Disclaimer: Last updated on March 25, 2020. This is an evolving situation with new measures being announced as the days go by and information below may no longer be current upon time of viewing. For the latest information, refer to our COVID-19 Content Hub.
As the ongoing response to COVID-19 rapidly evolves, many Canadians find themselves facing an uncertain financial future. To help alleviate concerns, the Canadian government introduced financial relief measures and programs to support individuals and businesses impacted by the COVID-19 pandemic. Below, you will find a list of government and other support programs available to Canadians during this challenging time.
For Individuals:
Employment Insurance (EI)
For information related to obtaining EI Sickness Benefits, visit https://www.canada.ca/en/services/benefits/ei/ei-sickness/apply.html. Those who are unable to work because they have been directed to self-isolate or quarantine will not have to wait the usual one week to receive EI sickness benefits. Additionally, the sickness benefits can be accessed without the usual requirement of a doctor's note or other medical certificate. Presumably it would be best if employers provide a record of employment (ROE) as soon as possible.
The Government has also created two new emergency funds: The “emergency care benefit” and the “emergency support benefit”.
The emergency care benefit will provide up to $900 every two weeks, for up to 15 weeks, to help Canadian workers who cannot go to work, do not have paid sick leave and do not qualify for EI sickness benefits. This includes those who are sick themselves, as well as those who are staying home to look after others who are sick or children who are not in school.
The emergency support benefit will offer payments of undisclosed amounts to unemployed workers who are not eligible for EI. Self-employed individuals appear to fall in this category.
Applications for both of these new benefits will open in April, at a date to be determined. When that happens, Canadians will be able to apply for these benefits through CRA MyAccount or My Service Canada Account or by calling a toll-free number that has not yet been made public.
(Update as of March 25, 2020: The Government has now passed legislation to combine the various EI measures noted above into the Canadian Emergency Response Benefit (CERB). The CERB is designed to make it so an employer can effectively furlough employees without actually laying them off. As described by Finance Minister Bill Morneau, the measure enables companies to temporarily let go of workers to cut payroll costs and leave money in the affected employees' pockets. "Companies don't need to separate their employee from their company. They just need to say, 'we can't pay you during this time period.' And when that happens, there is a direct wage subsidy to people, to employees so that they can actually live their lives," he said. "When this is done, they can go back to work for their employers and that we think is critically important."
This looks like a welcome solution as the EI program was being overwhelmed with applications.
For further detail please see the following link to the Department of Finance news releae: https://www.canada.ca/en/department-finance/news/2020/03/introduces-canada-emergency-response-benefit-to-help-workers-and-businesses.html
Per the Department of Finance news release “The portal for accessing the CERB would be available in early April.”)
Housing - rent and mortgage payments
Effective immediately, Canada's six largest banks — RBC, TD, BMO, Scotiabank, CIBC and National Bank — will allow mortgage payment deferrals for up to six months for those affected by the economic consequences of COVID-19. They will also provide relief for other credit products. Vancity is also deferring payments of mortgages and other loans for six months. Please note that these deferrals are available on a on a case-by-case basis so anyone wishing to avail themselves of these programs should contact their lender.
The Canada Mortgage and Housing Corporation is also increasing flexibility for lenders to defer mortgage payments on homeowner government-insured mortgage loans.
For renters in some parts of the province, it is possible to get emergency help for rent payments and one-time interest-free loans through rent bank programs.
Numerous advocacy groups are calling for federal and provincial governments to immediately pause all rent payments, in addition to mortgage payments, and cease all new evictions notices for the time being. Stay tuned for further information.
Other support for Individuals
There are various other supports available including a boost to the GST Credit and the Canada Child Benefit. However these require legislative process (sometime in April?) and will take some time to reach individuals.
Utility providers such as BC Hydro have assistance programs. Call BC Hydro's customer team at 1-800-224-9376 to discuss bill payment options.
For student loans, we understand a six-month, interest-free reprieve on Canada Student Loan payments is being legislated presently. Additionally, we understand that no payments on account of principal or interest will be required on insured student loans during the period March 30 to September 30, 2020.
For Businesses:
Business Credit Availability Program (BCAP)
Thus far, the Government appears to be opting to provide support directly to needy individuals rather than business owners. These funds are being made available through BDC, EDC and Farm Credit Canada (For Agri-related business). We understand that loan applications for amounts less than $100,000 can be made online through BDC’s website. Loans requests for amounts exceeding $100,000 appear to require more information and increased due diligence by these lenders.
10% Wage Subsidy
Below is from the Department of Finance Canada website:
“To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.”
Accordingly, we understand that eligible employers simply take the applicable deduction when making their next payroll remittance. An eligible employer is generally defined as one who:
- Employs one or more eligible employees;
- Has, on March 18, 2020, a CRA business number required to make payroll remittances; and is any of:
- a Canadian Controlled Private Corporation (CCPC) to which the small business limit applies;
- an individual (other than a trust);
- a partnership, all of the members of which are either CCPC’s, individuals or registered charities; or
- a registered charity.
The wage subsidy eligibility period is between March 18, 2020 and June 20, 2020.
Should employers try to keep employees on payroll or lay them off?
Simply, there is no easy answer to that question. Some considerations:
- What can the business afford to do?
You may need to prepare a cash flow projection with some assumptions regarding future events to try to make an assessment of your cash resources over the next few weeks and months. We are available to help if needed. - What is the impact on the Employee?
The differential between the actual wage and the EI benefit will impact higher income employees given the limitations of EI. - What is the impact on the Employer?
Laying-off certain employees who can then obtain EI clearly reduces the cash requirements of the business (and therefore its potential to survive this ordeal) and may not (in the case of lower paid employees) make a significant difference to their income. You may risk losing a good employee if they find employment elsewhere.
Commercial Rent and Landlords
Rent is typically one of the larger expenditures incurred by business owners. If you are unable to meet your rental obligations, we suggest communicating that directly to your landlord. Obviously these are extreme circumstances and we trust that landlords will be as reasonable as possible in these circumstances. Perhaps you can negotiate a rent deferral arrangement or a reduced rent for the duration of the COVID-19 crisis.
In general, we caution against simply deferring liabilities as they may accrue to a prohibitive sum which may not be sustained by future profits leading to potential insolvency; but that may just be a fight for another day.
We are here to help
These are unprecedented times for all of us. Now is the time for us to work together in order to overcome the challenges ahead while keeping our communities, our workplaces and our families as healthy and safe as possible.
At Baker Tilly, we are available to help answer your questions or provide additional assistance if needed. In the meantime, take care and stay the course to commit to social distancing.
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