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
Updated on 2019 Federal Tax Deadline The Federal Government has further extended the payment due date for current year individual, corporate and trust income tax returns (including instalment payments) to September 30, 2020 from September 1, 2020. Penalties and interest (including late filing penalties) will not be charged if payments are made and the return is filed by the extended deadline of September 30, 2020. Interest on Existing Tax Debt The CRA is also waiving interest on existing tax debts as follows:
- Individual, corporate and trust income tax returns- Waived interest Period: April 1,2020 – September 30,2020
- GST/HST returns – Waived Interest Period: April 1, 2020 – June 30, 2020 Please note this measure does not cancel penalties and interest already assessed on a taxpayer’s account prior to this period.
Income Tax Excise Tax The Canada Revenue Agency (CRA) was given temporary authority to extend certain deadlines imposed under the Income Tax Act and Excise Tax Act. The period of extension is a maximum of six months, beginning as early as March 13, 2020, and ending no later than December 31, 2020. Statute Barred This impacts taxpayers whose tax filings would otherwise be statute-barred after May 20, 2020 and may also impact certain requests for extensions to file objections. “Statute-barred” generally refers to the time limit for the Minister of National Revenue to make an assessment, reassessment or additional assessment.
- Reassessment period / statute-barred date - For taxation years that would have otherwise become statute-barred between May 20, 2020 and December 30, 2020, the statute-barred date is extended for a maximum of six months but not beyond December 31, 2020.
- Requests for extensions of time to file a Notice of Objection - Taxpayers whose deadline to request an extension to file a Notice of Objection expired between March 13, 2020 and December 30, 2020, will have up to six additional months, but not beyond December 31, 2020, to make their request.
- Application to the Tax Court of Canada (TCC) for extension to object to a (re)assessment - Taxpayers whose deadline to apply to the TCC for an extension to object expired between March 13, 2020 and December 30, 2020, will have up to six additional months, but not beyond December 31, 2020, to make their request.
- GST / HST - This also applies to time limits on assessments of GST / HST returns and of certain amounts of GST / HST payable, penalties, rebates or interest that would otherwise become statute-barred between May 20, 2020 and December 30, 2020.
- Filing deadline for certain Scientific Research and Experimental Development (SR&ED) prescribed forms - If taxpayers wish to apply for the SR&ED program, they must file required information using prescribed forms. To the extent that these forms were due between March 13, 2020 and December 30, 2020, the deadline for these forms has generally been extended for a maximum of six months, but not beyond December 31, 2020.
Provincial Announcements - Quebec The Quebec government has mirrored the federal announcement by extending their deadline for the payment of taxes owing to September 30, 2020. They are also waiving interest on existing tax debts during the period of March 17, 2020 to September 30, 2020. See the following websites for additional updates:
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
- The subsidy rate is up to 65 percent of eligible wages until December 19, 2020
- See government website for further announcements: COVID-19 Economic Response Plan
- The Canada Emergency Wage Subsidy (CEWS) will be extended through to summer 2021.
- The CEWS will consist of two parts: (1) A base subsidy available to all eligible employers who are experiencing a decline in revenues, with the subsidy amount varying depending on the scale of revenue decline; and (2) A top-up subsidy of up to an additional 25 percent for those employers who have been most adversely affected by the COVID-19 crisis 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.
- The Canada Emergency Response Benefit (CERB) will be extended by an additional four weeks to a maximum of 28 weeks. The many Canadians expecting to exhaust their CERB benefits at the end of August will now be able to access an additional month of support.
- Canadian website’s article: Government introduces Canada Emergency Response Benefit to help workers and businesses
The government is proposing to implement three new benefits to replace CERB:
- The Canada Recovery Benefit (CRB) will provide $400 per week for up to 26 weeks, to workers who are self-employed or are not eligible for EI and who still require income support and who are available and looking for work. This benefit will support Canadians whose income has dropped or not returned due to COVID-19. The benefit will allow Canadians to earn more income while on claim as well as include links to Job Bank, Canada’s national employment service, with career planning tools for those seeking employment. In addition, the government will be working with provinces and territories to share information to ensure that Canadians have access to tools and training opportunities to successfully return to the workforce.
- The Canada Recovery Sickness Benefit (CRSB) will provide $500 per week for up to two weeks, for workers who are sick or must self-isolate for reasons related to COVID-19.
- The Canada Recovery Caregiving Benefit (CRCB) will provide $500 per week for up to 26 weeks per household, for eligible Canadians unable to work because they must care for: a child under age 12 due to the closures of schools or daycares because of COVID-19, a family member with a disability or a dependent because their day program or care facility is closed due to COVID-19, a child, a family member with a disability, or a dependent who is not attending school, daycare, or other care facilities under the advice of a medical professional due to being at high-risk if they contract COVID-19.
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; Each province or territory will determine which workers would be eligible for support, and how much support they will receive.
Alberta’s Economic Plan Job Creation Tax Cut - Alberta corporations welcomed the announcement of the acceleration of the Job Creation Tax Cut which will see the general corporate income tax rate reduced to eight percent (from ten percent) as of July 1, 2020, a year and a half ahead of schedule. Originally, the corporate income tax rates were set to decrease from twelve percent in 2019 to eight percent on January 1, 2022. The Innovation Employment Grant - will provide a refundable tax credit to companies that invest in research and development in Alberta. Designed to incentivize job creation in high-growth industries, this tax credit is targeted at smaller, pre-income firms performing research and development that are not immediately benefitting from the corporate tax cut. Alberta is encouraging new start-ups to locate and grow their businesses in Alberta. Specific program details including criteria are yet to be released.
-The expanded CEBA program will enable businesses, and not-for-profits eligible for CEBA loans — and which continue to be seriously impacted by the pandemic — to access an additional interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000. Half of this additional financing will be forgivable if repaid by December 31, 2022. The application deadline for CEBA is being extended to December 31, 2020. Further details, including the launch date and application process will be announced in the coming days. An attestation of the impact of COVID-19 on the business will be required to access the additional financing. Small and Medium Enterprise Relaunch Grant The Small and Medium Enterprise Relaunch Grant provides financial assistance to Alberta businesses, cooperatives, and non-profit organizations that have less than 500 employees and were ordered to close or curtail operations as a result of public health orders to help offset a portion of their relaunch costs. Grant Amount
- Eligible organizations can apply to receive up to percent of their pre-COVID-19 monthly revenue, with a maximum of $5,000 in one-time funding per business.
- Applicants will be required to demonstrate a revenue decline of at least 50 percent in April and / or May 2020 in comparison to April 2019, May 2019 or February 2020 as a result of public health orders.
- The organization will not qualify for the program if it received any payments, grants, or amounts from any other sources, including insurance, to replace or compensate for the loss of revenue / earned revenue. However, organizations are permitted to receive amounts from these government assistance programs such as:Business Credit Availability Program (BCAP), Canada Emergency Business Account (CEBA), Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Commercial Rent Assistance (CECRA).
Employment Insurance Changes
The Canada Emergency Response Benefit (CERB) will expire on October 3, 2020, as planned. Recipients of the CERB will then be supported by the Employment Insurance (EI) system. For Canadians who would not normally qualify for EI, the government will create a transitional Canada Recovery Benefit. EI will become the sole delivery mechanism for employment benefits and will be modified to include self-employed individuals and others not currently eligible.
Temporary measures to help Canadians access EI benefits more easily include:
- 120 hours of work required to qualify;
- Minimum benefit rate of $400 per week; and,
- At least 26 weeks of regular benefits.
One-time insurable hours credit: To help individuals qualify with a minimum of 120 hours of work, EI claimants will receive a one-time insurable hours credit of:
- 300 insurable hours for claims for regular benefits (job loss)
- 480 insurable hours for claims for special benefits (sickness, maternity/parental, compassionate care or family caregiver) The hours credit will also be made retroactive to March 15, 2020
Minimum unemployment rate: A minimum unemployment rate of 13.1% is being used for all EI economic regions in order to lower the hours required to qualify for EI regular benefits. This measure is effective for one year starting on August 9, 2020. Minimum benefit rate: EI claimants as of September 27, 2020 will receive a minimum benefit rate of $400 per week (or $240 for extended parental benefits), if this is higher than what their benefits would otherwise be.
EI premium rate freeze: The government is freezing the EI premium rate for employees at the 2020 level of $1.58 per $100 of insurable earnings for two years. The rate for employers, who pay 1.4 times the employee rate, will also remain unchanged at $2.21 per $100 of insurable earnings. This is the lowest rate since 1980. This will save employers and employees approximately $2 billion.
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 Rent Subsidy (CERS) The new CERS, which replaces the Canada Emergency Commercial Rent Assistance (CECRA), program intends to provide simple and easy-to-access rent and mortgage support until June 2021 for qualifying organizations affected by COVID-19.
- The rent subsidy will be provided directly to tenants rather than through landlords.
- The CERS will support businesses, charities, and non-profits that have suffered a revenue drop, by subsidizing a percentage of their expenses, on a sliding scale, up to a maximum of 65 percent of eligible expenses until December 19, 2020, and up to 90 percent for those organizations that have been temporarily closed due to a mandatory public health order.
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.
Alberta’s Economic Plan The Small and Medium Enterprise Relaunch Grant provides financial assistance to Alberta businesses, cooperatives, and non-profit organizations that have less than 500 employees and were ordered to close or curtail operations as a result of public health orders to help offset a portion of their relaunch costs. Grant Amount -Eligible organizations can apply to receive up to percent of their pre-COVID-19 monthly revenue, with a maximum of $5,000 in one-time funding per business. Eligibility - Applicants will be required to demonstrate a revenue decline of at least 50 percent in April and / or May 2020 in comparison to April 2019, May 2019 or February 2020 as a result of public health orders. The organization will not qualify for the program if it received any payments, grants, or amounts from any other sources, including insurance, to replace or compensate for the loss of revenue / earned revenue. However, organizations are permitted to receive amounts from these government assistance programs such as: Business Credit Availability Program (BCAP) Canada Emergency Business Account (CEBA), Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Commercial Rent Assistance (CECRA). Application Dates - Applications opened on June 29, 2020 and will remain open until August 31, 2020, or for four weeks following the start of Phase 3 of Alberta’s Relaunch Strategy, whichever is later. How to Apply - Organizations must apply through the online application portal www.alberta.ca/sme-relaunch-grant.aspx
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.