March 31, 2020
By: Azadeh Taghizadeh, Daniel Sorensen and Lawrence Smith
Temporary Wage Subsidy
I. What is it?
Many employers do not have the means to be able to continue paying their employees as work may be limited or non-existent at this time. The government has recently announced the Temporary Wage Subsidy, whereby certain employers, for up to three months, are able to reduce the amount of payroll deductions that must be remitted to the Canada Revenue Agency (“CRA”), by 10%.
II. Who is eligible?
As of March 30, 2020, the government extended the Temporary Wage Subsidy for all businesses who experience a decrease in revenues of at least 30 percent. The number of employees is not a factor.
III. How much is paid?
The government may cover up to 75% of a salary on the first $58,700, that is, they will provide payments up to $847 per week. The payments would be made retroactive to March 15, 2020.
Availability of New Loans for Businesses
The government has also introduced new loan programs, whereby businesses may apply for and receive interest-free loans.
One such loan program is the Canada Emergency Business Account (“CEBA”). In order to apply for this loan, you may contact your financial institution. Small businesses and not-for-profit organizations with payroll costs of between $50,000 to $1 million in 2019 may apply for CEBA and be provided with an interest-free loan of up to $40,000. If you are able to fully repay the CEBA by December 31, 2022, there will be a loan forgiveness of 25% (up to $10,000).
Other such financing that is available include loans and support from the Business Development Bank of Canada, enhanced financing through Export Development Canada, and loan payment deferrals and other financing products for the agriculture and food industry through Farm Credit Canada.
In addition, the Bank of Canada has lowered interest rates to 0.25%.
Extension of Tax Deadlines
Both the federal and British Columbia provincial government have extended deadlines for tax return filing and payment deadlines.
The federal government has provided an extension for GST.HST remittances and customs payments to June 30, 2020.
The BC government has extended the tax filing and payment deadlines for PST and other applicable taxes until September 30, 2020. The BC government has also deferred the Employer Health Tax until September 30, 2020.
As further changes occur, we will provide you with update information. If you have any questions or need legal advice, please contact us to set up a consultation.
SORENSEN SMITH LLP