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COVID-19 – Up to Date Tax Information for Businesses in Ontario – Updated Apr 13, 2020

For a full listing of the federal government’s COIVD-19 Economic Response Plan please visit the Government of Canada website.

***As of Tuesday March 24, 2020 – all non essential workplaces will be closed. For a list of essential workplaces: https://news.ontario.ca/opo/en/2020/03/list-of-essential-workplaces.html

 

Filing deadlines

The federal government has not yet announced any changes to the filing deadlines for businesses.

 

Tax payment deadlines

Taxes owing that have become due since March 18, 2020 and before September 2020, will be allowed to be deferred without penalty and interest until after August 31, 2020. Simply put, if your business has taxes coming due are during this period, they will be payable by August 31, 2020.

Link to CRA tax payment change: https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html#Extension_of_Deadline

This relief applies to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. 

 

HST

***Update March 27, 2020 – A deferral of GST/HST remittances for:

  • February, March and April 2020 reporting periods for monthly filers
  • January 1, 2020 through March 31, 2020 reporting period for quarterly filers;
  • an annual filers, the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.

Payments will be due by June 30, 2020.

Link to CRA website: https://www.canada.ca/en/department-finance/economic-response-plan/covid19-businesses.html#deferral_sales_tax_remittance_customs_duty_payments

 

Funding

SME Loan and Guarantee Program

Through a program entitled The Business Credit Availability Program (BCAP), the federal government will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more additional support, largely targeted to small and medium-sized businesses. Details are forth coming. If you are in need of financing contact your financial institution.

Link to BDC: https://www.bdc.ca/en/pages/special-support.aspx

Note: Businesses should first contact their financial institutions to assess their businesses situation. Any funding required beyond what the institution can provide may be referred to BDC or EDC.

 

Canada Emergency Business Account

The government has announced a zero interest loan of up to $40,000 is available from the major financial institutions. To qualify organizations must have paid between $50,000 – $1,000,000 in payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of up to $10,000.

Link: https://www.canada.ca/en/department-finance/news/2020/03/additional-support-for-canadian-businesses-from-the-economic-impact-of-covid-19.html#_New_Loan_Programs

These loans will be administered through your financial institution. Contact your representative for more information.

 

Canada Emergency Wage subsidy

The government has proposed that eligible small employers will receive temporary wage subsidy for a period of three months.

 

75% Wage subsidy

***Update March 27, 2020 The subsidy has increased to 75%.

Link: https://www.canada.ca/en/department-finance/economic-response-plan/covid19-businesses.html#wage_subsidies

***Updated April 1, 2020

The government announced on March 30, 2020 that 75% of the wages should be used to re-hire employees that have been laid. Businesses small or large will have to demonstrate that their income has decreased by 30% or more. To demonstrate the decline, year on year figures will have to be analyzed. Comparing March 2019 to March 2020 should show at least a 30% decline in revenue.

Employers do not need to top up the employees pay with the additional 25%, although it is strongly encouraged.

The wage will cover up to $58,750 or $1,129 a week in pre-crisis earnings. The subsidy is retroactive from March 15, 2020.

How to apply: Through the My Business Account on the CRA website. Ensure you have your business registered as soon as possible. Also ensure you have direct deposit set up.

Link: https://www.cbc.ca/news/politics/canadian-emergency-wage-subsidy-explainer-1.5518180

There will be serious consequences for any abuse of the subsidy. See the Financial Post article for more information: https://www.msn.com/en-ca/news/politics/trudeau-announces-more-emergency-subsidy-details/ar-BB11UUXR?ocid=msedgntp

***Update April 11, 2020

https://www.canada.ca/en/department-finance/news/2020/04/government-introduces-covid-19-emergency-response-act-no-2-to-help-businesses-keep-canadians-in-their-jobs.html

The Canada Emergency Wage subsidy (CEWS) guidance has been updated.

CEWS would apply at a rate of 75% of the first $58,700 earned by employees – representing a benefit of up to $847 per week, per employee.

The program is in place for a 12 week period from March 15 – June 6, 2020. Periods are broken up into three 4 week periods.

 Claiming periodRequired reduction in revenueReference period for eligibility
Period 1March 15
to
April 11
15%March 2020 over:March 2019 orAverage of January and February 2020
Period 2April 12
to
May 9
30%Eligible for Period 1
OR
April 2020 over:April 2019 orAverage of January and February 2020
Period 3May 10
to
June 6
30%Eligible for Period 2
OR
May 2020 over:May 2019 orAverage of January and February 2020

Employers of all sizes are eligible. However, they must show a decline in revenue. This can be done on an accrual or cash basis – but once a method is selected, it must be used consistently.

  • 15% decline in March 2020 from March 2019 income OR a decline in average revenue earned in January and Feb 2020.
  • 30% decline in April 2020 from April 2019 income
    OR a decline in average revenue earned in January and Feb 2020.
  • 30% decline in May 2020 from May 2019 income
    OR a decline in average revenue earned in January and Feb 2020.

Once an employer is found eligible for a specific period, they automatically qualify for the second period.

For example, an employer with a 15% decline in March qualifies for the 1st and 2nd periods (see table above) i.e. salary and wage from March 15th – May 9th.

Employers that qualify for the 30% decline in revenue in April qualify for remuneration paid between May 10 – June 6th.

 

Non arm’s length transactions:

A special rule applies to employees that do not deal at arm’s length with the employer. The subsidy amount for such employees is limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of the lesser of $847 per week and 75% of the employee’s pre-crisis weekly remuneration. The subsidy is only  available in respect of non-arm’s length employees employed prior to March 15, 2020.

https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html

 

10% wage subsidy

The previously announced 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer will remain intact for those businesses/organizations not qualifying for the 75% subsidy.

Businesses will be able to reduce their remittances of income tax withheld on their employees’ remuneration for salary/wages paid between March 18, 2020 and June 20, 2020.

Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.

Link – details & calculations for employers on subsidy: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html

If you don’t claim the subsidy in the remittance period, it will be possible to get a refund at year end for the amount.

Important ***You cannot reduce your remittance of Canada Pension Plan contributions or Employment Insurance premiums. You must reduce the income tax portion of remittances***

 

Tip: Keep track of the subsidy amount in a separate account. This subsidy will be taxable so it will need to be reported in your business year end tax return.

Tip: Consider contacting your payroll provider and inquire if they will be assisting in reducing your business’ remittances to avoid unnecessary manual calculations.

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