See the update at the bottom of the text (April 2, 2020)
To help Canadians and businesses manage this difficult economic period, Prime Minister Justin Trudeau announced on April 1 that the government is proposing to introduce a wage subsidy of 75% for eligible businesses, for up to three months. This subsidy is retroactive to March 15, 2020.
This measure, part of Canada’s Economic Response Plan for COVID-19, would support businesses most affected by the COVID-19 pandemic and help protect the jobs Canadians depend on during this difficult time.
Today, Minister of Finance Bill Morneau, Minister of Small Business, Export Promotion and International Trade Mary Ng and Minister of Innovation, Science and Industry Navdeep Bains announced details of the proposed Canada Emergency Wage Subsidy:
- The Canada Emergency Wage Subsidy would apply at a rate of 75% to the first $58,700 normally received by an employee, representing a maximum benefit of $847 per week. The program would be in effect for 12 weeks, from March 15 to June 6, 2020.
- Eligible employers who experience a drop in gross revenues of at least 30% in March, April or May, compared with the same month in 2019, would be entitled to the subsidy.
- Eligible employers would include employers of all sizes and from all sectors of the economy, with the exception of public sector entities.
- As for not-for-profit organizations and registered charities similarly affected by income loss, the government will continue to work with this sector to ensure that the definition of “income” in this context meets their needs. The government is also considering additional support for non-profit organizations and charities, particularly those involved in the front-line response to COVID-19. Further details will be announced shortly.
- An eligible employer’s entitlement to this wage subsidy will be determined solely on the basis of wages or salaries actually paid to employees. All employers are expected to make every effort to supplement wages up to 100% of the maximum covered amount.
Canada’s Emergency Wage Subsidy is a key measure to ensure that workers can count on a source of income during this difficult period. It will enable employers to rehire laid-off workers, and retain those on their payroll, so that Canada’s workforce and supply chains can emerge from this crisis in a strong position.
Eligible employers may access the Canada Emergency Wage Subsidy by applying through the Canada Revenue Agency’s online portal. More information on how to apply for the program will follow. Organizations not eligible for the Canada Emergency Wage Subsidy may continue to be eligible for the previously announced wage subsidy of 10% of remuneration paid from March 18 to June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
Quick facts
- Allow businesses, including the self-employed, to defer all Goods and Services Tax (GST) and Harmonized Sales Tax (HST) payments collected on their sales until June. They will also be able to defer refunds of customs duties payable on imports until June. This measure is equivalent to granting Canadian companies interest-free loans of up to $30 billion. It will help companies continue to pay their employees and bills, and help limit the liquidity problems facing businesses across the country.
- Launch the new Canadian Business Emergency Account. This program will provide up to $25 billion to eligible financial institutions to make interest-free loans to small businesses, including not-for-profit organizations. Thanks to these loans, which are guaranteed and financed by the Government of Canada, small businesses will have access to the capital they need, at 0% interest, so they can pay rent and cover other important expenses over the coming months.
- Launch the new Loan and Guarantee Program for small and medium-sized businesses. This program will provide up to $40 billion in loans, funded by Export Development Canada and the Business Development Bank of Canada, to small businesses looking to their financial institutions to help them cope with the impact of COVID-19. This measure is aimed at small and medium-sized businesses that require additional assistance to meet their operational cash flow needs.
- Extend the maximum duration of the Work-Sharing program from 38 to 76 weeks, to support workers who agree to reduce their normal working hours due to new circumstances beyond their employer’s control.
- Increase credit available to farmers and the agri-food sector through Farm Credit Canada.
- Defer payment of income tax. The government will allow all taxpayers to defer payment after August 31, 2020 of income tax amounts that become due on or after March 18 and before September 2020. This relief measure will apply to new balances owing, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accrue on these amounts during this period.
***Updated April 2, 2020***
(Source: CQFF)
“According to what is written in the government document, if a company is not eligible for the large 75% wage subsidy for a given period, it could, however, according to our understanding, be eligible for the small 10% wage subsidy originally announced on March 18, 2020 if the applicable conditions are met (see in this regard our “Important Notice” of March 23 for frequently asked questions and that of March 25 to consult Part 1 of Bill C-13 which received Royal Assent). Indeed, the government document recognizes that the 10% wage subsidy will continue to exist (although it will obviously be impossible to access both the 75% and 10% subsidies for a given salary for a given period). Note, however, that we’ll have to wait for a new bill to be tabled in the House of Commons in a few days/weeks to find out all the details surrounding the new 75% subsidy.”
