Highly Affected Sectors Credit Availability Program (HASCAP)
Details have been announced about the Highly Affected Sectors Credit Availability Program (HASCAP).
Through the HASCAP, the Business Development Bank of Canada (BDC) will be working with participating Canadian financial institutions to offer government-guaranteed, low-interest loans of up to $1 million.
See our HASCAP page for details.
Manitoba Bridge Grant Expanded
The provincial government is extending the Manitoba Bridge Grant application deadline to January 31, 2021, and expanding the eligibility requirements to offer financial support and protection for more small businesses.
See our Manitoba Bridge Grant page for more information.
City of Winnipeg COVID-19 Grant Program
The City of Winnipeg is accepting applications for a COVID-19 Economic Support Grant Program to assist Winnipeg small businesses and not-for-profit organizations that have had to prohibit access to their premises due to the public health restrictions effective November 12, 2020.
The City will be distributing a total of $3 million to eligible local businesses and organizations. Small businesses and not-for-profit organizations can apply online for a non-repayable grant of $1,500, which can be used for rent, utilities, wages, personal protective equipment (PPE), sanitizing equipment, or other business expenses incurred. The deadline to apply for the first intake is February 28, 2021.
Visit https://winnipeg.ca/emergweb/covid-19/economic-support-grant.stm for details and to apply.
Canada Emergency Business Account
The Canada Emergency Business Account (CEBA) loans for eligible businesses and not-for-profits has increased from $40,000 to $60,000. Applicants have until March 31, 2021, to apply for the $60,000 CEBA loan or the $20,000 expansion if they have already received the $40,000 loan.
Visit our Canada Emergency Business Account page for details.
T3 Trust Reporting Rules
Certain Canadian and non-resident trusts will be required to file an annual ‘T3 Trust Income Tax and Information Return’ starting with the December 31, 2021 year end, even if there has not been any activity.
Visit our Trust Reporting Requirements page for details.
Filing Form PD27
CRA is recommending that all eligible employers file form PD27 “10% Temporary Wage Subsidy Self-identification Form for Employers” by the end of the 2020 year, even if zero subsidy has been claimed.
Visit our PD27 Temporary Wage Subsidy page for details.
Changes to 2020 T4 Reporting
For the 2020 tax year, the Canada Revenue Agency (CRA) will be introducing additional reporting for the T4 slip, Statement of Remuneration Paid.
Visit our T4 Reporting Changes page for details.
Canada Emergency Rent Subsidy (CERS)
Canadian businesses, non-profit organizations, or charities who have seen a drop in revenue due to the COVID-19 pandemic may be eligible for a subsidy to cover part of their commercial rent or property expenses, starting on September 27, 2020, until June 2021. Visit https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy.html for more information.
Manitoba Bridge Grant
The provincial government has announced the Manitoba Bridge Grant, which provides a $5,000 grant to eligible Manitoba businesses and organizations that are required to fully close their premises to the public as of November 12, 2020.
Please review the eligibility criteria carefully to determine if you qualify. The program application deadline is December 15, 2020.
Canada Emergency Wage Subsidy (CEWS)
The Canada Emergency Wage Subsidy (CEWS) has been extended to August 29. Click here for details: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html
Businesses can also still apply for periods 1, 2 and 3, which means employers can retroactively claim CEWS from March 15. To apply, visit https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-how-apply.html
Canada Emergency Response Benefit (CERB)
The Canada Emergency Response Benefit (CERB) has also been extended for those who are still unemployed and cannot find employment as a result of COVID-19. Visit this link to determine if you’re eligible and to apply: https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra.html
The 75% Canada Emergency Wage Subsidy
Important Note: Although applications for the 75% Canada Emergency Wage Subsidy (CEWS) commences on April 27, 2020, CRA has indicated that the first batch of applications will be processed on May 4, with payments beginning on May 5. Since applications up to May 3 are expected to be processed at the same time, there should be no advantage to applying on the first day as opposed to later in the week. It is important that applicants understand the CEWS well before applying.
For information about the subsidy, please visit: https://www.canada.ca/en/ revenue-agency/services/ subsidy/emergency-wage- subsidy.html.
Canada Student Service Grant
While the COVID-19 pandemic will limit employment opportunities for students, it presents an opportunity for students and youth to mobilize and take part in national service activities that can provide valuable labour market and skills development experiences, while giving back to their local communities.
To encourage students to participate in the COVID-19 response, the government will be launching a new national service initiative to recognize students' significant contributions to the COVID-19 efforts. It will include support through a new Canada Student Service Grant that will provide up to $5,000 to support student's post-secondary education costs in the fall.
More details will be made available on the ‘I Want to Help’ platform over the coming weeks, including detailed information about eligibility, the levels of funding available under the grant, how to apply for a national service position, and how applications will be assessed.
For the full Backgrounder issued on April 22, please see the following link: https://www.canada.ca/en/ department-finance/news/2020/ 04/support-for-students-and- recent-graduates-impacted-by- covid-19.html.
For other student opportunities, visit www.canada.ca/en/department- finance/economic-response- plan.html and search for the ‘Student Work Placement Program’ and the proposed ‘Canada Emergency Student Benefit.’
COVID-19 Economic Response Plan – Legislative Update
In the early morning hours of March 25, 2020, Bill C-13 “An Act respecting certain measures in response to COVID-19” was introduced, and received Royal Assent by the afternoon.
Details on a number of measures previously announced (see Canada’s COVID-19 Economic Response Plan) were disclosed. One common theme throughout the legislation is the ability to change specific amounts and rules by updating regulations rather than law, which means the government has more flexibility in making changes as events unfold. The key items discussed in this document include:
The Emergency Response Benefit legislation combines the previously announced “Emergency Care Benefit” and the “Emergency Support Benefits” as described in the March 18, 2020 COVID-19 Economic Response Plan (ERP). While continuing to focus on those not eligible for traditional employment insurance (EI) the actual legislation now provides coverage to a broader group of people than originally announced.
While the ERP describes the payments as support for those who are infected, in isolation, are caring for a family member who is sick, or are required to care for children due to school closures but are not eligible for EI sickness benefits, a March 25, 2020 Department of Finance update notes that it is also now available for: workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work; and wage earners and self-employed individuals, including contract workers, who are not eligible for conventional EI benefits.
The legislation requires the applicant to be an “eligible worker”, which means that they must be:
The worker, whether employed or self-employed, must cease to work for reasons related to COVID-19 for at least 14 consecutive days within the four-week period in respect of which they apply for the payment.
For the period of cessation of work, the applicant cannot receive income from the sources listed above, and cannot receive any other EI benefits. Further, workers that quit voluntarily are not eligible.
These income support payments can be made for a maximum of 16 weeks (previously noted as 15 weeks in the ERP). Amounts are determined by the Minister. Further, up to $2,000 would be provided per month (previously announced as up to $900 biweekly). These payments are not subject to law relating to bankruptcy or insolvency and are not garnishable.
A worker may apply for an income support payment for any four-week period falling within the period beginning on March 15, 2020 and ending on October 3, 2020 (payments are made every four weeks). Canadians would begin to receive their payments within 10 days of application. The rest of the application process has not yet been announced but will be made available in the first week of April, 2020.
The legislation does not exclude shareholders or their family members as long as they meet the income requirements.
Any individual eligible for the quarterly GSTC based on their 2018 personal income tax filings will be eligible for an additional payment in May 2020. Some others may be entitled to a one-time payment, even if their income is too high to receive quarterly payments.
As is the case with the regular GSTC, the one-time payment will depend on family composition (whether the recipient is married or single; number of children in the household). As well, the benefit is income-tested, and is reduced when “adjusted income” exceeds $37,789.
The mathematical formulas in the legislation will result in individuals or families with 2018 “adjusted income” less than $37,789 receiving a single payment equal to four quarterly GSTC payments (for example, $886 for a family of four).
For higher-income recipients, the mathematical formulas result in the reduction for “adjusted income” in excess of $37,789 being only half as large as it would be for the usual computation, so some individuals or families would receive a payment greater than four quarterly GSTC payments.
As well, some individuals or families whose “adjusted income” was too high to qualify for any quarterly GSTC payments will be eligible for this one-time payment. For example, a family of four would be ineligible for quarterly payments if their “adjusted income” exceeded about $55,500. However, a family of four with income under $73,000 would still qualify for a modest one-time payment.
Like the quarterly GSTC, this benefit is managed under the income tax system. No special application is required as the payment will be calculated by CRA based on income tax returns filed for 2018.
The legislation provides that this shall be paid in May, 2020, or such earlier month as may be designated by the Finance Minister, so it is possible that these payments will be released in April, 2020.
Families not presently receiving the GSTC may wish to confirm that CRA has a record of all minor children in their custody to ensure the calculations reflect these individuals. Taxpayers registered with CRA’s MyAccount service can view the children CRA shows under their custody online through that service.
All families eligible for monthly CCB benefits based on their 2018 personal income tax returns will receive an extra benefit as part of their May, 2020 benefit payment. Some other families with children under age 18 who do not receive monthly benefits will be eligible for a one-time benefit in May.
For families receiving monthly benefits, the May benefit will be enhanced by $300 per child under age 18. Families receiving no monthly benefits may receive a portion of this enhancement, depending on their income levels.
As an example, a family with two children aged 6 to 17, with an “adjusted income” of $180,000 in 2018 would not qualify for monthly CCB benefits. However, they would qualify for a one-time benefit of approximately $590 in May, 2020.
Like the monthly CCB, this benefit is managed under the income tax system. No special application is required as it will be based on income tax returns filed for 2018.
Individuals or families with children under age 18 who are not presently receiving the CCB may want to confirm that all of the children in their custody are reflected on CRA’s records, to ensure the appropriate payment is computed. Taxpayers registered with CRA’s MyAccount service can view the children CRA shows under their custody online through that service.
In recognition of the substantial recent value declines in the investment markets, the minimum withdrawal from a RRIF or a money purchase pension plan for 2020 (computed as a percentage of its value on January 1, 2020) will be reduced by 25%. No similar reduction is available for defined benefit individual pension plans.
This reduction will not be considered in determining whether withdrawals from a spousal RRIF attribute back to the other spouse, or for purposes of certain benefits available to non-residents of Canada under income tax treaties.
This measure, initially announced as part of the March 18, 2020 Economic Response Plan (ERP), provides eligible employers with a temporary wage subsidy for a period of three months. The subsidy was announced to be 10% of remuneration paid during that period, up to certain per employee and per employer maximums. Businesses were to benefit immediately from this support by reducing their remittances of income tax withheld from their employees’ remuneration. Remittances for CPP and EI cannot be offset by the subsidy. While the legislation fine-tunes the subsidy, it is largely consistent with the initial announcement.
In order to be eligible, the employer must meet three criteria:
For a CCPC requires that the CCPC had a business limit, for purposes of the small business deduction, greater than nil for its most recent tax year ended prior to March 18, 2020 (or, if it has no taxation year ended before that date, would have a business limit greater than nil if its taxation year ended on March 17, 2020).
For this purpose, the reduction to the business limit caused by passive income (“Adjusted Aggregate Investment Income”) is not considered. However, a CCPC which had no business limit for other reasons (for example, its taxable capital, in combination with other associated corporations exceeded $15 million; it was a member of an associated group of corporations and was not assigned any portion of the business limit; or it assigned its entire business limit to one or more other CCPCs under the specific corporate income rules) would not qualify for the subsidy.
A portion of remuneration (e.g. wages, salaries) paid to employees from March 18, 2020 to June 19, 2020, inclusive, will be recoverable by the employer. The legislation indicates that several amounts determining the available subsidy will be prescribed by regulation, and those regulations are not in the draft legislation. The amounts in italics below are amounts that were announced in the ERP, and are expected to be formally set by regulations yet to be released.
The subsidy will be equal to the least of three amounts, as follows:
Therefore, to get the maximum benefit of $25,000, the employer must have more than 18 employees with total wages no less than $250,000 during the period.
No formal application process has been released. Any subsidy to which the employer is entitled is deemed to have been remitted as a payroll remittance for income taxes withheld from the employees’ remuneration. In other words, source deduction remittances for income tax, but not for CPP or EI, can be reduced for the available subsidy, providing an immediate cash flow benefit to the employer.
Presumably, there will be an eventual requirement to account for the subsidy claimed, possibly when T4 slips are prepared and filed in early 2021. However, no additional filings have been implemented to date.
The initial announcements did not include individuals or partnerships as employers eligible for this benefit, an exclusion which was the subject of considerable commentary. They are included in the legislation. The legislation does not provide any exclusion for owners of the employer or persons related to the employer, so their remuneration should be eligible. Note, however, that a proprietor or partner is not an employee of their unincorporated business, so no subsidy would be available for their work.
The information above has been taken from Video Tax News’ website: https://www.videotax.com/march-25-update-covid_19
WARNING: This information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.
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