COVID 19 – GOVERNMENT CANADA Assistance
Emergency Wage Subsidy – CEWS
APPLICATIONS FROM APRIL 27
CEWS is a 75 per cent wage subsidy which will be available to qualifying businesses for a twelve-week period from March 15, 2020 to June 6, 2020. It is intended to support employers who have experienced a decrease in gross revenues of at least 30 per cent in March, April or May of 2020 (compared to the same period in 2019 or the average monthly revenue for January and February 2020). The subsidy will be retroactive to March 15, 2020. Employers will be required to attest to the decrease in revenue and maintain records demonstrating this decline.
Eligible Employers are defined as sole proprietors, taxable corporations, partnerships of eligible organizations, non-profit organizations or charities. The subsidy is not available to Public sector bodies such as municipalities, local governments, Crown corporations, public universities, colleges, schools and hospitals.
Eligible Revenue Reduction is defined as a decrease in gross revenues of at least 15 % for March 2020, and 30% for April and May 2020 compared to:
(i) the same period in 2019 or
(ii) the average monthly revenue for January and February 2020
The Revenue Reduction periods are defined as :
Period 1 : March 15, 2020 to April 11, 2020
Period 2 : April 12, 2020 to May 9, 2020
Period 3 : May 10 to June 6, 2020
If a business determines that it qualifies for CEWS for one claim period it auto matically qualifies for the following claim period.
For the purpose of the subsidy, revenue is defined as earnings from arm’s length sources for business carried on in Canada, based on the business’ normal accounting methods.
Eligible Employee: An eligible employee is an individual employed by an eligible employer in Canada during the claim period, other than an individual who is without remuneration for 14 or more consecutive days in the claim period, i.e., from March 15 to April 11, from April 12 to May 9, and from May 10 to June 6.
Employees who have been laid off or furloughed can become eligible retroactively, as long as an eligible employee rehires them and their retroactive pay and status meet the eligibility criteria for the claim period. Rehired employees must be rehired and paid before being included in the subsidy calculation.
Eligible Remuneration includes amounts paid to an employee as salary, wages and other taxable benefits, fees, and commissions. These are amounts employers would be required to make payroll deductions on to be remitted to the CRA. Severance pay and items such as stock option benefits or the personal use of a corporate vehicle are not part of eligible remuneration.
There is no overall limit on the subsidy amount an eligible employer may claim.
The subsidy is based on eligible remuneration paid between March 15, 2020 and June 6, 2020, and is equal to 75 per cent of the amount of normal remuneration paid, up to a maximum benefit of $847 per employee per week – (based on an annual salary of $58,700.
For detailed calculation guidelines go to Canada.ca CEWS Calculation guidelines
Applications for CEWS can be done three ways:
(i) using CRA My Business Account – RP account
(ii) business representatives can apply using Represent A Client – RP account
(iii) if neither of options (i) or (ii) are available, Web Forms application with a web access code
Applicants can expect to receive payment from CRA with in 10 business days of submitting an application.
Employers are encouraged, but not required to be eligible for CEWS, to pay the remaining 25 per cent top-up for employees to bring their salaries to 100 per cent of normal salaries. Employers may be required to repay all or a portion of the subsidy if they do not meet eligibility requirements. Penalties, fines or even imprisonment may also apply in cases of fraudulent claims.
Businesses that do not meet the eligibility criteria for the CEWS may still qualify for the previously announced 10 per cent wage subsidy (on wages paid March 18, 2020 to June 20, 2020, to a maximum of $1,375 per employee and $25,000 per employer).
The CEWS is not available to employers for amounts paid to an employee during a week from one of the four-week periods for which the employee is also eligible for the Canadian Emergency Response Benefit (CERB). Where employers are not eligible for the CEWS and have laid off employees, the employee will still qualify for the CERB of up to $2,000 a month (provided they meet all eligibility criteria).
Employers are encouraged, but not required to be eligible for CEWS, to pay the remaining 25 per cent top-up for employees to bring their salaries to 100 per cent of normal salaries. Employers may be required to repay all or a portion of the subsidy if they do not meet eligibility requirements. Penalties, fines or even imprisonment may also apply in cases of fraudulent claims.
March 27, 2020 – The Government of Canada announced additional relief to support Canadian business during the COVID-19 pandemic on . These measures provide for:
- extended tax reporting and remittance deadlines,
- deferred payment of customs duties, and
- significant adjustments to the government’s current administrative policies to help taxpayers meet their obligations.
This supplemental assistance, which includes further economic initiatives for small and medium businesses, builds on the extensive COVID-19 related support measures previously announced.
Shortly after the federal government’s statement, Québec followed suit, announcing that the GST/HST measures will be adopted for QST purposes.
The most significant tax measures included in the announcement can be found below.
- Deferral of GST/HST and QST Filing and Remittance
To assist Canadian businesses dealing with the economic impact of the COVID-19 pandemic, GST/HST remittance deadlines have been extended to June 30, 2020. Specifically, the extension applies to remittances due for the:
- February, March, and April 2020 reporting periods for monthly filers;
- Reporting period from January 1 to March 31, 2020 for quarterly filers; and
- GST/HST returns or instalments becoming due in March, April, or May of 2020 for annual filers.
The GST/HST remittance deferral provides short term cashflow relief.
The deferral applies to the remittances of any amounts owing and payable, as well as instalment payments that fall due during this period.
The deferral does not apply to the submission of GST/HST returns.
This deferral is optional and will not effect taxpayers in refund positions – negative net tax.
Québec has deferred both the QST filing and remittance deadlines to June 30, 2020 for all returns due between March 27 and June 1, 2020, inclusive. Finances Québec Information Bulletin 2020-5 provides further information on the QST deferral.
- Deferral of Customs Duties on Imports
Goods imported into Canada by businesses are subject to customs duties and GST. Customs duties and GST are determined on clearance of imports into Canada. Payment of customs duties and GST is required at the time of import clearance or when importer has an account set up with CRA, by the first day of the month following the month in which the Statement Of Account is issued.
The due date for payment of customs duties and GST owing on imports has been extended to June 30, 2020 for SOAs for the months of March, April, and May 2020.
- Additional Income Tax Relief
Several additional initiatives have been announced to help taxpayers meet their income tax obligations, as outlined below.
Administrative Relief
Most administrative income tax requirements of taxpayers due after March 18, 2020, such as return filings, elections, designations, and information requests, are now due on June 1, 2020.
Payroll deduction payments and related activities are excluded from this extension.
Objection Deadline Extended
The deadline for filing objections due on, or, after March 18 has been extended to June 30, 2020. CRA has indicated that all objections not related to the entitlement of an individual to benefits and credits are currently on hold, and no collection action will be taken in relation to such objections during this time.
Charity, Trust, Partnership, and NR4 Returns
The deadline for Form T3010 – Registered Charity Information Return has been extended to December 31, 2020 for all charities with a return due date between March 18 and December 31, 2020.
The deadlines for filing trust, partnership, and NR4 (non-resident withholding tax) information returns have all been extended to May 1, 2020.
Audit and Enforcement Activities
The CRA has indicated that it will not start contact with taxpayers in relation to audits. Taxpayers should not expect to receive notifications about new audits, information requests related to ongoing audits, or any reassessments.
The CRA is suspending collection action on new debts and making flexible payment arrangements available for taxpayers. Taxpayers can request cancellation of penalty and interest if unable to file a return or make a payment on time due to the COVID-19 pandemic.
- Additional Economic Relief
In addition to the tax relief measures above, the federal government announced several economic relief initiatives, including:
- Launching a new $25 billion Canada Emergency Business Account interest-free loan program for small businesses and not-for-profit organizations;
- Introducing a $20 billion program to guarantee operating credit and cashflow loans, as well as a separate $20 billion co-lending program for small and medium enterprises; and
- Increasing the previously announced wage subsidy for qualifying businesses to 75% from 10% for up to three months. This will be retroactive to March 15, 2020
- More Information
Complete information on the new COVID-19 relief measures announced by the federal government is available on the Department of Finance website at:
https://www.canada.ca/en/department-finance/news/2020/03/additional-support-for-canadian-businesses-from-the-economic-impact-of-covid-19.html
