The COVID-19 pandemic has not been an easy time for Canadian businesses as the first major wave of layoffs occurred this week.
In hopes of mitigating the negative economic effects, Canada’s Prime Minister, Justin Trudeau, announced the COVID-19 Economic Response Plan March 18, providing relief for both workers and businesses.
Right now, there is no designated phone number or government hotline for inquiries related to the available financial support for businesses, but anyone with questions should call one of the many numbers listed on the CRA’s resource page for businesses.
Navigating these relief efforts and understanding what your business qualifies for isn’t easy. That’s what this guide is for.
- To prevent lay-offs, the government has proposed a temporary wage subsidy for a period of three months for eligible small employers. It will be equal to 10 per cent of remuneration paid during that period, capping at a maximum subsidy of $1,375 per employee and $25,000 per business. To access this quicker, the government suggests businesses reduce their remittances of income tax withheld on their employees’ remuneration. This will apply to all businesses who are eligible for the small business deduction, non-profit organizations, and charities. Click here to read the eligibility guidelines for the small business deduction.
- The EI Work Sharing Program has been implemented, which provides EI benefits to workers who have agreed to reduce their usual working hours. It extends the eligibility of such agreements to 76 weeks, eases up on eligibility requirements, and provides a streamlined application process.
- Any income tax payments due between now and September 2020 will be deferred by The Canadian Revenue Agency. This will include tax balances due and installments of a payment plan.
- No SMEs will be contacted by The Canada Revenue Agency regarding any post-assessment GST/HST or Income Tax audits for the next four weeks. For most businesses, audit interaction with taxpayers and representatives will be temporarily suspended.
- For small businesses requiring assistance understanding their tax obligations, the Liaison Officer service will now be conducted over the phone and will be providing customized information related to the pandemic and its effects on the economy.
- The Business Credit Availability Program (BCAP) allows the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to aid small and medium-sized businesses with more than $10 billion in financial support. Both of those organizations will work with private-sector lenders to create credit solutions for businesses in sectors that are due to be hit the hardest, like oil and gas, air transportation, and tourism. Available credit for farmers and others in the agri-food sector will also be increased via the Farm Credit Canada.
- The Bank of Canada has lowered its interest rate to 0.75 per cent.
- On March 16, the government announced it is launched an Insured Mortgage Purchase Program (IMPP), which will see the government purchase up to $50 billion on insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). Details of the terms of the purchase operations will be provided to lenders by the CMHC later this week.
- The Bank of Canada announced it will adjust its market liquidity operations to maintain market functioning and credit availability. It will also be broadening its eligible collateral for its term repo facility to include the full range of collateral eligible under the Standing Liquidity Facility, with an exception of the non-mortgage loan portfolio. And finally, the Bank of Canada announced it will be providing support to the Canada Mortgage Bond market, including purchases of CMBs in the secondary market.