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
Income Tax Measures Employee Stock Options The Government confirmed employee stock options will be subject to greater restrictions, as first announced in Budget 2019. These limitations do not apply to options granted by a Canadian Controlled Private Corporation (CCPC). In recognition that some start-up and early stage companies are not CCPCs, those with gross revenues up to $500 million will also be excluded. The proposed changes allow the benefit to continue on the first $200,000 of fair market value of annual employee stock option grants. These new rules will apply to stock options granted on or after July 1, 2021. Home Office Expense Deductions In recognition of the compliance burden on employers and the uncertainty for first-time claims, employees will be allowed to deduct up to $400, without the need to track detailed expenses or obtaining a form from their employer. Further details will be provided by the Canada Revenue Agency (CRA) in the weeks ahead. Canada Child Benefit (CCB) This measure will provide the following support to CCB entitled families:
- Families with net income equal or less than $120,000 will receive $1,200 for each child under the age of 6
- Families with net income greater than $120,000 will receive $600 for each child under the age of 6
2021 Budget Tax Treatment of COVID-19 Benefit Amounts Budget 2021 proposes to allow individuals the option to claim a deduction in respect of the repayment of a COVID-19 benefit amount in computing their income for the year in which the benefit amount was received rather than the year in which the repayment was made. This option will be available for benefit amounts repaid at any time before 2023. Previously, a benefit amount was only deductible in the year of repayment. Further, COVID-19 benefits received by individuals who reside in Canada but are considered non-resident persons for income tax purposes will be taxable in Canada in a manner generally similar to employment and business income earned in Canada. The Budget proposes other personal tax measures:
- Enhance the Canada Workers Benefit by increasing the phase-in and phase-out rates and threshold, and to introduce a “secondary earner exemption” for individuals with an eligible spouse.
- Update the list of mental functions of everyday life that is used for the eligibility for the Disability Tax Credit (DTC), to recognize more activities in determining time spent on life-sustaining therapy and to reduce the minimum required frequency of therapy to qualify for the DTC. Fund consultations to reform the eligibility process for federal disability programs and benefits.
- Expand access to the travel component of the Northern Residents Deduction.
- Include postdoctoral fellowship income in “earned income” for RRSP purposes.
- Provide one-time payment of $500 in August 2021 to OAS pensioners over the age of 75 as of June 2022 and increase regular OAS payments for pensioners 75 and over by 10 percent on an ongoing basis as of July 2022.
This support will be delivered as four tax-free payments of $300 / $150, with the first payment being made shortly after the legislation is passed, and subsequent payments in the months of April, July and October 2021. Sales Tax Measures PPE (effective after December 6th 2020) Face masks and shields that meet specific criteria will be zero rated (zero percent taxable). This measure will only be in effect during the pandemic. E-Commerce and Digital Supplies (effective July 1, 2021) The Government is proposing significant changes to the application of GST / HST to digital supplies. Currently where a business only has a digital footprint in Canada, they are generally not required to register for the GST / HST. The Government is proposing a simplified registration for non-residents to bring them into the GST / HST system. The proposed changes will include:
- An online portal to register to simplify the registration process, filing and remittance of tax.
- These rules apply to business-to-consumer transactions.
- A non-resident registered vendor will not be required to charge GST / HST if the business acquiring the supply provides its GST / HST number to the vendor.
- The place of supply rules will be simplified so the tax rate is based on where the consumer is located; however, there will be exceptions where this location is not appropriate to the supply.
- Under this new system, non-residents will not be eligible to claim input tax credits.
- Similar to all other businesses, the registration threshold will be $30,000.
Third Party Distribution and Fulfillment Warehouses in Canada (effective July 1, 2021) To continue its focus on online businesses, the Government is proposing to require all fulfilment warehouses to be registered for the GST / HST and to collect tax on goods that are being shipped from a Canadian warehouse to the extent the vendor is not otherwise collecting the tax. The proposed changes also specifically target platform operators (a person “that controls or sets the essential elements of the transaction between a third-party vendor and a purchaser”). This is not intended to include payment processors or vendors that have classified or advertising website. GST/HST on Platform-based Short-Term Accommodation (effective July 1, 2021) The Government proposes to apply GST / HST on all supplies of short-term accommodation in Canada facilitated through a digital platform. A simplified GST / HST registration and remittance framework will be available to non-resident accommodation platform operators that are not otherwise carrying on business in Canada. In addition, there will be new penalties introduced for GST evasion.
New T4 Slip Information Codes and Reporting For the 2020 calendar year, in addition to reporting employment income in Box 14 or Code 71, the new information codes below should be used to report employment income and retroactive payments made in the following periods: Code 57: Employment income – March 15 to May 9 Code 58: Employment income – May 10 to July 4 Code 59: Employment income – July 5 to August 29 Code 60: Employment income – August 30 to September 26 E.g. If you are reporting employment income for the period of April 25 to May 8, payable on May 14, use code 58. 10-percent Temporary Wage Subsidy for Employers (TWS) and Form PD27 Requirement Employers eligible for the TWS are required to complete and submit Form PD27, 10-percent TWS Self Identification Form for Employers, to the CRA. This includes employers who have already claimed the TWS and those who haven’t but still intend to, as well as employers who qualified for both the TWS and the CEWS but elected to claim a TWS of 10 percent or less (including a claim of zero). However, if an employer elected not to participate in both the CEWS and the TWS, Form PD27 does not need to be filed. Employers who did not qualify for the TWS will also not be required to complete Form PD27. The CRA will use this form to reconcile the TWS remittances to the amounts reported on the 2020 T4 Summary. Employers can also instruct the CRA on how they want to apply any balances of TWS available on the Form PD27
2021 Budget Indirect Tax Changes Application of GST / HST to E-Commerce The legislation introduced in the 2020 Fall Economic Statement has been included with some qualifications and clarifications. A reminder that this legislation will require non-residents and distribution platform operators to register for the GST / HST under a simplified system when they are selling to consumers in Canada. This includes sales of digital supplies and services, short-term accommodations in Canada and the supply of goods through online platforms. Safe Harbour Rules Where a platform operator is obligated to collect and remit GST / HST on supplies they facilitated for a third-party who is not registered for GST / HST, they are likely to rely on information provided by third parties. This may not be accurate information relative to the information requirements needed for GST / HST purposes. To avoid this situation, the Budget proposes rules that will: impose joint and several liability on a platform operator and a third-party supplier for the collection and remittance of GST / HST, if the third-party supplier provides false information to the platform operator; and limit the liability of a platform operator for failure to collect and remit tax, if the platform operator reasonably relied on the information provided by a third-party supplier. Eligible Deductions GST / HST registered suppliers will be eligible to deduct amounts for:
- bad debts; and
- certain provincial HST point-of-sale rebates to purchasers from the GST / HST they must remit.
Simplified System – Small Supplier Threshold The $30,000 small supplier threshold proposed under the simplified GST / HST system provides if the amount is exceeded in a 12-month period, registration is required. The Budget proposes to exclude zero rated sales as there would not be any tax to remit. Platform Operators Information Return Platform operators will be required to file an information return if they facilitate a supply of Canadian short-term accommodations, or a sale by a non-registered vendor of goods located in a fulfilment warehouse in Canada. The amendment in Budget 2021 clarifies that the requirement to file an annual information return applies only to platform operators that are registered or are required to be registered for the GST / HST. This will reduce the compliance requirement for some. Authority to Register a Person The Minister of National Revenue will be given the authority to register a non-resident vendor and platform operator that are required to be registered under the simplified GST / HST system. The CRA will have the authority in respect of compliance measures within the simplified GST / HST system as they have under the regular system. The CRA has indicated they will take a practical approach in administering these measures in the twelve months following implementation. Corporate Tax Measures Immediate Deduction Budget 2021 proposes to provide immediate deductions in respect of certain “eligible property” acquired by a CCPC. This immediate deduction will be available for eligible property acquired on or after Budget Day and that becomes available for use before January 1, 2024, up to a maximum amount of $1.5 million per taxation year. The immediate deduction will only be available for the year in which the property becomes available for use. The $1.5-million limit will be shared among associated members of a group of CCPCs. CCPCs with capital costs of eligible property in a taxation year that exceed $1.5 million will decide which capital cost allowance (CCA) classes the immediate deduction will be attributed to, and any excess capital costs will be subject to the normal CCA rules. For those CCPCs with less than $1.5 million of eligible capital costs, no carry-forward of excess capacity will be allowed. Rate Reduction for Zero-Emission Technology Manufacturers Budget 2021 proposes a temporary measure to reduce corporate income tax rates for qualifying zero-emission technology manufacturers as follows: 7.5 percent, where that income would otherwise be taxed at the 15 percent general corporate tax rate; and 4.5 percent, where that income would otherwise be taxed at the 9.0 percent small business tax rate. The reduced rates will apply to taxation years that begin after 2021. The reduced rates will be gradually phased out starting in taxation years that begin in 2029 and fully phased out for taxation years that begin after 2031. CCA for Clean Energy Equipment Budget 2021 proposes to modernize CCA classes for investments in specified clean energy generation and energy conservation equipment. Qualifying property will be eligible for accelerated CCA rates of 30 percent and 50 percent, depending on classification. Interest Deductibility Limitations Budget 2021 proposes to introduce rules that will limit the amount of net interest expense that an entity may deduct in computing its taxable income to no more than a fixed ratio of “tax EBITDA.” Generally, EBITDA is a corporation’s taxable income before taking into account interest expense, interest income and income tax, and deductions for depreciation and amortization. The measures will be phased in, with a fixed ratio of 40 percent for taxation years beginning on or after January 1, 2023, but before January 1, 2024 (the transition year), and 30 percent for taxation years beginning on or after January 1, 2024. This measure will apply with respect to existing as well as new borrowings. The following rules will apply:
- Tax EBITDA will exclude, among other things, dividends to the extent they qualify for the inter-corporate dividend deduction or the deduction for certain dividends received from foreign affiliates.
- Interest expense and interest income will include amounts that are legally interest, and also certain payments that are economically equivalent to interest, and other financing-related expenses and income.
- The measure of interest expense will exclude interest that is not deductible under existing income tax rules, including the thin capitalization rules, which will continue to apply.
- Interest expense and interest income related to debts owing between Canadian members of a corporate group will generally be excluded. The new rules will also apply to trusts, partnerships and Canadian branches of non-resident taxpayers.
Exemptions from the new rules will be available for:
- CCPCs that, together with any associated corporations, have taxable capital employed in Canada of less than $15 million; and
- groups of corporations and trusts whose aggregate net interest expense among their Canadian members is $250,000 or less. Interest denied under these rules will carry forward for up to twenty years or carried back for up to three years. Denied interest may be allowed to be carried back to taxation years that begin prior to the effective date of this rule.
These proposed rules also include a “group ratio” rule that will allow a taxpayer, in certain circumstances, to deduct interest in excess of the fixed ratio of tax EBITDA calculated on a consolidated basis. For purposes of the group ratio rule, the parent company and all of its subsidiaries that are fully consolidated in the parent’s audited consolidated financial statements will be included in the calculation. Draft legislative proposals are expected to be released for comment in the summer. Mandatory Disclosure Rules Budget 2021 launches public consultations on proposals to enhance Canada’s income tax mandatory disclosure rules. This consultation will address changes to the Income Tax Act’s (ITA’s) reportable transaction rules, a new requirement to report notifiable transactions, and a new requirement for specified corporations to report uncertain tax treatments. Tackling Tax Avoidance and Evasion Budget 2021 builds on the previous investments in the Canada Revenue Agency (CRA) with new measures to combat tax evasion and aggressive tax avoidance. Reaffirming CRA Audit Power Budget 2021 proposes to amend legislation to confirm that CRA officials have the authority to require taxpayers to respond to questions orally or in writing, including in any form specified by the relevant CRA official.
- Government Employee Wages Benefits Programs
- Canada Emergency Wage Subsidy (CEWS) Original Program Details
- 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
Subsidy Rate Changes
- The subsidy rate is up to 65 percent of eligible wages until December 19, 2020
- The Government proposes to increase the maximum wage subsidy back to 75 percent (from the current 65 percent) for the 11th to 13th qualifying periods, which run from December 20, 2020 to March 13, 2021. The maximum base subsidy would remain at 40 percent and the maximum top-up wage subsidy rate would increase to 35 percent.
- The Canada Emergency Wage Subsidy (CEWS) will be extended through to summer 2021.
- See member firm websites for additional information on qualified organizations, limitations, and periods covered: Mazars & MNP
- See government website for further announcements: Canada Emergency Wage Subsidy
- Updated March 3, 2021 - The Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS) and Lockdown Support programs will remain in effect to June 5, 2021 at the current rates.
- 2021 Budget Update - The Budget proposes wage subsidy rate structures for June 6, 2021 to September 25, 2021. The maximum subsidy rates will initially be 75 percent, with gradual phasing out starting July 4, 2021. Only employers with a decline in revenues of more than 10 percent will be eligible for the wage subsidy for qualifying periods beginning on or after July 4, 2021.
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
- Benefit has ended on December 2, 2020. You can no longer apply for this benefit.
The Canada Recovery Benefit (CRB) This program will provide $450 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. Government Site for CRB Update: You may apply up to a total of 19 eligibility periods (38 weeks) between September 27, 2020 and September 25, 2021. The first four of these weeks will be paid at $500 per week, consistent with the current payment amount, and the remaining eight weeks will be paid at $300 per week. All new Canada Recovery Benefit claimants after July 17, 2021 will also receive the $300 per week benefit, available until September 25, 2021. The Canada Recovery Sickness Benefit (CRSB) This program 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. Government Site for CRSB Update: The government has announced an extension to the CRSB eligibility period limits. Eligible recipients may now apply to any open period for up to a total of 4 weeks. The Canada Recovery Caregiving Benefit (CRCB) This program 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. Government Site for CRCB Update: Each household may apply up to a total of 38 weeks between September 27, 2020 and September 25, 2021.
Budget Update: The Government proposes to extend the number of weeks that Canadians can apply for the Canada Recovery Caregiving Benefit from 38 weeks to 42 weeks. The payments will remain at $500 per week. 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.
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. 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).
Employment Insurance Changes 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. See government site for more information.
2021 Budget Update: The Government proposes to provide authority for potential extensions of the Canada Recovery Benefit and its associated benefits, as well as regular Employment Insurance (EI) benefits until no later than November 20, 2021. 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.
Canada Recovery Hiring Benefit Budget 2021 introduces the new Canada Recovery Hiring Benefit (CRHB). This program provides eligible employers a subsidy of up to 50 percent on the incremental remuneration paid to employees between June 6, 2021 and November 20, 2021. Eligible employers can claim either the CRHB or the CEWS for a particular qualifying period, but not both. Qualification Eligible employers include individuals, non-profit organizations, registered charities, certain partnerships and Canadian-controlled private corporations (CCPCs). Employers qualify for this program if they have a drop in revenue which is to be computed the same way as it is computed for the CEWS. Subsidy Amount The subsidy is equal to the incremental remuneration multiplied by the applicable hiring subsidy rate for that qualifying period. Incremental remuneration for a qualifying period means the difference between remuneration paid by an employer in a qualifying period and remuneration paid by an employer in a baseline period. The initial baseline period will be March 14 to April 10, 2021.
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. December 2020 Update -As of December 4, 2020, CEBA loans for eligible businesses will increase from $40,000 to $60,000. -Applicants who have received the $40,000 CEBA loan may apply for the $20,000 expansion, which provides eligible businesses with an additional $20,000 in financing. -All applicants have until March 31, 2021, to apply for $60,000 CEBA loan or the $20,000 expansion.
- March 2021 Update -Program extended until June 30, 2021 Link to government site for CEBA
- 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. - This support is available until June 2021. Link to government site for Guarantee Program
- 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.
- This support is available until June 2021.
- See government site for Mid-Market Financing Program and Mid-Market Guarantee and Financing Program
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.
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.
Link to government site for CERS Updated March 3, 2021 - The Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS) and Lockdown Support programs will remain in effect to June 5, 2021 at the current rates. 2021 Budget Update- The Budget proposes to extend the current rate structure for the base rent subsidy from June 6, 2021 to September 25, 2021, with subsidy rates being gradually phased out starting July 4, 2021. Budget 2021 also proposes to introduce a deeming rule whereby the purchaser of the assets of a seller may be deemed to meet the rent subsidy rules. Further support is available for applicants who qualify for the base rent subsidy in locations that must cease operations or significantly limit their activities under a public health order issued under the laws of Canada, a province or territory. Budget 2021 proposes to extend the current 25-percent rate for the Lockdown Support for the qualifying periods from June 6, 2021 to September 25, 2021.
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).
Applications for the first and second payment are open. Application intake will remain open until March 31, 2021. How to Apply - Organizations must apply through the online application portal www.alberta.ca/sme-relaunch-grant.aspx
Highly Affected Sectors Credit Availability Program (HASCAP) Eligibility
- Small and medium-sized Canadian-based businesses that have seen their revenues decrease by 50% or more as a result of COVID-19
- Business must have been financially stable and viable prior to current economic situation
- Business must have received payments either from the CEWS or the CERS by having demonstrated a minimum 50% revenue decline for at least 3 months (not necessarily consecutive) within the 8-month period prior to date of HASCAP Guarantee application
- Loan must be used to continue or resume operations (not for repayment of existing financing)
- The guarantee covers amounts ranging from $25,000 to $1 M
- Loans are low interest bearing with repayment terms up to 10 years
- Up to a 12-month postponement of principal payments at start of loan Government has mandated BDC to provide a guarantee to financial institutions for 100% of value of new term loan
- Application is through financial institution (can apply at one institution only)
- Applications open at some participating financial institutions beginning February 1, 2021; other participating institutions will deploy program progressively over days that follow
Mining Companies and Flow Through Shares: When the federal Department of Finance recognized the challenges being faced by the junior mining industry in the wake of COVID-19, it proposed an extension of the current flow-through spending timelines of 12 months. Draft legislation and explanatory notes extending the timelines were announced mid-December 2020, providing support to struggling junior companies.
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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.