COVID-19 support programs for your business
The Canada Emergency Wage Subsidy
The government says they’ve paid out more than $50 billion to 350,000 businesses through the Canada Emergency Wage Subsidy (CEWS) program. This support has helped businesses keep or rehire 3.9 million workers across Canada.
It’s a key program for small businesses, with 70% of approved applications made by employers with 25 employees or less.
CEWS currently includes a base subsidy for all employers that have experienced a decline in revenues, as well as a top-up wage subsidy for businesses hardest hit by the pandemic.
The maximum combined base subsidy and top-up wage subsidy rate is set at 65 per cent for consecutive qualifying periods, which end on December 19, 2020.
The government proposes to increase the maximum wage subsidy to 75% for businesses with a revenue decline of 70% or more, for the qualifying periods from December 20, 2020 to March 13, 2021.
This would apply to the 3 consecutive qualifying periods that start on December 20, 2020:
- Period 11 (December 20, 2020 to January 16, 2021)
- Period 12 (January 17, 2021 to February 13, 2021)
- Period 13 (February 14, 2021 to March 13, 2021)
For businesses experiencing a revenue decline between 50% - 70%, the maximum base subsidy would be 40%, and the maximum top-up wage subsidy rate would be 35%.
Businesses experiencing a decline below 50% would apply the rate that stays at 80% of the revenue decline, with no top-up available to them.
See below for the rate structure between periods 11-13.
The government recently announced that the wage subsidy program has been extended to June 2021. NOTE: They haven’t released the details for the qualifying periods after March 13, 2021.
The Canada Emergency Rent Subsidy
The Canada Emergency Rent Subsidy (CERS) program provides rent and mortgage support to qualifying businesses, charities and non-profits. The subsidy covers eligible fixed property expenses, including rent.
CERS replaces the Canada Emergency Commercial Rent Assistance program (CECRA), which closed last month. A key change in the new program is that CERS can be claimed directly by qualifying small business tenants, unlike CECRA, which was only available to property owners.
The new rent subsidy is structured like the Canada Emergency Wage Subsidy. It’s available on a sliding scale to business owners, with the amount your business receives proportional to your revenue loss. For example: if your business experienced a revenue drop of 70% or more compared to pre-pandemic levels, you could receive a subsidy of up to 65% for eligible expenses until Dec. 19, 2020.
There’s another layer of support for businesses whose revenues have dropped and have had to close their doors or limit their activities due to public health orders. If your business qualifies, it could receive an additional 25% of rent support, which could mean a rent subsidy of 90%.
The government is proposing to extend the current subsidy rates of the Canada Emergency Rent Subsidy for an additional three periods, until March 13, 2021. The rates have not changed.
Canada Emergency Business Account
The Canada Emergency Business Account (CEBA) provides interest-free loans of up to $60,000 to small businesses and non-profits.
As of Dec. 4, 2020, CEBA loans for eligible businesses increased from $40,000 to $60,000. If you've already applied for CEBA, you may apply for the $20,000 expansion.
So that’s $60,000 (total) of which $20,000 ends up forgivable if repaid by December 31, 2022.
The government also extended the availability of the CEBA program to small businesses that have not been operating from a commercial banking account. As of Oct. 26, 2020, eligible businesses can now apply after opening a business chequing/operating account with their primary financial institution.
The government reports that CEBA has been accessed by more than 790,000 small businesses and non-profits so far.
CEBA can be used to cover operating costs such as payroll, rent, utilities, insurance, property tax and regularly scheduled debt service.
In this fiscal update, the deadline to apply for a CEBA loan has been extended to March 31, 2021.
Home office expenses for your employees
Hundreds of thousands of Canadians transitioned to working from home when the COVID-19 outbreak was declared a pandemic. Prior to the pandemic, workers needed to meet certain conditions to claim home office expenses. This included diligently tracking their expenses and getting a signed form from their employer.
To help relax the work-space-from-home rules, the CRA will allow Canadians with “modest expenses” to claim up to $400 for home office expenses without the need to track detailed expenses.
Employees will be able to make their claim based on the amount of time working from home, and as their employer you generally won’t need to provide a signed form for your employees. More details to follow.
The government announced new support for sectors that are hurting the most from the economic impacts of the COVID-19 pandemic. No other details have been released at this time for the following programs:
- The Highly Affected Sectors Credit Availability Program (HASCAP) will support the hardest-hit businesses in sectors like tourism and hospitality, hotels, arts and entertainment. This stream will offer low-interest loans of up to $1 million for extended terms, up to ten years.
- The Strategic Innovation Fund, which provides funding to innovative businesses, will receive a boost of $250 million over 5 years.
- The Regional Relief and Recovery Fund supports businesses that haven’t been able to access other federal emergency support programs. The government will top-up this fund to $500 million, and earmark 25% of the program’s resources to support local tourism businesses through June 2021.
Income tax measures
No changes were announced to personal or corporate income tax rates, the capital gains inclusion rate, wealth tax, or the rate of GST. We outline the proposed income tax measures below.
Canada Child Benefit
Families with children under 6 could get up to $1,200 per child in 2021 through the Canada Child Benefit.
Families with a net income of $120,000 or less would receive 4 tax-free payments of $300 each. Families with a net income above $120,000 would receive half the amount, which is 4 tax-free payments of $150 each.
Registered Disability Savings Plan
The government is proposing to remove the time limit on the period for which a Registered Disability Savings Plan (RDSP) may remain open after a beneficiary becomes ineligible for the disability tax credit.
GST/HST relief on face masks and face shields
They’re proposing to waive GST/HST on face masks and face shields. The measure would apply to supplies of these items made after December 6, 2020, until their use is no longer recommended by public health bodies.
Limit on employee stock option grants
They’re proposing a $200,000 annual limit on employee stock option grants that qualify for the employee stock option deduction.
NOTE: These measures are dependent on legislation passing in the House of Commons and the Senate.
If you’d like to learn more about this or other COVID-19 programs for Canadian businesses, please call us at 1-800-265-1002 or email [email protected] Unlimited consultation related to tax matters is a key benefit of FBC Membership. You can also book an appointment. Visit our COVID-19 Resource Centre for the latest information, advice and insights for small business owners.