The Government of Canada recently announced Canada's COVID-19 Economic Response Plan, which includes a comprehensive set of economic measures to help combat the economic effects of the COVID-19 pandemic. The plan will provide up to $27 billion in direct support to Canadian workers and businesses and $55 billion in additional liquidity, mostly in the form of tax deferrals for businesses, to help stabilize the Canadian economy and boost consumer confidence during this pandemic. Additional funding is expected to be provided as the situations evolves.
Here are the federal programs that can support your business:
- Changes to the Canada Account: The Canada Account is administered by Export Development Canada and is used to support exporters deemed to be operating in the national interest. The changes to the Canada Account will allow the government, through the Minister of Finance, to provide additional support to Canadian businesses through loans, guarantees or insurance policies.
- Wage Subsidy for Businesses: Eligible businesses will be granted a temporary wage subsidy, for up to 3 months, equal to 75% on the first $58,700 each worker earns in one year, which equals $847 per worker, per week. This subsidy will apply to any business that has seen its revenue decrease by more than 30% because of COVID-19, regardless of the number of workers the business employs. This subsidy will be backdated to March 15, 2020.
- Ensuring Businesses Have
Credit through the Business Credit Availability Program
(BCAP): The Business Development Bank of Canada and Export
Development Canada will provide more than $65 billion of support,
through the BCAP, largely targeting small and medium-sized
businesses. These entities are also working with private sector
lenders to coordinate solutions for individual businesses. The
objective of the BCAP is to improve access to financing for
credit-worthy Canadian businesses with viable business models whose
access to financing would otherwise be restricted. The BCAP is
currently available. To access the BCAP, businesses should first
contact their financial institution, which will contact Business
Development Bank of Canada and/or Export Development Canada where
appropriate. The BCAP includes:
- Canada Emergency Business Account: This program will offer $40,000 loans to small businesses and non-profits, which will be guaranteed by the federal government and interest free for the first year. To qualify for these loans, businesses need to have paid between $50,000 and $1 million in total payroll in 2019. Businesses will be forgiven for up to 25% of the loan, or $10,000, if the balance of the loan is repaid on or before December 31, 2022.
- Loan Guarantee to Small and Medium-Sized Enterprises: Export Development Canada is working with financial institutions to help them issue new operating credit and cash flow term loans up to $6.25 million for small to medium-sized enterprises. Export Development Canada is also supporting businesses by offering banks a guarantee on loans up to $5 million to ensure these businesses can access cash immediately. For more details on these programs, businesses should contact their financial institutions.
- Co-Lending Program for SMEs: The Business Development Bank of Canada is working with financial institutions to co-lend term loans, of up to $6.25 million, to small and medium-sized enterprises, to help meet their operational cash flow requirements.
- Support for Farmers: An additional $5 billion in lending capacity is being made available to producers, agribusinesses and food processors, which will help to deal with cash flow issues caused by a decrease in sales.
- Tax Filing Deadline Deferral: Canadian businesses will be allowed to defer, until August 31, 2020, the payment of any income tax amounts owing on or after March 18, 2020 and before September 2020. This applies to tax balances due and instalments under Part I of the Income Tax Act. No interest or penalties will accrue during this tax deferral period.
- Tax Audit Deferral: The Canada Revenue Agency will not initiate any post assessment GST/HST or Income Tax audits on any small or medium business for the next four weeks, beginning on March 18, 2020.
- Sales Tax and Customs Duty Payment Deferrals: Businesses, including self-employed individuals, will be able to defer GST and HST payments, as well as duties and taxes on imports, until June 30, 2020. This deferral will apply to GST/HST remittances for the February, March and April 2020 reporting periods for monthly filers; the January 1, 2020 through March 31, 2020 reporting period for quarterly filers; and for annual filers, the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer's current fiscal year. For GST and customs duty payments for imports, the deferral will include amounts owing for March, April and May.
- Launching the Insured Mortgage Purchase Program: This program will allow the federal government to purchase up to $150 billion of insured mortgage pools through Canada Mortgage and Housing Corporation, which will provide long-term stable funding to banks and mortgage lenders and help facilitate continued lending to Canadian consumers and businesses.
- Helping Banks Continue Lending: The Domestic Stability Buffer will be lowered by 1.25% of risk-weighted assets, which will allow Canada's big banks to inject $300 billion of additional lending into the economy.
As the situation is evolving rapidly, information regarding how to access the funds available through some of the programs above has yet to be released.
Additional programs administered by Ontario, Alberta and British Columbia are set-out below.
The following is a list of support for businesses as part of Ontario's Action Plan in response to COVID-19:
- Lowering Energy Costs: Supporting more affordable electricity bills for eligible residential, farm and small business consumers by setting electricity prices for time-of-use customers at the lowest rate, known as the off-peak price, 24 hours a day for 45 days, beginning on March 25, 2020.
- Lowering Taxes: Cutting taxes by $355 million for approximately 57,000 employers through a proposed temporary increase to the Employer Health Tax exemption.
- Funding for Charities and Non-Profit Social Services: Enhancing funding by $148 million for charitable and non-profit social services such as food banks, homeless shelters, churches and emergency services.
- Tax Penalty Relief: Providing five months of interest and penalty tax relief for businesses to file and make payments for the majority of provincially administered taxes, including employer health taxes, tobacco taxes and gas taxes.
- Deferring WSIB Payments: Allowing employers to defer Workplace Safety and Insurance Board payment premiums for up to six months.
- Closure of Non-Essential Businesses: The Government of Ontario has ordered the mandatory closure of all non-essential businesses in the province, that went into effect at 11:59pm EST on Tuesday, March 24, 2020. This order is effective for a period of 14 days and may be extended. On Tuesday March 24, 2020, the province released the list of essential businesses, which will be permitted to stay open, and non-essential businesses, which will be required to stay closed.
Measures announced by Alberta include:
- Tax Deferrals: A deferral of corporate income tax balances and instalments from March 19, 2020 until August 31, 2020.
- Energy Bill Deferrals: Farm and commercial customers can defer electricity and natural gas payments for 90 days.
- ATB & Credit Union Deferrals: Small businesses that work with Alberta Treasury Branches (ATB Financial) can apply for a payment deferral on loans and lines of credit up to 6 months and access additional working capital. Also, businesses are encouraged to contact their credit union to directly work out a plan based on their situation.
- WCB Premium Payment Deferral: Private sector employers can defer Worker's Compensation Board payments until 2021.
Alberta also announced more measures will be introduced, which will focus on liquidity for households first and then on more conventional fiscal stimulus.
British Columbia announced it will amend the Employment Standards Act to prevent layoffs of employees who are forced to stay home from work due to COVID-19.
Measures announced by British Columbia include:
- Deferral of Taxes: The filing and payment deadlines for the employer health tax, provincial sales tax (including municipal and regional district tax), carbon tax, motor fuel tax and tobacco tax have been extended until September 30, 2020.
- Prohibition on Resale of Essential Goods and Supplies: Acquiring essential goods and supplies, whether from a retail environment or from a government organization or other body, and whether inside or outside of British Columbia, and subsequently reselling that essential good or supply, is prohibited. Essential goods and supplies include (i) food, water and other beverages; (ii) fuel and gasoline; (iii) health care goods, pharmaceuticals and medical supplies; and (iv) personal hygiene, sanitation and cleaning goods. More information on this order can be found here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.