Frequently Asked COVID-19 Questions

Over the last few weeks, our Federal and Provincial governments have introduced various measures to help support Canadians and businesses in the uncertain times the COVID-19 pandemic has created. These updates, announced daily, leave a lot of questions as to what is available for small businesses and individuals, and how exactly the aid is accessed.  Here, we’ve compiled a list of the most frequently asked questions from our clients for your reference. 

What is the Canada Emergency Response Benefit (CERB)?

The CERB will provide up to four taxable benefit payments of $2,000 every four weeks ($500 per week up to a maximum of 16 weeks) to eligible workers who have lost their income due to COVID-19.  Individuals are allowed to earn up to $1,000 per month while collecting CERB and includes individuals who are unable to undertake their regular seasonal work because of COVID-19. Click here to apply.

Are there any changes to my Canada Child Benefit (CCB) Change?

The government is providing up to an extra $300 per child. Those who already receive the CCB do not need to re-apply.

Are there any changes to my Goods and Service Tax Credit (GST) Payment?

There is a one-time special payment starting April 9 for low and modest-income families.  The average additional benefit will be $400 for qualifying single individuals and close to $600 for couples.  There is no need to apply for this special payment, if you are eligible, you will automatically receive the payment. Click here to learn more.

How will the filing of my income taxes and tax payments be affected?

The filing due date for filing your 2019 income tax return for individuals has been deferred until June 1, 2020.  Any taxes due from your 2019 income tax return or instalments required are being deferred until September 1, 2020, without any interest or penalties.

I am struggling to make loan payments. Is there anything I can do?

Reach out to your bank and request to defer loan payments for some time.  From what we have seen, banks are working with their clients to help navigate this uncertain time.  You must reach out to your bank ahead of time before missing payments, which will damage your credit score, and the ability to obtain some of the new loan programs mentioned below.

How do I create a My Business Account with CRA?

There are two ways to access the “My Business Account” portal:

• Option 1: Sign-In Partner Login / Register

  • Under this option, the business owner would log in using the same sign-in information they use for online banking.  It should be noted this option may potentially allow the CRA to access banking information. 

• Option 2: CRA login / CRA register

  • Under this option, the business owner would register to have CRA online access. The information the business owner needs to provide is the following:

    • Social insurance number;

    • Postal code;

    • Date of birth;

    • Tax information – amount entered on line 121 of the 2018 tax return;

    • Select a delivery method for a CRA security code to provide full access to “My Business Account”;

    • Enter CRA security code upon receipt;

    • Create user ID and password;

    • Set up security questions;

    • Agree to terms and conditions; and 

    • Provide Business number.

For more information, please click here.

Below is a recap from our April 29th blog post: COVID-19 Small Business Help

How does the 75% wage subsidy work for my business?

The Federal government has introduced the Canada Emergency Wage Subsidy (“CEWS”) which will cover 75% of eligible remuneration retroactive to March 15, 2020, up to a maximum of $847 per week per employee.  The wage subsidy will cover 75% of the weekly remuneration of an employee earning up to $58,750. On May 8, 2020, the Prime Minister announced this program will be extended past June. This subsidy covers individuals, taxable corporations, partnerships, not-for-profit organizations and registered charities that have had at least a 30% decrease in gross revenue as a result of COVID-19 (15% for the month of March). 

Do I qualify, and how do I get these benefits?

• For established employer’s the decrease in revenue will be measured using the chart below.

• Subsidy applications are made through My Business Account with CRA.  Manning Elliott is able to assist our clients with this application.  Please contact us for further details; and

• Payouts will take approximately 10 days from the application if registered for direct deposit.  

It is recommended that employers set up direct deposit with the CRA to expedite receipt of the 75% Wage Subsidy.  For a more detailed analysis of the requirements of the 75% wage subsidy and its interaction with other COVID-19 relief measures please refer the information here.

Note that employers eligible for the 10% Wage Subsidy (noted below) will need to reduce their  75% Wage Subsidy claim by the amount of the 10% Wage Subsidy they are entitled to, whether or not they have already claimed it.

10% Wage Subsidy

Along with the 75% Wage Subsidy noted above, a 10% Wage Subsidy is available to eligible employers in respect of remuneration paid to employees between March 18, 2020, and June 20, 2020. The maximum subsidy amount is $1,375 per employee and $25,000.  This subsidy is applied as a reduction of income tax withholdings remitted to the CRA on payroll.  CPP and EI amounts do not qualify for this subsidy, only income taxes withheld.  Most payroll providers have already implemented this into payroll software packages.  Any benefits received, or deemed to be received, under the 10% Wage Subsidy will reduce the employer’s entitlement to the 75% Wage Subsidy.  Employers who do not qualify for the 75% wage subsidy may be able to claim the 10% Wage Subsidy.

The 10% Wage Subsidy is limited to Canadian-controlled private corporations that claimed a small business deduction in preceding years, individuals (other than a trust), non-profit organizations, registered charities and partnerships where the members of the partnerships meet the aforementioned criteria.

Additional details on the 10% Wage Subsidy can be found here.

• Penalties for false representations:

  • The CRA has indicated that it will be using a combination of automated questionnaires, follow up phone calls and comprehensive reviews or audits to verify the eligibility of claims. Employers must ensure that records are kept demonstrating the eligibility for the claim including the calculation of the reduction in revenue and the eligible remuneration amounts. Where the employer has been found to have been ineligible for the CEWS, the ineligible portion of the CEWS must be repaid-with interest. In addition, the legislation specifically provides for a penalty of 25% for employers engaging in artificial transactions to reduce revenue in order to qualify for the CEWS. Existing legislative provisions would allow for additional penalties of 50% of any ineligible CEWS claimed where an employer knowingly, or under circumstances amounting to gross negligence, makes a false statement or omission on the CEWS application. It should be noted that in the Federal government’s announcement of the program they mentioned that the penalties could be as high 225% of any ineligible CEWS claimed which would reference the inclusion of criminal penalties.

How does the Canada Emergency Business Account work for my company? 

If your payroll for 2019 was between $20,000 and $1.5M you’re eligible to receive a loan through an eligible financial institution. The Canada Emergency Business Account (“CEBA”) will be an interest-free loan up to $40,000!  Additionally, up to $10,000 of this amount (e.g. 25% of the loan amount) will be forgiven if the remaining portion of the loan is repaid by  December 31, 2022. This can be now accessed through your financial institution. As part of the loan application, you will need to acknowledge that the borrowed funds are to be used to pay non-deferrable operating costs such as payroll, rent, utilities, etc.

What other types of financing are available for my business?

• Export Development Canada “EDC” Backed Loan – EDC will guarantee new operating term loans that banks extended to small and medium-sized enterprises up to $6.25 million through co-lending arrangements between the banks and EDC.

• Co-Lending Program for Small and Medium-Sized Enterprises “SME”– The Business Development Bank of Canada is working with financial institutions to co-lend term loans to SMEs for operational cash flow requirements.  Eligible businesses may obtain incremental credit amounts up to $6.25 million through this program.

To find out if you qualify for these loan items above, please contact your bank for further details.

How does the Canada Emergency Commercial Rent Assistance (CECRA) program work?

The Federal government in partnership with Provincial governments announced a program to reduce rent payable by eligible small businesses by 75 percent for the months of April, May and June – the Canada Emergency Commercial Rent Assistance Program (“CECRA”). 

• How does this work?

  • The government will provide loans to qualifying commercial property owners to cover 50 of the rent payable by eligible small business tenants for the months of April, May and June 2020. The loans will be forgivable if the property owner agrees to reduce the tenant’s rent for the months of April, May and June by at least 75%. The small business tenant will be responsible for 25% of the remaining rent. 

• Do I qualify and how do I apply?

  • Businesses, including non-profits and charities who have had to temporarily cease operations or experienced at least 70% drop in pre-COVID-19 revenues, with monthly rent costs of less than $50,000 are eligible for the new benefit.  It is expected that the program will be operational by mid-May. These benefits are retroactive to April.

Can I stop all forms of tax remittances for my business?

The Canada Revenue Agency has provided administrative relief for any corporate Part 1 tax balances owing between March 18, 2020, and September 1, 2020.  If you operate your business as a sole proprietorship or hold a partnership interest as an individual the payment date for the 2019 tax year has also been extended to September 1, 2020. No interest or penalties accumulate on these amounts owing during this period.

• Goods and Services Tax/Harmonized Sales Tax

  • Businesses can defer GST/HST remittances that became owing on or after March 27, 2020, until June 30, 2020. This applies for monthly filers on remittances collected for the February 2020 to April 2020 reporting periods; for quarterly filers on remittances collected for the January 1, 2020, to March 31, 2020 reporting period; and for annual filers whose GST/HST returns or instalments are due March, April or May 2020.  Any GST/HST instalments due on or after March 27, 2020, can be deferred until June 30, 2020. 

• Provincial Taxes – Effective as of the March 23, 2020 announcement date, businesses can defer filing and making BC provincial tax payments for PST, tobacco tax, motor fuel tax, carbon tax and Employer Health Tax until September 30, 2020.

• Custom duties – Are now deferred until June 30, 2020.

We Are Here to Help

Manning Elliott is here to help. To assist business owners in navigating through these trying times, visit our blog to stay up to date on the most recent activity related to COVID-19. 

This content is believed to be accurate as of the date of posting. Canadian tax laws are complex and are subject to frequent change. Professional advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.