FINANCING OPTIONS FOR CANDADIAN BUSINESSES
As a part of COVID-19 relief measures, the Federal Government is offering the following:
Small Business Loans
BDC provides up to $100,000 in small business loans. There is an easy online application process through the website.
https://www.bdc.ca/en/online_financing/pages/loan-application.aspx
They are currently experiencing a high volume of applications and therefore, it is recommended that you apply soon to avoid further delay.
Interest Free Loans
The Federal Government announced that interest free loans of up to $40,000 will be made available to small to mid-sized businesses through commercial banks. The loans will be interest free for one year, and $10,000 may be forgivable if the business repays the loan by the end of 2022. Further details will be available soon.
https://www.canada.ca/en/department-finance/economic-response-plan/covid19-businesses.html
Business Credit Availability Program (BCAP)
The BCAP will allow the Business Development Bank of Canada (“BDC”) and Export Development to provide more than $10 billion of additional support to small and mid-sized businesses.Many of our clients are concerned about their working capital and funding requirements during the pandemic.We have been advising our clients to reach out to BDC to see if they may qualify for a loan.Relief measures include:
a. Working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months for qualifying businesses;
b. Postponement of payments for up to 6 months, free of charge, for existing BDC clients with total BDC loan commitment of $1 million or less; and
c. Reduced rates on new eligible loans.
Info: https://www.bdc.ca/en/pages/special-support.aspx?special-initiative=covid19
SUPPORT FOR CANADIAN BUSINESSES
Temporary Wage Subsidy for Employers
The federal government announced up to 75 per cent wage subsidy for qualifying businesses, for up to 3 months, retroactive to March 15, 2020. This will help businesses to keep and return workers to the payroll.
More details on eligibility criteria will start with the impact of COVID-19 on sales, and will be shared before the end of the month.
Key notes from preliminary information:
· Business must demonstrate a reduction of revenues by > 30%, due to COVID-19.
· Wage subsidy up to 75% of salaries, on first $58,700 per employee. ($847 per week, per employee).
· Every effort must be made to top up the remaining 25%.
· No restriction for number of employees or size of company.
· Serious consequences for modifying reporting to take advantage of subsidy.
Income Tax Payments for all Taxpayers (including Corporations)
The CRA will allow taxpayers to defer their taxes until after August 31, 2020. The payment of any income tax amounts that become owing on or after March 19, 2020 and before September 2020 will be due September 1, 2020.This relief will apply to income tax balances due, as well as instalments, and no interest or penalties will accumulate on these amounts during this period.It is unclear at this time whether the CRA is intending to waive late-filing penalties.As such, it is recommended that all taxpayers continue to file all other returns by their tax filing deadlines until further notice.
Federal Government Announces Broad Tax Deadline Extensions
The Federal Government announced additional extensions to many tax-related deadlines. Most federal tax filing deadlines have been extended to June 1, 2020, including the March 31 deadline for T1134 forms and T2s. The filing deadline for the T5013 partnership return and other information that individuals will need to complete their T1 returns (such as T3 Trust Returns and NR4 Statement of Amounts Paid or Credited to Non-Residents) have been extended to May 1, 2020. The deadline for most T1 returns remains June 1, 2020.Note that some returns and payments will still be due at the usual time.
Deferral of GST/HST and Customs Duties on Imports
Businesses, including self-employed individuals, may defer all Goods and Services/Harmonized Sales Tax (GST/HST) and customs duties owed for imports until June 30, 2020.It is unclear whether GST/HST returns will have to be filed while the deferral is in effect.
Income Tax Objections
For any objection request due March 18 or later, the deadline is extended until June 30, 2020.
Deferral of B.C. Provincial Tax Payments
Effective immediately, B.C. is extending filing and payment deadlines for the following taxes until September 30, 2020:
· Employer Health Tax;
· Sales taxes
o Provincial sales tax (including municipal and regional district tax);
o Carbon tax;
o Motor fuel tax; and
o Tobacco tax
Delayed PST Budget 2020 Tax Changes
The following tax changes will be postponed until further notice:
· Eliminating the PST exemption for carbonated beverages that contain sugar, natural sweeteners or artificial sweeteners
· Expanded registration requirements for Canadian sellers of goods, along with Canadian and foreign sellers of software and telecommunication services
Delayed Carbon Tax Increase
Carbon tax rates will remain at their current levels until further notice.
Reduced School Tax Rates for Businesses
School tax rates for commercial properties (Classes 4, 5, and 6) will be reduced by 50%.
SUPPORT FOR CANADIAN WORKERS
Canada Emergency Response Benefit (CERB)
The CERB replaces previously announced EI programs and is intended to be simpler and more accessible to Canadians.
To support workers and help businesses retain their employees, the CERB is a non-taxable benefit of $2,000 per month payable to workers who lose their income as a result of the COVID-19 pandemic, for a period of up to four months. The CERB applies to the following individuals who are at least 15 years of age, resident in Canada in 2019 and had a total income of at least $5,000 from employment or self-employment in either 2019 or in the 12 months immediately preceding their application:
· Employees that earned a wage;
· Contractors;
· Self-employed individuals who would not otherwise be eligible for Employment Insurance (EI); and
· Workers who are still employed, but are not receiving income because of disruptions to their work due to COVID-19.
Individuals eligible for the CERB are those individuals above that:
· Lost their job;
· Are sick;
· Are quarantined;
· Are taking care of someone that is sick with COVID-19; or
· Are parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures.
A person will be eligible if work ceased for at least 14 consecutive days within the four-week application period, due to reasons related to COVID-19.
A person cannot receive EI benefits (or other income) and the CERB for the same period. Those who already receive EI regular and sickness benefits as of today will continue to receive their EI benefits, and such person would apply for CERB once their EI benefits cease and they are unable to return to work due to COVID-19, if prior to October 3, 2020.
A portal to access the CERB will be made available sometime in early April, with the goal of the CERB payments being received within 10 days from the date of application. The CERB will be paid every four weeks and will be available retroactively from March 15 to October 3, 2020.
https://www.canada.ca/en/department-finance/economic-response-plan/covid19-individuals.html#unable_work_new_canada_emergency_response_benefit
Goods and Services Tax
A one-time special payment will be paid by early May 2020 through the Goods and Services Tax Credit (GSTC). This will double the maximum GSTC payment amounts for the 2019-2020 benefit year. The average amount received for those eligible will be up to $400 for single individuals, and $600 for couples.