Welcome to the high-level summary of Covid-19 related actions by the Canadian Government. The details and links below have been split between “Tax Filings Affected”, “Government Employee Wages Benefits Programs” and “Government Loan Programs”; and are extracts from the more detailed information available on the websites of the Canadian Praxity Participant firms’ websites, links to which are available at the bottom of this page. Praxity Participant Firms in Canada are Mazars and MNP
Tax Filing Affected
- The deadline for producing and filing income tax returns is postponed to June 15th, 2020; balances due related to income tax returns for the 2019 taxation year is postponed to August 31, 2020.
- For individuals and individuals in business, the deadline for applying balances due related to income tax returns for the 2019 taxation year is postponed to August 31, 2020.
- In addition, the contributions from individuals that are subject to the QPP, QPIP, HSF and the Québec Prescription Drug Insurance plan for the 2019 taxation year, and would otherwise have to be made no later than on April 30, 2020, are postponed to August 31, 2020.
- For those who must pay tax installments, the payment of the June 15, 2020, tax installment is suspended until August 31, 2020. The date and terms of payment of this amount will be announced shortly. Individuals will have a reasonable period of time to pay the amount due.
- For trusts (other than a specified investment flow-through trust), the deadline for filing their income tax return for the 2019 taxation year is extended to May 1, 2020.
- The balance will be payable no later than August 31, 2020.
- For trusts having a filing due date in June, July, or August 2020 will have an extended deadline to September 1, 2020. A waiver of penalties and interest will be extended to related information returns, elections, designations and information requests that must be filed with a T3 Trust Income Tax and Information Return (T3) provided that they are filed, and payments are made by September 1, 2020 (note that the deadline was not actually extended).
- The payment of tax installments and taxes due as of today is suspended until August 31, 2020.
- The rules applicable to the filing of corporate income tax returns, including the due date for filing such tax returns, will not be changed. Only the time when the balance can be paid will be postponed.
- On May 25th, the Government announced that corporations who would otherwise have a filing deadline in June, July or August 2020 now have until September 1, 2020 to file their income tax returns. This would apply to December 2019, January 2020 and February 2020 taxation years. All related information returns, elections, designations and information requests that need to be filed with the corporate tax return are also extended to September 1, 2020 as long as they are filed and payments are made by September 1, 2020.
- Partnerships that had to file a Partnership Information Return (form TP-600-V) for 2019 by March 31, 2020, now have until May 1, 2020, to file the return.
For GST, HST, and QST The following tax deadlines related to Goods and Services Tax, Harmonized Sales Tax, and Quebec Sales Tax are postponed to June 30, 2020
- Monthly filers have to remit amounts collected in February, March and April 2020 reporting periods;
- Quarterly filers have to remit amounts collected for the January 1, 2020, through March 31, 2020, reporting period; and
- Annual filers, whose GST/HST and QST return or installment are due in March, April or May 2020, have to remit amounts due and unpaid for their previous fiscal year and installments of GST/HST and QST in respect of the filer’s current fiscal year. See the following websites for additional updates:
- Federal government: : https://www.canada.ca/en/department-finance/news/2020/03/additional-support-for-canadian-businesses-from-the-economic-impact-of-covid-19.html
- Québec government: http://www.finances.gouv.qc.ca/documents/Bulletins/en/BULEN_2020-3-a-b.pdf
Government Employee Wages Benefits Programs
Canada Emergency Wage Subsidy (CEWS) This subsidy program will apply at a rate of 75 percent of the first $58,700 normally earned by employees – representing a benefit of up to $847 per week. This program will be in place from March 15 to August 29, 2020
- Eligible employers who suffer a drop in gross revenues of at least 15% in March, 30% in April or 30% in May, when compared to the same month in 2019, would be able to access the subsidy.
- An eligible employer is under no obligation to prove that their decline in revenue is related to COVID-19.
- Eligible employers are able to hire back eligible employees and pay them retroactively in respect of a claim period (i.e. March 15- April 11)
- See member firm websites for additional information on qualified organizations, limitations, and period covered: Mazars & MNP
- See government website for further announcements: COVID-19 Economic Response Plan Canada Emergency Response Benefit (CERB)
- This taxable benefit would provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic.
- Canadian website’s article: Government introduces Canada Emergency Response Benefit to help workers and businesses
Temporary Salary Top-Up for Low-Income Essential Workers
The Government announced a measure to help those who work in hospitals, long-term care facilities and grocery stores; those who earn less than $2,500 per month on a full-time basis will receive a temporary top-up to their salaries. More details will be released shortly.
Government Loan and Support Programs
Business Credit Availability Program (BCAP)
- Canada Emergency Business Account Program - Small businesses may apply for an interest-free loan of up to $40,000 through the $25 billion established for this program and purpose. - The funding is targeted to small businesses and not-for profits to help cover their operating costs during a period where their revenues have been temporarily reduced due to the economic fallout from the COVID-19 virus. - This will better position the applicants to quickly return to providing services to their communities and to creating employment. - The applications must be made through the applicants existing financial institution. - To qualify, each applicant must demonstrate that they paid between $50,000 to $1 million in total payroll in 2019. Repaying the loan in full prior to December 31, 2022 will result in loan forgiveness of 25 percent of the loan being repaid, subject to a cap of $10,000. - On May 19th, there has was an expansion of eligibility to reach more business owners, such as sole proprietors receiving income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than payroll. For applicants with payroll lower than $20K would need a business operating account at a participating financial institution, a Canada Revenue Agency business number, and to have filed in 2018 or 2019 tax return, and eligible non-deferrable expenses between $40,000 and $1.5 million; eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. - On June 15, 2020, the government announced that beginning June 19, 2020, eligibility for the CEBA will be expanded to allow more small businesses access to the program. This announcement allows small businesses with payroll under $20,000 in the 2019 calendar year to now be eligible for the CEBA. To qualify under the expanded eligibility rules, CEBA applicants with payroll lower than $20,000 will need: A business operating account at a participating financial institution; A Canada Revenue Agency business number; A 2018 or 2019 tax return; and Eligible non-deferrable expenses of between $40,000 and $1.5 million. On Thursday, June 18, 2020, the Government announced the application process for eligible businesses under the expanded rules will not open on June 19th; no new date has yet been released.
- Small and Medium Enterprise Loan and Guarantee Program - Small and medium-sized businesses can get support through a new program that brings BDC together with financial institutions to co-lend term loans to these businesses for their operational cash flow requirements. Eligible businesses may obtain incremental credit amounts up to $6.25 million. BDC provides 80 percent and a financial institution provides the remaining 20 percent. - EDC will also provide guarantees to financial institutions so that they can issue new operating credit and cash flow term loans of up to $6.25 million to small and medium-sized businesses, as a result of a new domestic mandate enhancing EDC’s role in supporting Canadian businesses through COVID-19 crisis. These loans will be 80 percent guaranteed by EDC, to be repaid within one year. - Eligible companies could obtain up to $12.5 million through these two lending streams. - Applications must be made and can only be adjudicated through the existing bank or other authorized financial institution with whom the applicant has an existing banking relationship with.
- Mid-Market Businesses - The Government announced that the BCAP has been expanded to support midmarket businesses with loans of up to $60 million per company and guarantees of up to $80 million. Through the BCAP, Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) will work with private sector lenders to support access to capital for Canadian businesses in all sectors and regions.
Working Capital Loan COVID-19 Program Through this Working Capital Loan, the new relief measures for qualified businesses include:
- 36 month subordinated working capital loans of $100,000 up to $2 million with flexible terms.
- Principal payment postponements during the first 12 months for all qualifying businesses and for existing BDC clients.
- Following the initial 12-month principal payment free period, 40 percent of loan is to be repaid within the remaining 24 months.
- 60 percent is payable in a balloon payment due at the 36th Month.
The Canada Emergency Commercial Rent Assistance (CECRA) for Small Businesses
The CECRA provides relief for small businesses experiencing financial hardship due to COVID-19. It offers unsecured, forgivable loans to eligible commercial property owners (whether they have a mortgage on their property or not) to reduce the rent owed by their small business tenants. The loans will cover 50 percent of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May and June. The loans will be forgiven if the property owner agrees to reduce the small business tenants’ rent by at least 75 percent. The small business tenant would cover the remainder, up to 25 percent of the rent. To qualify for CECRA: Small business tenants must attest to their eligibility with the program requirements: - gross rent in a given location is less than $50,000 per month; annual revenues are less than $20 million (at the ultimate parent level); and the business has incurred at least a 70 percent drop in pre-COVID-19 revenues. Property owners must attest that the information provided in their application is correct and that they meet the eligibility requirements of the program: - a legally binding rent reduction agreement for the period of April, May and June 2020 has been entered into, reducing an impacted small business tenant’s rent by at least 75 percent; - the rent reduction agreement with each impacted tenant includes: a moratorium on eviction for the period during which the property owner agrees to apply the loan proceeds; and a declaration of rental revenue. The CECRA aims to lower rent by 75 percent for small businesses that have been affected by COVID-19. The Canada Mortgage and Housing Corporation will administer and deliver the CECRA, a program partnering the Federal Government and Provincial and Territorial Governments, which are responsible for property owner-tenant relationships. Further details about the program include:
- The program will provide forgivable loans to qualifying commercial property owners to cover 50 percent of three, monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.
- The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 percent for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The tenant will be responsible for covering 25 percent, the property owner 25 percent, while the Federal Government and Provinces will share the remaining 50 percent.
- Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70 percent drop in pre-COVID-19 revenues. This support will also be available to non-profit and charitable organizations.
It is expected that the CECRA will be operational by mid-May, with commercial property owners reducing the rents of their small business tenants for the months of April and May (retroactively) and June. Canada Emergency Student Benefit (CESB) & Canada Student Service Grant (CSSG) For post-secondary students and recent graduates who are ineligible for the Canada Emergency Response Benefit or Employment Insurance, but who are unable to find full-time employment or are unable to work due to COVID-19, the Federal Government has proposed to introduce the CESB. The CESB will provide $1,250 per month for eligible students from May through August 2020, and $1,750 for students with dependents and those with permanent disabilities. More details on the CESB are expected to be released in coming days. For students who choose to do national service and serve their communities, the new CSSG will provide up to $5,000 for their education in the fall. More details on the CSSG will be made available on the “I Want to Help” platform soon. Innovation Assistance Program Through the Industrial Research Assistance Program (IRAP), the Government of Canada introduced the Innovation Assistance Program (IAP) specifically to support small and medium enterprises (SMEs) that are pursuing technology-driven innovation but are not eligible for the CEWS — either because they do not have sufficient revenue history or have not earned revenues at all. This wage subsidy would offer support for up to 12 weeks, covering the April 1 to June 23, 2020 period. Other conditions include:
- Being incorporated as of March 1, 2020
- Being profit-oriented, and
- Having 500 or fewer full-time equivalent employees.
- The subsidy also offers the possibility of further growth by developing and commercializing innovative products, services or processes.
Online Agri-Food Business Funding The governments of Canada and Ontario are investing up to $2.5 million to help the agri-food sector expand online, providing more opportunities for producers to grow their business and offer more food choices for families who are shopping from home during the COVID-19 outbreak.
Large Employer Emergency Financing Facility (LEEFF)
The LEEFF offers bridge financing to employers whose needs during the pandemic are not being met through conventional financing arrangements and require additional funding to maintain operations. The Government reiterated their objective of protecting Canadian jobs, helping Canadian businesses weather the current economic downturn, and avoiding bankruptcies of otherwise viable businesses where possible. The program will be open to large for-profit businesses, with the exception of those in the financial sector, as well as certain not-for-profit businesses, such as airports, with annual revenues generally in the order of $300 million or higher. To qualify for LEEFF support, eligible businesses must be seeking financing of approximately $60 million or more, have significant operations or workforce in Canada, and not be involved in active insolvency proceedings. Support through LEEFF will be delivered by the Canada Development Investment Corporation (CDIC), in cooperation with Innovation, Science and Economic Development Canada (ISED) and the Department of Finance.
Canada Revenue Agency’s National Business Resumption Plan The Canada Revenue Agency (CRA) recently released its National Business Resumption Plan (NBRP). The plan was created to provide CRA employees with information regarding the staging of the resumption of program and corporate activities and operations that did not resume during the Agency’s critical services phase from March 16 to June 26, 2020. Agency employees will continue to focus on payments and compliance under the new emergency measures. Other tax activities not yet activated at full strength will be resumed in stages over the next six to nine months.
Links to Our Member Firms
Further Covid-19 advice
The information contained herein on Covid-19 government measures within the G8, consists solely of information that can be found on the websites of one or more Praxity Participant firms, and has not been written, modified or verified by Praxity, it’s staff, officers or directors.