There have been many releases, retractions and revisions to the various tax and subsidy programs that the Government has implemented since the start of the COVID-19 pandemic, to address the ever-changing impact on the financial well-being of individuals and the economy. Due to this fact, it can sometimes be difficult to determine what information is the most up to date, and what could be available for you or your business.
This update is intended to provide a brief summary of pertinent programs and their current status.
Tax payment and filing deadlines
Since the beginning of the pandemic, the question of filing deadlines and payments has been a moving target. The most recent announcement came on July 27, which further extended most payment deadlines to September 30, 2020 (previously September 1st). Provided returns are filed and any balance owing is paid in full, no late filing or interest payments will be charged on tax returns.
In addition, the government has announced that it will be providing interest relief on existing tax debts between the periods of April 1, 2020 to September 30, 2020. For GST/HST debts, the interest relief period applies between the periods of April 1, 2020 to June 30, 2020.
For more information on tax filing deadlines, see the Canada Revenue Agency summary here.
Canada Emergency Response Benefit (CERB) and Student Benefit (CESB)
The CERB program provides individuals who are not working, or who are earning less than $1,000 of employment income as a result of COVID-19, with a $2,000 payment for eligible 4-week periods. Prior to the most recent update in June, individuals could only apply to the CERB for four of the 4-week periods. In June, this program was updated to allow for individuals to apply for six of the prescribed 4-week periods between March 15, 2020 and October 3, 2020.
The CESB program is a similar subsidy available for students over the summer months, providing them with a benefit of $1,250 for each eligible 4-week period, or a $2,000 payment for students with a dependent or a disability.
Information on these programs and their updates, can be found in our previous bulletin on the matter, here.
Canada Emergency Wage Subsidy (CEWS) and Temporary Wage Subsidy (TWS)
The TWS program was the first wage subsidy program announced at the beginning of the pandemic, which provided employers with a 10% subsidy on gross wages paid, which they could apply against payroll deductions. This program ended on June 19, 2020, although eligible employers can claim the TWS up until their T4s are filed. Many employers elected not to claim this subsidy as it reduced the claim under the CEWS program.
The CEWS program was released shortly after the TWS was initially released and provided up to a 75% subsidy of wages paid, provided certain prescribed losses in revenue were being experienced by the business. Of all the COVID-19 related programs, the CEWS program has gone through the most changes and iterations and is by far the most complicated. The most recent revisions to this program occurred during July, and details on the program’s updates can be found in our last bulletin here.
In brief, the most recent CEWS update extended the program until November (or potentially December), and can apply to a business that has experienced any decrease in revenue for the prescribed periods ending after July 5, 2020. In place of the previous 75% subsidy is a subsidy that is calculated on a pro-rata basis based on how much revenue decrease your business has experienced from the preceding reference period.
While the application deadline for the CEWS program is January 31, 2021, we strongly recommend applying for each period as soon as you are able to.
Canada Emergency Business Account (CEBA)
The CEBA is an emergency loan program of up to $40,000 that businesses can apply for in order to help fund their expenditures during this financially stressful time. Potentially, 25% of the loan is “forgivable” (does not have to be repaid), provided the balance of the loan is repaid on or before December 31, 2022.
The most recent update to this program came in June, which expanded the program to allow for more businesses to qualify. Our update on this revision can be found in our bulletin here. Applications for CEBA can be made through your banking institution.
Canada Emergency Commercial Rent Assistance (CECRA)
The CECRA program requires the cooperation of both the landlord of a property and its “impacted small business” tenant. When the program was initially launched, the government provided subsidies to landlords in the form of forgivable loans for up to 50% of the normal lease payment as long as the landlord agreed to reduce the lease payments by at least 75% for the months of April, May and June 2020. This means the tenant will be paying 25% of their normal lease payment, and the landlord will be receiving 75% of their normal lease payment (25% from the tenant, and 50% from the government). New applicants have until August 31, 2020 to apply for the CECRA.
Further details on the program can be found in our previous bulletin here.
The government later announced that the program would extend to July 2020, and removed the requirement to claw-back insurance proceeds and provincial rent supports from the forgivable loan amounts. This press release can be viewed here. Participation in the one-month extension is voluntary and those who qualified for the CECRA based on the existing parameters would qualify for the CECRA during July without having to reassess whether they had a 70% revenue decline in July. Existing applicants can apply for the one-month extension until September 14, 2020. Application details for the July extension can be found here.
The biggest hurdle with the CECRA program, is that the impacted small business tenant must have experienced an average 70% decline in revenue for the April – June, 2020 period compared to the April – June period in 2019 (or average of January and February 2020). In addition, the landlord must be willing to participate in the program.
GST/HST is only required to be charged on the rent charged to the tenant. The forgivable loan from the government is considered to be a financial instrument and therefore GST/HST is not required to be collected on this amount.
We are continuously monitoring the nature of any new programs or amendments to the existing programs. We will continue to provide updates as they come available. If you have any questions concerning the above, do not hesitate to contact us.
To review any of our previous updates on COVID-19 please see our website.
This summary deals with proposed matters that are complex and may not apply to particular facts and circumstances. As well, the material and the references contained therein reflect laws and practices which are subject to change. For these reasons, this material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter.
Although this communication has been carefully prepared, Wilkinson & Company LLP does not accept any legal responsibility for its contents or for any consequences arising from its use. No part of this document may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means (photocopying, electronic, mechanical, recording or otherwise).