During the COVID-19 pandemic, small and large business alike are facing unprecedented challenges whether it be maintaining supply chain functions, paying employees, or servicing customers. The Government of Canada and Ontario, along with some private industry stakeholders, have taken some steps to attempt to assist businesses in these difficult times. Below is a list of known programs available to businesses.
It should be noted that these are all subject to change, and new information and details are being updated daily. It should also be noted that these are not the full breadth of initiatives that all levels of government are undertaking to assist in stimulating the economy, but rather the programs that are readily available for current relief. If you would like to discuss any of the below or have further inquiries please do not hesitate to reach out to Simon Valleau (email@example.com), or Andrew Chudnovsky (firstname.lastname@example.org) to discuss your options.
Expanded Work Share Program
- There are a number of eligibility requirements that are important to note and which all must be met. Some of these eligibility requirements are listed below, and a full list can be found at the link provided at the bottom of this article.
- For employers to be eligible:
- A decline in business of at least 10%;
- Shortage of work is temporary, and beyond your control, and not a cyclical slowdown; and
- Be a year-round business in Canada for at least 2 years.
- For Employees to be eligible:
- Year-round permanent, full-time or part-time employee needed to carry out day-to-day function of business;
- Be eligible for EI benefits; and
- Agree to reduce hours by same percentage as other participating employees and to share the work.
- The Work Share (WS) program works by allowing employers to create one or multiple WS units. A WS unit is a group of employees who have similar functions and who mutually agree to reduce their hours of work by the same percentage over a set period of time. For example, all servers would have a similar job description and form one WS unit, while all Bartenders may form a separate WS unit. If one employee works regularly 40 hours a week and another 20, both employees would have to agree to reduce their work hours by the same percentage (say 50%) relative to their regular hours, meaning one employee under the new work share plan would then continue to work 20 hours while the second works 10.
- The WS unit cannot reduce their hours by more than 60%, and not less than 10%. Different WS units in the same business may have different reductions in regular hours as necessary. A company cannot apply for the WS program unless all employees that have the same position agree to participate. The WS program is therefore an ‘all or nothing’ solution in the context of one job description area of the business. If one employee chooses not to, or does not qualify for EI benefits, they must still reduce their hours as part of the WS unit.
- The WS program is generally intended for non-essential employees required in day-to-day functions of the business and not intended for management, executive level marketing or sales, or any employee who is integral in supporting the company’s recovery plan. Some managers may be able to participate in the WS plan.
- The WS agreement must be a minimum of 6 consecutive weeks and can last up to 26 consecutive weeks, with an extension of 12 weeks available. Effective March 15, 2020, the WS program has introduced multiple special measures not previously available including increasing the maximum duration of a WS agreement from 38 to 76 weeks, waiving mandatory waiting periods between agreements, and easing the recovery plan requirements of the agreements. Extensions are not automatic, and the business must apply and be assessed by Service Canada upon the request for extension which must be filed at least 30 days prior to the end of the WS agreement.
- There are a number of other requirements from the employer standpoint, including financial reporting, and on the employee side, including consent of one employee to act as a WS unit representative. There are also a number of forms that must be completed and filed with Service Canada in order to qualify for this program.
Small Business Wage Subsidies
- Provides eligible employers with a subsidy of up to 75% of the first $58,700 of salary paid to employees, up to 12 weeks retroactive to March 15, 2020.
- Eligible employers:
- Individual, taxable corporations registered charities, non-profit organizations, and partnerships;
- Must have a registered payroll account with the CRA on or before March 15, 2020.
- Eligible employers must have seen a 15% decrease in qualifying revenue in March 2020, and 30% for the following months;
- Revenue is attached to business carried on in Canada, using normal accounting methods and excludes revenues from extraordinary items and account of capital;
- Calculated under the accrual method or cash method, but not a combination. Consult with your respective accountant/accounting staff regarding this point;
- An affiliate group of eligible entities can jointly elect to apply on consolidated basis;
- Employers who participate in joint ventures, and whose revenue is substantially all from joint ventures can utilize qualifying revenue from same;
- Non-arms length relationships (employees employed by separate entity in operating group for example) may allow for may qualify as revenue in one part or all of the group in certain cases;
- There are a number of anti-avoidance rules in place, which include penalties for manipulation of revenue/repayment of subsidy etc.
- Amount of subsidy:
- The greater of 75% of the remuneration up to $847 per week; and
- The amount of remuneration paid, up to a maximum benefit of $847 per week or 75%of the employee’s baseline renumeration, whichever is less.
- Based on average weekly remuneration pair during period that begins Jan 1, 2020 and ends March 15, 2020;
- Eligible remuneration may include other taxable benefits.
Refund on Payroll Contributions re. Wage subsidy
- 100% refund for certain employer-paid contributions for EI, and CPP;
- Covers 100% of employer-paid contributions for eligible employees for each week in which they are on leave with pay and for which employer is eligible to claim for Wage Subsidy;
- Not available for employees who are on leave with pay for only a portion of their usual work week;
- Employers continue to collect and remit, and will apply for a refund.
Business Credit Availability Program (BCAP)
- 10 Billion in direct lending and financial support at market rates
- It is being streamed through the commercial financial institutions who will be able to assist clients in accessing these loans. 3 Programs available:
- Canada Emergency Business Account for interest free loans up to $40,000.00 to small businesses and not-for-profits specifically to help cover operating costs. Must demonstrate a payroll of between $50,000 and $1,000,000 in total payroll for 2019;
- Loan guarantees for small and medium sized enterprises through Export Development Canada. Provides operating credit and cash flow term loans of up to $6.25 million. Serviced through financial institutions;
- Co-Lending program for small and medium sized enterprises. Business Development Bank of Canada is working with financial institutions to co-lend term loans for operational cash flow requirements.
- No limit theoretically, not just blanket availability, must show financial viability of company.
- Please contact your financial institutions directly with regard to these loans. We are happy to provide Independent Legal Advice on any potential loan agreement.
GST and HST
- Remittances deferred until June 30, 2020
- Extension also applies to customs duties
Other relief measures
- Electricity cost relief by suspending time of use electricity rates (held to off peak rates);
- Provincial tax deferrals for Employer Health Tax, Tobacco Tax, Fuel Tax, Beer Tax, and Mining Tax;
- WSIB premium deferrals;
- Business Education Property Tax Deferrals for one payment quarter;
- Employer Health Tax exemption threshold increased;
- Property Tax reassessments conducted postponed;
- Tax filing extensions and income tax payment deferrals; and
- Banks all have individual programs being offered.
- All have a variety of measures in place. Please speak to your bank/credit union/lender to discuss potential support during the COVID-19 pandemic.
This list will be updated frequently as more information becomes available. Please do not hesitate to reach out with further inquiries or questions in this regard.