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COVID Support for Businesses - May 25 2020

Canada Emergence Wage Subsidy (CEWS)

  • Wage subsidy for eligible employers calculated at 75% of eligible remuneration (salary, wages and commissions) paid to eligible employees up to a maximum of $847 per week for a twelve week (soon to be extended) commencing March 15, 2020.
  • There are currently 3 claim periods – Mar 15-Apr 11, Apr 12-May 9 and May 10-June 6.
  • Special rules further limit the weekly benefit of non arms length employees based on weekly average pay from Jan 1-Mar 15, 2020. If a non arms-length employee was not paid salary in this period, they will not qualify for the benefit.
  • Eligible employers include taxable corporations (other than public institution), individuals, registered charities, not-for-profit organizations and partnerships. The employer must have had a payroll business number as of March 15.
  • To qualify, an employer must have experienced a drop of 15% (March) or 30% (April and May) when compared to the same month in 2019 (year-over-year approach) or compared to Jan and Feb 2020 (alternative approach)
  • The benefit is reduced by any subsidy received under the TWS program (see next)
  • If a business qualifies for a given period, it will automatically qualify for the subsequent period.
  • The subsidy is considered taxable income for the period received.
  • Application is made through the CRA My Business Account – see link below. A business must re-apply for each period.
Information about program
To apply

Temporary Wage Subsidy (TWS)

  • A three-month measure that provides a subsidy of 10% of remuneration paid to eligible employees by eligible employers from Mar 18 to June 19, 2020 up to a maximum of $1,375 per employee and a employer maximum of $25,000.
  • Eligible employers include individuals, partnerships, Canadian-controlled private corporations (CCPCs) eligible for the small business deduction, not-for-profit organizations, and registered charities.
  • The employer must have had an existing payroll number as of Mach 18 and pay one or more employees and pay salary, wages, bonuses, or other remuneration to eligible employees.
  • An eligible employee us one who is employed in Canada.
  • Continue to deduct source deductions as usual. Application is made by reducing source deductions up to a maximum of federal and provincial tax calculated for the relevant remittance period.
  • The CEWS gets reduced by this subsidy.
  • The subsidy is considered taxable income for the period applied for.
  • See link below for information on the program.
FAQ – Temporary wage subsidy for employers

Canada Emergency Business Account (CEBA)

  • Federal sponsored interest-free loan program offering up to $40,000 to eligible small businesses and not-for-profit organizations
  • Eligible businesses must have been registered and operational on or before March 1, 2020, not be a holding company, and your 2019 T4 summary return must show at least $20,000 in remuneration (Box 14).
  • Now expanded to include family owned businesses paying shareholders by dividends, those relying on contractors and sole proprietors. This new qualified business must have a business account with a participating financial institution (ie Bank), possess CRA business number, filed either a 2018 or 2019 return and have non deferrable (operating) expenses between $40,000 and $1.5 million.
  • For 2020, the loan operates as a revolving line of credit after which it will be converted into a fixed five-year loan.
  • Repayment of the loan by Dec 31, 2022 will result in a loan forgiveness of 25% (up to $10,000)
  • No interest will apply until after December 31, 2022 after which the rate will be 5%.
  • Application is made through your financial institution
  • See link below for details and consult your financial institution for more details.
Gov of Canada CEBA

Canada Emergency Commercial Rent Assistance (CECRA)

  • The program will provide forgivable loans to qualifying commercial property owners to cover 50 per cent of monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June.
  • The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 per cent for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25 per cent of the rent.
  • Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70 per cent drop in pre-COVID-19 revenues. This support will also be available to non-profit and charitable organizations.
  • Applications are now open – see link below. Commercial property owners must lower the rents of their small business tenants payable for the months of April and May, retroactively, and for June.
  • Further details on CECRA will be shared soon once final terms and conditions are available. The federal government and provincial and territorial governments urge property owners to provide flexibility to tenants facing hardship in this uncertain time.
  • Details are to be released and a link is given below.
CECRA for small businesses

Other Programs

  • Many financial institutions are able to negotiate mortgages and loans such as switching to interest-only payments. Consult your financial institution for details.
  • Additional loan financing from Business Development Bank of Canada (BDC) and Export Development Canada (EDC).
  • The Work-Sharing program was an existing program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activities.
  • The Nova Scotia Small Business Impact Grant offers up to $5,000 for those businesses forced to close or reduce operations because of Covid-19. Details available at link below
  • Nova Scotia Small Business Credit and Support Program offers loans of up to $25,000 for eligible businesses with payrolls less than $20,000 (the eligibility threshold for the CEBA) available through provincial credit unions. Details available in link below
  • Nova Scotia Small Business Rent Deferral Program – most likely less relevant given the new CECRA.
Nova Scotia Small Business Impact Grant
Scotia Small Business Credit and Support Progra
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