May 14, 2020

Summary of COVID-19 Financial Supports for Small Businesses in Canada

Last updated: May 13, 2020

DISCLAIMER: The details of these support programs are changing almost daily and getting revised and/or clarified. This is our most up to date info as of May 13, 2020 but please be advised that this information may change.

Canada Emergency Response Benefit ($500/week)

Qualifying Factors:

Resident of Canada over 15  (YES/NO) 

Stopped working due to COVID-19   (YES/NO) 

(A) Income of at least $5,000 in 2019   (YES/NO)   OR   

(B) Income of at least $5,000 in 12 months prior to application   (YES/NO)  

Individual cannot have earned more than $1,000 in gross employment wages and/or net self-employment income (profit) for 14 or more consecutive days (YES/NO)    (If YES, can apply for first period CERB)

For next periods (starting April 12 2020), must have less than $1,000 per month employment or self-employment income    (YES/NO)  

Notes:

  • Income of at least $5,000 may be from any or a combination of the following sources: employment; net self-employment income (profit); maternity and parental benefits under the Employment Insurance program; non-eligible dividends (generally, those paid out of corporate income taxed at the small business rate)
  • The Benefit is only available to individuals who stopped work as a result of reasons related to COVID-19. If you are looking for a job but haven’t stopped working because of COVID-19, you are not eligible for the Benefit. For example, if you are a student who had a job last year and were planning on working this summer you do not qualify for the benefit. Cannot have quit your job voluntarily.
  • Do not need an ROE to apply

Note: The wording on the CRA website still currently states that you must have “stopped working because of reasons related to COVID-19” so we are hoping for more clarification soon as to how this applies to Sole Proprietorships (self employed individuals). Our impression is that Sole Proprietors are allowed to continue working part-time as long as their Net Self-Employment income (profit) in a 4 week period is below $1,000.

To apply: Apply through CRA My Account for Individuals, see Alicia’s How To Video here   https://deximal.ca/dex_news/how-to-apply-for-canada-emergency-response-benefit-cerb-covid-19/

Canada Emergency Business Account $40,000 Loan

Qualifying Factors:

Total payroll (gross wages) of at least $20,000 in 2019   (YES/NO) – Recently reduced

Notes:

  • Wages or Bonus to a Shareholder is eligible, Dividends to a Shareholder are NOT eligible.
  • For Sole Proprietors, net profit is not payroll, so it would have to be Wages paid to other employees.
  • The Canada Emergency Business Account will provide qualifying business customers with access to a $40,000 line of credit:
    • at 0% interest until Dec 31, 2022
    • $10,000 loan forgiveness is available provided outstanding balance is fully paid on or before Dec 31, 2022.

To apply: Apply directly through your Bank that you use for your business bank account. This is being funded by the govt but administered by each bank individually. You will need a copy of your 2019 T4 Summary for the application.

Temporary 10% Wage Subsidy

Qualifying Factors:

Either a Sole Prop or Inc/Ltd that is a CCPC   (YES/NO) 

Have an existing RP Payroll account number on March 18, 2020   (YES/NO) 

Pay any amount of Salary, Wages, Bonuses to an employee in Canada   (YES/NO) 

Notes:

  • The subsidy is equal to 10% of the remuneration you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 total per employer.
  • Wages or Bonus to a Shareholder is eligible, Dividends to a Shareholder are NOT eligible.
  • The subsidy amount is taxable income to your business.
  • Does NOT need to show reduced revenue.

To apply: For those doing their own payroll, detailed instructions from Intuit here: https://quickbooks.intuit.com/learn-support/en-ca/covid-19/temporary-wage-subsidy-for-employers/00/516529

For Deximal monthly bookkeeping clients, we are administering this for you through your payroll service by Deximal. The subsidy is taken as a deduction on your CRA Payroll Source Deductions remittance.

See Alicia’s How To Video here  https://deximal.ca/dex_news/how-to-video-wage-subsidy-covid-19/

Canada Emergency 75% Wage Subsidy

Qualifying Factors:

Drop of at least 15% in March 2020 Monthly Revenue, Drop of at least 30% in April & May Monthly Revenue (see table below)   (YES/NO) 

Pay any amount of Salary, Wages, Bonuses to an employee in Canada   (YES/NO) 

Notes:

Claiming period         Reference period for eligibility

March 15 – April 11    Reduction in Revenue 15%; March 2020 over March 2019 OR Average of January and February 2020

April 12 – May 9          Reduction in Revenue 30%; April 2020 over April 2019 OR Average of January and February 2020

May 10 – June 6          Reduction in Revenue 30%; May 2020 over May 2019 OR Average of January and February 2020

  • New Businesses or high-growth firms will be allowed to compare their March 2020 revenue using an average of their revenue earned in January and February 2020. Employers would select the general year-over-year approach or this alternative approach when first applying for the CEWS and would be required to use the same approach for the entire duration of the program.
  • Employers can claim both the Temporary 10% Wage Subsidy and 75% Wage Subsidy if eligible. 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 75% Canada Emergency Wage Subsidy in that same period. (See Alicia’s Video for an example)
  • If Employees are Paid, but NOT WORKING: The employer is eligible for a refund of 100% of CPP and EI Payroll Taxes paid by the employer. This is to ensure that the employer is not paying out of pocket for keeping employees on paid leave.
  • Wages to a Shareholder is eligible as long as the Shareholder was receiving wages previously during Jan 1-Mar 15, 2020, Dividends to a Shareholder are NOT eligible. If a Shareholder is taking a wage, they must limit that wage to their pre-crisis pay (cannot increase their salary now to take advantage of wage subsidy).
  • The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:
    • 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
    • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.
  • There would be no overall limit on the subsidy amount that an eligible employer may claim, as long as they continue to meet the reduced revenue eligibility.
  • Employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels, but it is not required.
  • The subsidy amount is taxable income to your business.

To apply: Employers who run their own payroll should apply through CRA My Business Account online.

For Deximal monthly bookkeeping clients, we are administering this for you through your payroll service by Deximal. We will need you to review and approve the application with a CRA signed authorization form.

See Alicia’s 3-part How To Video series here:

CEWS Webinar Part 1: https://www.youtube.com/watch?v=F56eE6z44OM&t=638s

CEWS Webinar Part 2: https://www.youtube.com/watch?v=ZY-YusXKHKQ&t=609s

CEWS Webinar Part 3: https://www.youtube.com/watch?v=AwsInafXpso&t=248s

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

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