• The percentage used in the TEMPORARY WAGE SUBSIDY has been increased from 10% to 75% of the gross pay of an employee. This change will result in larger subsidy claims by eligible employers, see below for more on this program
• The subsidy calculation date will now begin on Sunday, March 15th rather than the previous date of Wednesday, March 18th
• The CANADA EMERGENCY BUSINESS ACCOUNT was announced today by Prime Minister Justin Trudeau
• Banks will offer $40,000 loans that will be guaranteed by the • Federal government for qualifying businesses
• The loan will be interest-free for the first year
• $10,000 of the loan will be forgivable if certain conditions are met
• Deferring GST and HST payments until June 2020
• MORE DETAILS TO COME
ANNOUNCEMENTS TO DATE
TEMPORARY WAGE SUBSIDY FOR EMPLOYERS
Here are some details on the subsidy support for business:
• Sole-proprietors who have employees (not a trust)
• Certain partnerships who have employees
• Not-for-profit organizations (as defined by the income tax act) who have employees
• Charities who have employees
• Certain Canadian Controlled Private Corporations (CCPC) that claimed the small business deduction in the last taxation year (excluding the passive income reduction)
• Large CCPC groups do not qualify (taxable capital greater than 15 million)
• Must be registered for payroll deductions (business number ending in RP) on March 18, 2020
• Profit allocation to sole proprietors and partners do not qualify as this is not considered employment income
What is it?
• 10% of the gross pay of an employee paid between March 18, 2020 and June 19, 2020
• Limited to $1,375 per employee
• Capped at $25,000 per employer
• Employers that are part of an associated group DO NOT SHARE the $25,000 cap, each has their own cap available to them
• The subsidy is taxable to the employer
How does the subsidy get paid?
• Employer manually calculates the subsidy and must retain records of the calculation
• It is expected that a form will be submitted with the 2020 T4 information slip submission in 2021 to support this subsidy claim
• Employer deducts the subsidy from remittance made for payroll deductions
• Can only reduce the income tax withheld, NOT CPP NOR EI
• If the subsidy is greater than the income tax withheld, the unclaimed residual is carry forward to the next remittance to be applied
• April 15th remittance will be the first opportunity for most employers to apply the subsidy reduction
ABC, a cleaner, has 6 employees, pays $85,000 in gross wages between March 18 and June 19, 2020
• Potential subsidy is 10% * $85,000 = $8,500
• However the maximum subsidy is 6 * $1,375 = $8,250
• ABC would deduct $8,250 from its payroll remittances but only against the income taxes withheld from the employees, ABC may have to reduce a couple of remittance payments
• The $8,250 subsidy would be taxable income to ABC
CANADA EMERGENCY RESPONSE BENEFIT (CERB)
CANADA EMERGENCY RESPONSE BENEFIT (CERB) is a merger of the EMERGENCY CARE BENEFIT and EMERGENCY SUPPORT BENEFIT programs that were announced by the Federal government on March 18, 2020.
What is it?
• $2,000 a month TAXABLE benefit to be paid every four weeks starting March 15, 2020 to October 3, 2020
• Payment is to flow within 10 days of application
• No applications after December 2, 2020
Who qualifies for support?
• People facing unemployment
• People who are sick, quarantined or in directed self-isolation
• People who are unable to work
• Specifically described as:
• Workers who must stop working due to COVID-19 and do not have access to paid leave or other income support
• Workers who are sick, quarantined or taking care of someone who is sick with COVID-19
• Working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures
• Wage-earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance
• Workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work
• Must be at least 15 years old, reside in Canada and have at least $5,000 of income in the last 12 months prior to application or in 2019
• Not eligible for the benefit if the person quits their employment voluntarily
How do I access?
• Application portal will be available in the first week of April 2020
• Visit My Account (personal income tax portal) and My Service Canada (EI\OAS\CPP portal) for application details in the first week of April 2020
This is a new program, so there may be rollout issues with software coding and processing so patience will be required.
IF YOU ARE RECEIVING EI REGULAR AND SICKNESS BENEFITS
The one week waiting period for individuals claiming EI sickness benefits has been waived.
No requirement for a medical certificate when claiming sickness benefits due to quarantine.
Canadians who are already receiving EI regular and sickness benefits as of March 25, 2020, would continue to receive their benefits and should NOT apply to the CANADA EMERGENCY RESPONSE BENEFIT. If their EI benefits end before October 3, 2020, they could apply to the CERB once their EI benefits cease, if they are unable to return to work due to COVID-19.
Canadians who have already applied for EI after March 18, 2020, and whose application HAS NOT been processed would not need to reapply to the CERB as you would be enrolled into the CERB.
NOTE: Canadians who are eligible for EI regular and sickness benefits would still be able to access their normal EI benefits, IF STILL UNEMPLOYED, after the 16 week period covered by the CERB.
• If an employee is sick or quarantined use CODE D as the reason for separation on Record of Employment, do not add comments
• If an employee is no longer working due to shortage of work because the business has closed or decreased operations due to COVID0-9 use CODE A, do not add comments
• If the employee refuses to come to work but is not sick or quarantined, use CODE N for leave of absence, avoid comments unless absolutely necessary
OTHER ITEMS PREVIOUSLY ANNOUNCED ON MARCH 18, 2020
• CANADA CHILD BENEFIT an extra payment of up to $300 a child, being paid in May 2020
• recommended that you file your 2019 tax return as soon as possible to continue program eligibility for July 2020 – July 2021
• GOODS AND SERVICE TAX CREDIT an extra payment (up to $400 for individuals and up to $600 for couples) in early May, this measure is targeting low and modest-income families
• recommended that you file your 2019 tax return as soon as possible to continue program eligibility for July 2020 – June 2021
• Has been suggested that taxpayers verify Canada Revenue Agency data on the number of children (if applicable) through their My Account
• 2019 personal tax deadline deferred from April 30, 2020, to June 1, 2020
• New personal income tax balances and tax instalments are deferred to August 31, 2020, without incurring interest or penalties
• Registered Retirement Income Fund (RRIF) minimum payout amounts can be reduced by 25% for 2020, contact your financial advisor to accomplish
• Canada Student Loans and Apprentice Loans effective March 30, 2020, will be placed on a six-month principal and interest-free moratorium, no payment will be required for six months and interest will not accrue
• Canadian banks have committed to work with their customers on a case by case basis to find solutions to help them manage hardships caused by COVID-19. Please contact your financial institution regarding flexibility for a mortgage deferral
SUPPORT TO BUSINESS PREVIOUSLY ANNOUNCED ON MARCH 18, 2020
• Work sharing program has been extended from 38 weeks to 76 weeks
• Work sharing program provides EI benefits to workers who agree to reduce their normal working hours because of developments beyond the control of their employers
• Businesses can defer until August 31, 2020, the payment of income tax amounts and instalments that became due after March 18 and before September 2020. No interest or penalties will accumulate on these amounts during this period
ONTARIO'S ACTION PLAN
Released March 26, 2020
• Doubling of the GAINS payment for six months which targets about 194,000 low-income seniors in Ontario, revised payment to commence in April 2020
• One time payment to families to pay for extra costs associated with school and daycare closures
• $200 for each child, 12 and under
• $250 for children with special needs
• Students with OSAP loans, six-month payment deferral and interest relief
• Electricity prices for time of use customers will be set at the lowest rate (off-peak price) for 24 hours a day for 45 days
• Expanding eligibility to support low-income families to ensure their electricity and natural gas services are not disconnected for non-payment during the COVID-19 outbreak
• Temporary increase to the Employer Health Tax exemption to $1,000,000 for 2020 to reduce EHT levies on 57,000 employers
• Providing a 5-month interest and penalty-free period to make payments for the majority of provincially administered taxes (examples include Employer Health Tax, gas and fuel tax, insurance premium tax and retail sales tax on insurance contracts and benefit plans).
• Defer the upcoming quarterly (June 30) remittance of education property tax to school boards by 90 days to provide flexibility to municipalities to provide property tax deferrals to local residents and businesses
• Allowing employers to defer payments for up to six months to WSIB
• We recommend the filing of the WSIB return and deferring payment as required