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A Summary of the Canadian Government’s Economic Response to COVID-19 for Businesses

The global coronavirus pandemic has gripped the world as few other crises have in the past.  As of May 13, 2020, more than 4.2 million confirmed infections in at least 187 countries and territories, including at least 291,000 deaths. According to the latest data from the Canadian government, there are a total of 71,157 cases in the country and 5,169 deaths.

 

In order to provide economic relief to individuals, families, businesses, and the healthcare system, the Government of Canada is taking immediate, significant, and decisive action during the COVID-19 outbreak. Here’s a summary of the government’s economic response plan for businesses.

 

Support for Businesses

 

Avoiding Layoffs and Rehiring Employees

 

·         The Canada Emergency Wage Subsidy (CEWS) covers 75% of an employee’s wages—up to $847 per week—for employers of all sizes and across all sectors who have experienced at least a 15% drop in gross revenues in March and 30% in April and May.

 

·         Three-month Temporary 10% Wage Subsidy measure for eligible employers to reduce the payroll deduction required to be remitted to the Canada Revenue Agency (CRA).

 

·         Extension of maximum duration of the Work-Sharing program from 38 weeks to 76 weeks.

 

Access to Credit

·         The Business Credit Availability Program (BCAP) includes:

o   Loan Guarantee for Small and Medium-Sized Enterprises

o   Co-Lending Program for Small and Medium-Sized Enterprises

o   BDC’s Mid-Market Financing Program

o   EDC’s Mid-Market Guarantee and Financing Program

 

·         The Canada Emergency Business Account (CEBA) will provide interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover their operating costs during a period where their revenues have been temporarily reduced.

 

·         The Large Employer Emergency Financing Facility (LEEFF) program will be open to large for-profit businesses – with the exception of those in the financial sector – as well as certain not-for-profit businesses, such as airports, with annual revenues generally in the order of $300 million or higher.

 

·         The Canada Emergency Commercial Rent Assistance (CECRA) program will lower rent by 75% for small businesses that have been affected by COVID-19.

Canada Emergency Commercial Rent Assistance

Taxes and Tariffs

·         Businesses are now allowed to defer the payment of income tax amounts that become owning on or after March 18 and before September, until after August 31, 2020.

 

·         Businesses and self-employed individualsare allowed to defer until June 30, 2020, payments of the GST/HST, as well as customs duty owing on their imports.

 

·         Tariffs on certain medical goods, including PPE equipment, are being waived.

 

Self-Employed Individuals

 

·         As part of the Canada Emergency Response Benefit (CERB), a taxable benefit of $2,000 every four weeks for up to 16 weeks will be provided to eligible workers who have lost their income due to COVID-19.

 

·         Businesses and self-employed individualsare allowed to defer until June 30, 2020, payments of the GST/HST, as well as customs duty owing on their imports.

 

Indigenous Businesses

 

·         Up to $306.8 million in funding will be provided to help small and medium-sized Indigenous businesses and to support Aboriginal Financial Institutions that finance these businesses.The funding will allow for short-term, interest-free loans and non-repayable contributions through Aboriginal Financial Institutions, which offer financing and business support services to First Nations, Inuit, and Métis businesses.

 

Supporting Financial Stability

 

·         Relief for federally regulated pension plan sponsors.

 

·         Launching of an Insured Mortgage Purchase Program.

 

·         The Bank of Canada has lowered interest rates, intervened to support key financial markets. and is providing liquidity support for financial institutions.

 

·         The Office of the Superintendent of Financial Institutions is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets. This will allow Canada's large banks to inject $300 billion of additional lending into the economy.

 

We are an Edmonton-based full-service accounting firm that offers expert accounting, taxation, business reporting, and consultancy to all kinds of businesses. We have served several clients belonging to many different industries and helped them achieve their goals in a highly competitive and ever-changing business environment.

 

Get in touch with us to learn more about our accounting services.

 

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