COVID-19 – FINANCIAL RELIEF FOR CANADIANS
Since the beginning of March, restrictions and measures related to COVID-19 have rapidly escalated. On March 18, 2020, the Government of Canada announced a series of measures designed to support the finances of individuals, businesses, charities, and non-profit organizations. Since then, on an almost daily basis, new possibilities have been introduced, and old ones have been adjusted. This document aims to provide a consolidated summary of support in their most current state of affairs, as of April 8, 2020.
As Canada struggles with the COVID-19 pandemic, the federal government has implemented a number of measures to assist businesses improve their cash flow such that they can survive over the coming months. They can be sorted into three primary categories: payroll support, financing, and deferrals of tax payments. While sole proprietors are eligible for many of these measures, some additional measures will be discussed in the Individuals section of this newsletter.
There are generally three payroll programs available: the 10% Temporary Wage Subsidy (10% WS), the 75% Canada Emergency Wage Subsidy (75% WS), and the Employment Insurance (EI) Work-sharing Program. In general, the 75% WS is available to a wide variety of entities whose revenue has dropped by at least 30%. The 10% WS is available only to smaller businesses, but does not require a revenue decline. In cases where employers are entitled to both, amounts received under the 10% WS will reduce the amounts receivable under the 75% WS.
The EI Work-sharing Program is different in that it enables the employees and employer to agree to reduce working hours by 10% to 60%. This reduces the employer’s payroll costs, while the employees receive EI payments directly for the reduction in their hours. While the Work-sharing Program can be used in combination with a subsidy, the government has specifically noted that receipts under the 75% subsidy will be eroded by the EI received by the employee. The legislation implementing the 10% subsidy does not provide for any similar reduction.