and
- Be at least 15 years old.
*Includes employees, independent contractors and self-employed individuals
When will payments be made?
- People who apply online and request direct deposits should receive payments within five days.
- There is no waiting period.
What is the application process?
- Online and telephone applications will open
through the Canada Revenue Agency the week of April 6, 2020.
- The application is available on a staggered basis based on birth month (e.g., if born January to March, applications start Monday).
- The deadline to apply is December 2, 2020.
- Workers who applied for EI on or after March 15 need not apply because they’ll be automatically transferred over.
Who is excluded from the CERB?
- Individuals who are still receiving some income (e.g. contract work or a wage subsidy through their employer); and
- Individuals who did not lose their job due to COVID-19.
Additional information
- The CERB is a temporary stand-in for EI so everyone will receive the same $2,000 per month, even if they would normally have qualified for less (or more) than $500 per week on EI.
- EI-eligible-workers can switch back to regular benefits at the end of the 16 weeks.
- The CERB payments are taxable as income and must be reported during 2020 tax filing.
- Government backgrounder available here.
2) Canada Emergency Wage Subsidy
What is it?
- 75% wage subsidy of up to $874 per week (no cap on number of employees).
- Organizations pay employees up front and then recover payment from the government.
- Employers are encouraged to make best efforts to top-up employees’ wages.
How long does it last?
- 12 weeks (i.e. March 15 to June 6, 2020).
What are the eligibility criteria?
- Must be able to show a 30% drop in revenue from this time last year (e.g., March 2019 vs March 2020); and
- Must re-apply each month.
*Organizations of all sizes can access the benefit. The government is currently developing an inclusive definition of revenue to ensure non-profits and charities are eligible.
When will payments be made?
- Details are still
being ironed out, but current predictions are that it will be 4-6 weeks for the
program to be set up.
- After that, it’s unclear what the lag time will be on reimbursement.
What is the application process?
- CRA is developing an application to be available in the “My Business Account” portal in 3-6 weeks.
Who is excluded?
- Public organizations such as schools and hospitals; and
- Employees who are within a 4-week period during which they received the CERB
Additional Information
- Because the wage subsidy isn’t yet available, organizations could consider encouraging staff to go on CERB in the interim
- The wage subsidy is taxable income for the employer and will reduce the amount of remuneration expenses eligible for other federal tax credits calculated on the same remuneration.
- Government backgrounder available here.
3) Canada Emergency Business Account
What is it?
- Interest-free loan of up to $40,000 to help pay for operating costs.
How long does it last?
- If the loan is repaid on or before December 31, 2022, 25% of the loan will be forgiven (i.e. up to $10,000), if not, it will convert to an interest-based loan.
What are the eligibility criteria?
- Must be a small business or a not-for-profit;
- Be able to show that there was a temporary reduction in revenue due to COVID-19; and
- A 2019 payroll that was between $50,000 to $1 million.
When will payments be made?
- It’s too early to say, so best to contact your financial institution and discuss the options.
What is the application process?
- The loans will be disbursed through financial institutions, with some applications expected to open April 6, 2020.
Additional Information
- Government backgrounder available here.
4) Other Benefits to Consider
- The government continues to offer the 10% temporary wage subsidy, previously announced. Unlike the CEWS, organizations don’t need to show a drop in revenue, nor do they have to apply. The organization simply retains a portion of its payroll remittances.
- Note that for employers eligible for the CEWS and the 10% wage subsidy, the former will be reduced by 10% to prevent double-dipping.
- The CRA has deferred GST/HST payments and remittances that become owing on or after March 27, 2020 to the end of June 2020.
- The WSIB is allowing businesses to defer premium reporting and payments until August 31, 2020.
Need advice specific to your workplace? Contact us.