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March 26, 2020

U.S. Treasury, IRS, and Department of Labor Announce Coronavirus Aid Relief

On March 24, 2020, the U.S. Treasury, IRS, and U.S. Department of Labour announced that “All American businesses with fewer than 500 employees will receive funds from the US government to provide employees with paid leave, either for the employee’s own health needs or to care for family members” so that employers will be able to keep their workers.  

The Families First Coronavirus Response Act provides paid sick leave and expanded family and medical leave for COVID-19 related reasons and created the refundable paid sick leave credit and the paid child-care leave credit for eligible employers. Eligible employers are businesses and tax-exempt organizations with fewer than 500 employees that are required to provide emergency paid sick leave and emergency paid family and medical leave under the Act. Eligible employers will be able to claim these credits based on qualifying leave they provide between the effective date and December 31, 2020. Equivalent credits are available to self-employed individuals based on similar circumstances. 

Small businesses with fewer than 50 employees will be eligible for an exemption from the leave requirements relating to school closings or child care unavailability where the requirements would jeopardize the ability of the business to continue. The exemption will be available on the basis of simple and clear criteria that make it available in circumstances involving jeopardy to the viability of an employer’s business as a going concern.  

Our recommendation for eligible employers is to update current policies and keep track of the Coronavirus-related wages separately.  

The above content is believed to be accurate as of the date of posting. Canadian and U.S. tax laws are complex and are subject to frequent changes. Professional tax 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 herein.