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COVID-19: Measures for Businesses and Individuals
Over the last week, the government of Canada and the province of Ontario have introduced and enhanced some of the previously announced measures to help businesses and individuals deal with the COVID-19 outbreak.
We have highlighted below some of these measures that will support you throughout the coming months. Please note that the full details on these measures are expected to be announced this week.
- Business Measures
[Federal] Wage Subsidy
The previously announced payroll subsidy to small business has been increased from 10% to 75%, as an incentive for employers to maintain their employees on payroll. The subsidy will be retroactive to March 15, 2020 and will only apply to companies that experienced a decrease of 30% or more in revenues.
The wages covered by the subsidy will be capped at 75% of salary on the first $58,700 which could mean a subsidy up to $847 per week per employee. The criteria for small businesses has been expanded to include Partnerships and sole proprietors. Mr. Morneau is expected to provide further eligibility criteria regarding the wage subsidy tomorrow, March 31.
[Federal] GST/ HST Payment Deferral
The government has announced the deferral of GST and HST payments owed March 27 onwards by businesses until June, which will give businesses more cash liquidity during the outbreak. There has been no extension to the filing deadline.
[Provincial] Employer Health Tax (EHT) Exemption
On March 25, 2020, the Ontario government announced an increase in the Employer Health Tax exemption for 2020 from $490,000 to $1 million and a five‑month relief period for Ontario businesses who are unable to file or remit their provincial taxes on time due to the special circumstances caused by the coronavirus (COVID‑19) in Ontario.
For more details: https://www.fin.gov.on.ca/en/tax/eht/index.html
[Federal] Deferral on WSIB Payments
The Workplace Safety and Insurance Board will allow an employer to defer WSIB payments for a period of six months. All employers are automatically eligible for the financial relief package. Schedule 1 employers with premiums owed to the WSIB will be allowed to defer reporting and payments until August 31, 2020. The deferral will also apply to Schedule 2 businesses that pay WSIB for the cost related to their workplace injury and illness claims.
No interest will be accrued on outstanding premium payments and no penalties will be charged during this six-month deferral period. More information on this program may be found here.
[Federal] Extension to File Taxes & Collections
Trusts and Partnerships with a fiscal year ending on December 31, 2019 were granted an extension until May 1, 2020 to file their 2019 returns. Taxpayers who owe income tax balances or income tax installments on or after March 18, 2020 and before September 2020 have until September 1, 2020 to remit these amounts. This includes Corporations who have Part I income tax owing, although corporate filing due dates have remained unchanged.
Collections activities on new debts are suspended until further notice and flexible payment arrangements have been made available. Taxpayers who are prevented from making a payment when due, filing a return on time, or otherwise complying with a tax obligation because of circumstances beyond their control, they can submit a request to cancel penalties and interest. Please note that these measures do not apply to pre-existing debts, which will be assessed on a case-by-case basis to prevent financial hardship.
[Federal] Access to Credit & Interest Rate
The government announced the launch of the Canada Emergency Business Account. Through this program, managed by the existing banking system, small businesses that paid between $50,000 and $1 million in total payroll in 2019, will be able to apply for government-guaranteed loans of up to $40,000.
These loans will be free of interest for the first year and up to $10,000 repayment could be waived for companies that pay off the balance by December 31, 2022. The Bank of Canada has also cut its key interest rate to 0.25, as a response to the COVID-19 outbreak.
This measure comes in addition to the previously announced support of $10B for small and medium sized businesses, to be provided through BDC and EDC. Access to credit through these institutions will require certain formalities including the provision of historical financial statements and projected cash flows.
[Provincial] Interest and Penalty Relief for Businesses
On March 25, 2020, the Ontario government announced a five-month relief period for Ontario businesses who are unable to file or remit select provincial taxes on time, due to the special circumstances caused by the coronavirus (COVID-19) in Ontario.
Tax filing and remittance deadlines will remain the same. However, beginning April 1, 2020, penalties and interest will not apply to Ontario businesses that miss any filing or remittance deadline under select provincial taxes. This will continue for a period of five months.
The following provincial taxes are included in the relief period:
Employer Health Tax
Beer, Wine & Spirits Tax
Insurance Premium Tax
International Fuel Tax Agreement
Retail Sales Tax on Insurance Contracts and Benefit Plans
Race Tracks Tax
The Canada Emergency Relief Benefit (CERB) is an income-relief benefit that will replace the Emergency Care Benefit and Emergency Support Benefit introduced by the Federal Government last week.
A worker can apply for the CERB for any four-week period beginning March 15, 2020 and ending October 3, 2020. A worker will be entitled to receive the CERB for a maximum of 16 weeks. The monthly CERB entitlement is $2,000 (or another amount as fixed by Regulation).
In order to be eligible, a worker must:
be at least 15 years of age and a resident of Canada
have had a total income of at least $5,000 in the 12-months preceding the worker’s application from employment, self-employment, maternity or parental EI benefits, or other maternity or parental-related allowances, money or other benefits paid under a provincial plan
have ceased working for reasons related to COVID-19 for at least 14 consecutive days within the four-week period in respect of which they apply for the CERB.
A worker will not be eligible for the CERB if, they have quit employment voluntarily or, if during the period when the worker is not working, the worker is in receipt of:
income from employment or self-employment
maternity or parental-related allowances, money or other benefits paid under a provincial plan.
The Federal Government has indicated there will be an online portal available by early April 2020 to process CERB applications and that workers will begin to receive payments within 10 days of application.
[Federal] Extension to File Taxes & Collections
As previously announced, the government has given Canadians an extra month to file their personal taxes. Taxpayers will have until June 1 to submit their income tax returns with the Canada Revenue Agency.
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