As a business advisor and accountant, we see the ups and downs of small businesses all the time. What we do know is that when things go down, they eventually go back up. It’s times like these when your cash flow and budgeting is so important, and we really want our businesses to get through this and come out stronger than ever. To help with this, we want to provide a clear summary of what is currently being offered by the Government of Canada as a response to COVID-19 and how you can take action right away.
Small business supports during COVID-19
- Wage subsidy of 10% of total wages paid for 3 months (up to $1,375 per employee and $25,000 per employer). Payroll systems are currently working on putting together a plan so that this comes into effect automatically when calculating and remitting taxes to CRA.
As an example, if you currently pay an employee $48,000 per year or $4,000 per month, you can actually keep 10% of this over 3 months ($1,200 total for this one employee).
UPDATE: this subsidy has been increased to 75% as long the company shows a 30% reduction in revenue due to COVID-19. The amount is capped at $847 per week, which is based on a $59,000 salary. Details on the application of this will be released on April 6th.
- Income taxes owing can be deferred from now until August 31, 2020 with no interest or penalties (also includes tax instalments)
As an example, if you file your December 31, 2019 corporate tax return, any income taxes owing for this period would be due by March 31, 2020. However, you can now defer this tax owing up until the end of August 31, 2020
UPDATE: GST/HST payments owing can also be deferred until June 2020
- Work-sharing programs are available for employers to avoid layoffs by reducing employees’ hours to up to 50% and have the remaining portion supported by Employment Insurance Benefits.
For example, if you have two employees that are currently doing a similar role, but you no longer need them to work full-time due to a reduction in sales volume, you can now have them both work 4-hour days (instead of 8). You would pay 50% of their salaries and Employment Insurance would pay the other 50%. Find out more about the work sharing program here.
- Business Credit Availability Program (BCAP) for small businesses looking for additional access to credit and lending through Business Development Bank of Canada (BDC) and Export Development Canada (EDC).
If you are in need of additional working capital or credit extensions, talk to your current financial institution and they will contact BDC and EDC where appropriate.
Individual supports during COVID-19
- The filing deadline for taxes is deferred until June 1, 2020. In addition, income taxes owing from now until August 31, 2020 can be deferred with no interest or penalties (also includes tax instalments)
This means all individuals that would normally file by April 30th can now hold off for one month if more time is needed. That also means the tax that would normally be due on April 30th can now be deferred until August 31, 2020. Note that if you are expecting the GST credit or Child Care Benefits, it is recommended to file on time to avoid any delays in the 2020-21 calculation.
- Emergency Care Benefit available in April 2020 to support individuals not eligible for EI (including self-employed business owners). This includes up to $900 bi-weekly for up to 15 weeks.
For example, if you are currently working as a business owner and therefore, not eligible for regular EI benefits, you can still apply for the Emergency Care Benefit, assuming that you are either sick with COVID-19 or quarantined and unable to work (apply for the Emergency Care Benefit here).
UPDATE: New emergency fund is available April 6th which includes $2,000 per month for 4 months. You must show that you’ve made $5,000 in the last 12 months OR reported in 2019.
- Mortgage deferral available up to 6 months with most banks and lenders across Canada
If you currently have a mortgage and you are struggling with payments due to the COVID-19 crisis, you can contact your bank’s support team to request a deferred mortgage payment for up to 6 months. There are also other options available with specific lenders so please call their main contact line and find out what they can offer you.
We want to also offer our ongoing support to business owners and individuals with questions about the options that are available to you. Please reach out to us anytime at info@virtualcfo.ca and we would be happy to help.
