o support Canadian businesses and help them retain their workers during this difficult time, the Government is announcing measures to:
1. CRA filing deadlines and GST/HST payments: Allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply 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. This measure will result in businesses having more money available during this period. However, there is no mention of postponing GST/HST remittances or instalments, or remittances of payroll or other withholdings. These are amounts that are collected on the government’s behalf by businesses, so the funds do not belong to the business. March 27, 2020 update: An additional $12.5 billion is being made available through federal programs, to help with “operational cash flow requirements,” and HST and GST payments are being deferred until June, giving businesses more time to make their payments.
Charities have until December 31, 2020, and this deferral applies to charities with Form T3010 due between March 18, 2020, and December 31, 2020.
The government has provided a map to understand the deferred deadlines here.
The government said it will defer certain Goods and Services Tax/Harmonized Sales Tax (GST/HST) remittances to June 30, 2020, for monthly, quarterly and annual filers. As a result, taxpayers will now have until June 30, 2020, to make the following payments:
- For monthly filers — Remittances collected for the February, March and April 2020 reporting periods.
- For quarterly filers — Remittances collected for January 1, 2020, through March 31, 2020 reporting period.
- For annual filers whose GST/HST return or instalment are due in March, April or May 2020 — Remittances collected and owing for their previous fiscal year; and,
- instalments of GST/HST for the filer’s current fiscal year.
In addition, the CRA confirmed it won’t be contacting any small- or medium-sized businesses to initiate any post assessment GST/HST or income tax audits for the next four weeks. You can read more on the ins and outs fo the GST/HST deferral on the CRA Canada.ca website.
2. Business Credit Availability Program (BCAP) [updated May 11, 2020]:
(i) Business Credit Availability Program: The Business Credit Availability Program (BCAP) is targeted at small and medium-sized businesses. The Government of Canada defines small businesses as companies having less than 99 employees and medium-sized businesses as companies with between 100 and 499 employees. For more information, see the Government of Canada’s website. The BCAP will provide more than $10 billion in support. The program is a collaboration between EDC, the Business Development Bank of Canada (BDC), and private sector lenders. The goal is to provide credit solutions for individual businesses in sectors such as oil and gas, air transportation, and tourism.
(ii) EDC Loan Guarantee for Small and Medium-Sized Enterprises (SMEs): EDC will guarantee new operating credit and cash flow term loans that financial institutions extend to small and medium-sized enterprises affected by the impact of COVID-19 up to $6.25 million with 80% guaranteed by EDC. For export sector and domestic companies, the program cap will be a total of $20 billion. This money is to be used for operational expenses only. Statistics Canada defines SMEs as Enterprises with 1-499 employees. This program is now available through various financial institutions and credit unions.
(iii) BDC Co-Lending Program for Small and Medium Enterprise: The purpose of this program is to provide term loans for operating and liquidity to businesses that were financially viable and generating income prior to the COVID pandemic. The program has three components: 1) loans of up to $312,500 to businesses with revenues of less than $1 million; 2) loans up to $3.125 million for businesses with revenues between $1 million and $50 million; 3) loans up to $6.25 million for businesses with revenues over $50 million. Interest will not accrue for the first 12 months of the loan and the loan will be repayable over 10 years. The financial institutions will be releasing additional information in the coming days.
These programs will roll out in mid-April, and interested businesses should work with their current financial institutions. More information can be found here.
On May 11, 2020, the federal government announced new measures to support businesses impacted by COVID-19, including expanding the Business Credit Availability Program to mid-sized companies with significant financing needs. Support for mid-market businesses will include loans of up to $60-million per eligible company, and guarantees of up to $80-million.
III. Canada Account business support [Updated April 16, 2020]
The Minister of Finance will now be able to raise the limit of the Canada Account in order to deal with the COVID-19 outbreak. The Canada Account is used to support exporters when necessary and in the national interest. Exporters can receive support through loans, guarantees or insurance policies.
These programs will roll out in mid-April, and interested businesses should work with their current financial institutions. More information can be found here.
IV. Large Employer Emergency Financing Facility (LEEFF)
On May 11, 2020, the federal government announced new measures to support businesses impacted by COVID-19, including establishing a Large Employer Emergency Financing Facility(LEEFF) to provide bridge financing to eligible large employers whose needs are not being met through conventional financing mechanisms. The LEEFF program will be open to large for-profit businesses (with the exception of financial sector businesses) as well as certain not-for-profit businesses (e.g., airports) whose annual revenues are generally $300-million or more. While many LEEFF details remain unknown, the government stated that the following “guiding principles” will apply:
- protection of taxpayers and workers:
- fairness; and
According to the government, businesses must be seeking financing of about $60-million or more and have significant operations or workforce in Canada in order to qualify for LEEFF. Businesses involved in active insolvency proceedings are ineligible.
On May 20, 2020, the federal government announced that the application process for the government’s Large Employer Emergency Financing Facility (LEEFF) program is now open. The program will support eligible large employers whose needs are not being met through conventional financing.
3. Canada Emergency Business Account [Updated June 15, 2020]
The government announced a $25 billion program that will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced. The program will be implemented by eligible financial institutions in cooperation with EDC. To qualify, small businesses will need to demonstrate they paid between $50,000 and $1 million in total payroll in 2019, and operating as of March 1, 2020. Repaying the balance of the loan on or before December 31, 2022, will result in loan forgiveness of 25% (up to $10,000). If the loan is not repaid by then, the remaining balance will be converted to a three-year term loan at 5 per cent interest.
This program is now available at various financial institutions and credit unions.
Information on the emergency loan program can be found here.
Business owners can apply for support from the Canada Emergency Business Account through their banks and credit unions.
On April 16, 2020, the Prime Minister of Canada announced additional measures to support small businesses, including:
- expanding the Canada Emergency Business Account (CEBA), which provides interest-free loans of up to $40,000 to small businesses and not-for-profits, to include businesses that paid between $20,000 and $1.5 million in total payroll in 2019. This new range will replace the previously qualifying range of $50,000 to $1 million in total payroll; and
- introducing the Canada Emergency Commercial Rent Assistance (CECRA) for small businesses. The program will provide loans, including forgivable loans, to commercial property owners who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May, and June, 2020. Implementation of the program will require a partnership between the federal government and provincial and territorial governments, which are responsible for property owner-tenant relationships.
On May 19, 2020, the government announced that it will be expanding the eligibility criteria of the Canada Emergency Business Account to include many owner-operated small businesses.
On June 15, 2020, the federal government announced that as of June 19, 2020, applications will be accepted for the Canada Emergency Business Account under expanded eligibility rules.
This means that owner-operated small businesses that had been ineligible for the program due to their lack of payroll, sole proprietors receiving business income directly, as well as family-owned corporations remunerating in the form of dividends rather than payroll will become eligible this week.
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.
Eligible businesses will qualify for financing of up to $40,000, with 25 per cent of this being forgivable based on the current terms of CEBA loans. Businesses can contact their primary financial institution for more information or to apply directly for CEBA.
4. Certain CRA activities suspended: The Canada Revenue Agency will not contact any small or medium (SME) businesses to initiate any post-assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.
5. The CRA Liaison Officer service offers help to owners of small businesses to understand their tax obligations. Traditionally available in person, this service is now available over the phone and will be customizing information during these challenging times by ensuring small businesses are aware of any changes such as filing and payment deadlines, proactive relief measures, etc.
These measures will cost $55 billion and are in effect immediately.
6. Low loan-to-value mortgages: Minister of Finance Bill Morneau announced on March 20, 2020, amendments to mortgage insurance eligibility criteria, set out in regulations made under the National Housing Act and Protection of Residential Mortgage or Hypothecary Insurance Act. These changes will help provide stable funding and liquidity to financial institutions and mortgage lenders and support continued lending to Canadian businesses and consumers. This announcement is in support of Canada Mortgage and Housing Corporation’s (CMHC) March 16, 2020 launch of a $50 billion Insured Mortgage Purchase Program (IMPP) and CMHC’s March 20, 2020 announcement on program details. The amendments allow mortgage lenders to pool previously uninsured mortgages into National Housing Act Mortgage-Backed Securities (NHA MBS) for CMHC to purchase these securities through the IMPP. The impact of this measure will provide financial institutions with more liquidity. This, in turn, will allow financial institutions to continue lending to businesses as well as individuals, while assisting customers who face hardship and need flexibility, on a case by case basis.
Effective March 24, 2020, the following low loan-to-value mortgages funded prior to the date of this announcement, March 20, 2020, are eligible for government-guaranteed insurance:
- Low loan-to-value mortgages with a maximum amortization term up to 30 years commencing from when the loan was funded.
- Low loan-to-value mortgages whose purpose includes the purchase of a property, subsequent renewal of such a loan, or refinancing.
All other eligibility criteria for government-guaranteed insurance will continue to apply to these mortgages. The above amendments will remain in force until December 31, 2020, at which time the eligibility criteria will revert to the existing rules. The Minister of Finance reserves the right to make amendments prior to this date, should circumstances change.
These changes will not apply to low loan-to-value mortgage loans funded on or after March 20, 2020. The other existing criteria which apply for transactional mortgage insurance will remain unchanged. More information can be found here.
On May 13, 2020, the federal government also announced that the Regional Relief and Recovery Fund (RRRF), aimed at supporting small businesses and communities, is accepting applications. The RRRF is specifically targeted to entities that have been unable to access existing support measures while faced with COVID-19. Businesses interested in receiving support through this initiative are invited to apply through their local regional development agency.
On May 14, 2020, the Prime Minister announced up to $469.4-million in new measures to support certain fish harvesters impacted by the COVID-19 pandemic.
The government also announced the launch of a $100-million Agriculture and Food Business Solutions Fund, backed by Farm Credit Canada. The fund is to support a wide range of enterprises in the agribusiness and agri-food sector, including companies involved in primary production, agri-tech, manufacturing, packaging, and distribution.
7. The Bank of Canada interest rate: The Bank of Canada cut the prime interest rate to 0.75%. Other banks have also reduced rates. March 27, 2020 update, the Bank of Canada announced an unscheduled interest rate cut, slashing the key interest target by half a percentage point to 0.25 percent. Global economies have been badly hit by the pandemic which has seen half a million people in Canada alone file for employment insurance in recent weeks.
8. Charities filing requirements: The filing deadline for charities with a Form T3010, Registered Charity Information Return due between March 18 and December 31, 2020, will be extended to December 31, 2020.
9. Wage subsidies: To help businesses keep and return workers to their payroll through the challenges posed by the COVID-19 pandemic, the Prime Minister, Justin Trudeau, established the new Canada Emergency Wage Subsidy (75%) and the Temporary Wage Subsidy (10%). For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10 per cent wage subsidy for a period, any benefit from the 10 per cent wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period. More information on the wage subsidies can be found What are the wages subsidies program the federal government has implemented to curb temporarily layoffs, CEWS etc.? (Updated July 17, 2020) on this page.
10. Temporary changes to Canada Summer Jobs program and Canada Emergency Student Benefit: The Canada Summer Jobs program provides opportunities for youth to develop and improve their skills within the not-for-profit, small business, and public sectors, and supports the delivery of key community services.
The federal government is making temporary changes to the Canada Summer Jobs program to allow employers to receive an increased wage subsidy, so that private and public sector employers can also receive up to 100 percent of the provincial or territorial minimum hourly wage for each employee.
The extended program will end on February 28, 2021.
This program will allow employers to adapt their projects and job activities and hire staff on a part-time basis.
On April 29, 2020, Parliament convened to debate the legislation required for the government’s previously announced emergency support measures for students, including the Canada Emergency Student Benefit (CESB).
The legislation was passed by the House of Commons late yesterday. The Senate will convene tomorrow (May 1, 2020) to finalize the Bill.
The Senate is expected to consider Bill C-15, An Act respecting Canada emergency student benefits (coronavirus disease 2019)on Friday, May 1, 2020. The legislation, which was passed by the House of Commons late in the evening of April 29, 2020, is required to implement the government’s previously-announced Canada Emergency Student Benefit.
On May 13, 2020, Prime Minister Trudeau announced that students and recent graduates will be able to apply for the Canada Emergency Student Benefit (CESB) on Friday May 15, 2020. Further details on the CESB are available here.
11. Relief for federally regulated pension plan sponsors
The Finance Minister announced on April 15, 2020, that some federally regulated pension plan sponsors are facing significant financial constraints, and the government will provide immediate, temporary relief to sponsors of federally regulated defined benefit pension plans. More information here.
On May 29, 2020, the federal government announced that the Solvency Special Payment Relief Regulations, 2020are now in force. The Regulations provide temporary relief for federally regulated defined benefit pension plan sponsors in the form of a moratorium on solvency special payments from May 27 until December 30, 2020. The regulations also provide accommodations for solvency special payments made since April 1, 2020. More information is available here.
12. A new wage boost for essential workers
The Government of Canada announced on April 15, 2020 that it will be working with provinces to top-up the salary for essential workers earning less than $2,500 per month. Further details will be released shortly. For more information, see the Government of Canada’s news release of April 15, 2020.
On May 7, 2020, the federal government announced an agreement with all provinces and territories to share the cost of wage top-ups for essential workers. The federal government will provide up to $3-billion for this new benefit, and the provinces and territories will contribute up to $1-billion. Each provincial and territorial government will determine the eligibility criteria for essential workers and how the benefit will be distributed in their respective jurisdictions.
13. Youth Employment and Skills Program (“YESP”)
On May 26, 2020, the federal government announced an additional $9.2-million fund for the Youth Employment and Skills Program (“YESP”) to fund up to 700 new positions for youth (ages 15 to 30) in the agriculture industry. Eligible employers include producers, agri-businesses, industry associations, provincial and territorial governments, Indigenous organizations, and research facilities. Employers may apply for this funding retroactive to April 1, 2020, with projects to be completed by March 31, 2021.