Covid-19 Economic Response Plan Summary

By PKF Team Blog March 26, 2020

Federal

Last a few weeks the world has changed which we have seen in Hollywood movies. This time it was in reality and numbers do not lie.

As any other government in the world, the Government of Canada together with provincial counterparts are taking immediate, significant and decisive action to help Canadians facing hardship as a result of the COVID-19 outbreak. Here is the summary of most of the changes

On March 18, 2020, the Federal Government announced a new set of economic measures as part of the Government of Canada’s COVID-19 Economic Response Plan with a price tag of up to $27 billion in direct support to Canadian workers and businesses.

Support for businesses:

Avoiding layoffs:

Extending Work-Sharing Program
The Government of Canada is implementing the EI Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hour as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements, and streamlining the application process.
- To be eligible for a Work-Sharing program, employers must:
  - have been in business in Canada year-round for at least two (2) years;
  - be a private business, publicly-held company or a not-for-profit organization;
  - demonstrate that the shortage of work is temporary and beyond their control;
  - demonstrate a recent decrease in business activity of approximately 10%; and
  - Submit and implement a recovery plan designed to return the Work-Sharing individuals to normal working hours by the end of the program.
- Employers may not make a Work-Sharing agreement with employees who are:
  - seasonal, or students hired for the summer or co-op term;
  - hired on a casual or on-call basis; or
  - Shareholders of the business, whose shares provide them with significant decision making power as to the direction of the company.

Providing small business with wage subsidies
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.
- Eligible employer for wage subsidies:
  - are a non-profit organization, registered charity, or a Canadian-controlled private corporation (CCPC);
  - have an existing business number and payroll program account with the CRA on March 18, 2020;
  - Pay salary, wages, bonuses, or other remuneration to an employee.
  Note: CCPCs are only eligible for the subsidy if their taxable capital employed in Canada for the preceding taxation year, calculated on an associated group basis, is less than $15 million.
  
  Important links:
  https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html

Support for businesses:

Access to credit

Establishing a Business Credit Availability Program
The Business Credit Availability Program (BCAP) will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses. This will be an effective tool for helping viable Canadian businesses remain resilient during these very uncertain times. BDC and EDC are cooperating with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism. Same time the government is developing similar mechanisms to farmers and the agri-food sector through Farm Credit Canada.
- What you need to know about the Business Credit Availability Program (BCAP)
  - Businesses seeking support through BCAP should first contact their financial institutions for an assessment of their situation.
  - Financial institutions will refer to EDC and BDC their existing clients whose needs extend beyond what is available through the private sector alone.
Important links:
https://www.edc.ca/en/campaign/coronavirus-covid-19.html
https://www.bdc.ca/en/pages/special-support.aspx
- Cutting the interest rate
  The Bank of Canada also took a series of actions to support the Canadian economy during this period of economic stress, enhance the resilience of the Canadian financial system, and help ensure that financial institutions can continue to extend credit to both households and businesses. This included cutting the interest rate to 0.75% as a proactive measure in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices.

More flexibility

More time to pay income taxes
The Canada Revenue Agency will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
The Canada Revenue Agency will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.
The Liaison Officer Service offers help to owners of small businesses to understand their tax obligations. Traditionally available in-person, this service is now available over the phone and will be customizing information during these challenging times by ensuring small businesses are aware of any changes such as filing and payment deadlines, proactive relief measures, etc.

ALBERTA

Utility payment deferral

Residential, farm and small commercial customers can defer electricity and natural gas bill payments for the next 90 days to ensure no one will be cut off, regardless of the service provider.
Call your utility provider directly to arrange for a 90-day deferral on all payments.

WCB premium payment deferral

Small, medium and large private sector employers can defer WCB premium payments until 2021.
For small and medium businesses, the government will cover 50% of the 2020 premium when it is due in 2021 – saving businesses $350 million.
Large employers will have their 2020 WCB premium payments deferred until 2021, at which time their premiums will be due.
Employers who have already paid WCB premiums in 2020 are eligible for a rebate or credit.

Banks and credit unions

Banks – Small business customers can apply for a payment deferral on loans and lines of credit for up to 6 months and access additional working capital. Other businesses and agriculture customers can access support on a one-on-one basis. Further solutions are being considered at this time
Credit unions – Business members should contact their credit union directly to work out a plan for their personal situation.

ONTARIO

Electricity Relief to Small Businesses and Farms During COVID-19. Effective immediately, electricity will be priced at “low-peak” – 10.1 cents/kwh – at all hours of the day for the next 45 days.
The Government of Ontario declared all non essential businesses must close by 11:59 pm on March 24, 2020. The closure will last for a minimum of 14 days.