The following is an overview of various programs that have been announced and/or put in place by the Federal and Provincial governments in response to the global COVID-19 pandemic. Please note that we have only identified programs that are relevant to businesses and their employees. As such, this is not a comprehensive review of all government programs targeting the economic impact of the COVID-19 pandemic. This overview is subject to change as the pandemic progresses.
Employment Insurance Sickness Benefits
Employment Insurance (“EI”) sickness benefits provide up to 15 weeks of partial income replacement for eligible claimants who have experienced a decrease in regular weekly earnings of more than 40% for one week work because of illness or injury.
Effective March 15, 2020, the Federal Government will waive the one-week waiting period for EI sickness benefits for absences from work caused by COVID-19 quarantine. No medical certificate is required for individuals claiming EI sickness benefits due to quarantine.
Support for Individuals
Canada Emergency Response Benefit
On March 25, 2020, the Federal Government passed the Canada Emergency Response Benefit Act as part of the COVID-19 Emergency Response Plan which creates a new Canada Emergency Response Benefit. This benefit replaces the Emergency Care Benefit and Emergency Support Benefit which were previously announced on March 18, 2020 as part of the Federal Economic Response Plan.
The Canada Emergency Response Benefit is an income support payment payable to eligible workers for up to four (4) months within the period falling between March 15, 2020 and October 3, 2020 for workers who have ceased work and are not receiving income as a result of COVID-19. The Federal Government has announced that the amount of the benefit will be $2000 per month.
To qualify for the CERB, a worker must be at least 15 years of age, and must have a total income of at least $5000 (or such other amount as prescribed) for 2019 or in the 12 months prior to their application from employment, self-employment, EI benefits, or provincial pregnancy and parental benefits.
The CERB will be available to the following workers, including self-employed individuals:
- who have lost their job or income due to COVID-19;
- who are unable to work as a result of sickness or quarantine; and
- who need to provide care of an individual who is sick or in quarantine, or who need to provide care or supervision to a child due to school or daycare closures.
A worker must have ceased working for reasons related COVID-19 for at least 14 consecutive days within the 4-week period for which they apply for the benefit in order to be eligible. A worker is not eligible for the CERB if they quit their employment voluntarily.
The CERB will not be payable to those who are in receipt of employment or self-employment income (subject to exceptions that may be made by regulation), EI benefits or provincial pregnancy and parental benefits for the days on which they have ceased working.
The Federal Government is creating an online portal to receive applications for the Canada Emergency Response Benefit and indicates that the goal is for first payments to be issued in April. Individuals who have already applied for EI as a result of a cessation of work due to COVID-19 will not be required to re-apply.
Emergency Care Benefit
As noted above, the Emergency Care Benefit (announced on March 18, 2020) has been eliminated and replaced by amalgamated Canada Emergency Response Benefit as of March 25, 2020.
Emergency Support Benefit
As noted above, the Emergency Support Benefit (announced March 18, 2020) has been eliminated and replaced by amalgamated Canada Emergency Response Benefit as of March 25, 2020.
EI Work Sharing Program
Work Sharing is an existing EI program that helps avoid layoffs when there is a temporary reduction in normal business activity levels that is outside the employer’s control. The employer must show a decrease in sales/production levels of at least 10% in order to apply for the Work Sharing Program. Employees agree to work a reduced work schedule and share available hours for a specified period and receive EI benefits during that period. The employer must submit and implement a Recovery Plan which facilitates the return of affected employees to normal hours by the end of the Agreement.
The Federal Government will modify the existing EI Work Sharing Program to provide EI benefits to workers who agree to reduce their working hours and share available work as a result of a downturn in business beyond their employer’s control which is directly or indirectly related to COVID-19, as follows:
- The permissible duration of Work Sharing Agreements will be extended from 38 weeks to 76 weeks as a result of COVID-19.
- The mandatory waiting period between Agreements, which must usually be equal to the number of weeks of the previous agreement up to a maximum of 38 weeks, will be waived.
- Finally, the Federal Government will ease Recovery Plan requirements. Additional details to follow as they become available.
These special measures are effective from March 15, 2020 until March 14, 2021.
The Federal Government will provide a one-time special GST credit payment by early May 2020. This credit is intended to support low- and modest-income families.
Canada Child Benefit
The Federal Government will increase the maximum annual Canada Child Benefit payment by $300 per child for the 2019-2020 benefit year only. Eligible families will receive the extra payment as part of the CCB payment in May 2020.
Minimum RRIF Withdrawals
The Federal Government has reduced the required minimum withdrawals from Registered Retirement Income Funds by 25% for 2020.
Tax Flexibility Measures for Individuals
The CRA has deferred the filing due date for 2019 tax returns for individuals to June 1, 2020.
Individuals who may be entitled to receive enhanced benefits under the GST credit or Canada Child Benefit are encouraged to file their returns as soon as possible.
The CRA will also allow taxpayers to defer the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 2020 until after August 31, 2020, without the accrual of interest or penalties.
The CRA will also recognize electronic signatures for the purposes of the Income Tax Act on a temporary basis in order to reduce the necessity of meeting between taxpayers and tax preparers as a result of COVID-19.
Federal Student Loans
Effective March 30, 2020, the repayment of Canada Student Loans and Canada Apprentice Loans will be paused with no accrual of interest until September 30, 2020.
Support for Businesses
Temporary Small Business Wage Subsidy
The Federal Government previously announced the provision of a temporary (3 month) 10% wage subsidy for eligible small businesses. The subsidy was set be equal to 10% of the remuneration paid in the 3-month period between March 18, 2020 and June 19, 2020 up to a maximum of $1,375 per employee and $25,000 per employer.
On March 27, 2020, Prime Minister Justin Trudeau announced that the initial 10% wage subsidy implemented to help businesses adversely affected by COVID-19 was insufficient, and would be increased to a 75% wage subsidy for qualifying businesses. The announced subsidy is intended to be backdated to March 15, 2020.
To be eligible for the former 10% subsidy, employers were expected to meet all of the following criteria:
- Be a non-profit organization, registered charity, or Canadian-controlled private corporation (CCPC);
- Have an existing business number and payroll program account with the CRA as of March 18, 2020; and
- Pay salary, wages, bonuses, or other remuneration to an employee.
For CPCCs to be eligible, their taxable capital employed in Canada for the preceding tax year (calculated on an associate group basis) also must have been less than $15 million.
While these same eligibility criteria are presumed to also be intended to apply to the new 75% wage subsidy, details of the program are still being worked out, and more information is expected to be released by Monday, March 30, 2020.
As with the 10% wage subsidy program, it is expected that under the increased wage subsidy, employers will still be permitted to reduce their remittances of income tax withheld on their employee’s remuneration by the amount of the subsidy, but must continue to remit Canada Pension Plan contributions and Employment Insurance premiums. Alternatively, the employer will be able to elect not to reduce payroll remittances during the year and instead ask for the subsidy to be paid at the end of the year or transferred to the next year’s remittance.
Business Credit Availability Program
Business Development Bank of Canada (“BDC”) and Export Development Canada (“EDC”) will be permitted to provide more than $10 billion of additional support targeted predominantly to small and medium-sized businesses.
Business credit support will take the form of both direct lending and other financial support at market rates, and will be made available to businesses with viable business models whose access to financing would otherwise be restricted.
Businesses are directed to contact their financial institutions first. Access to the BCAP for businesses that require support beyond what the financial institution will provide will then be facilitated between the financial institution and BDC or EDC.
Tax Flexibility Measures for Businesses
The CRA will allow all businesses to defer the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 2020 until after August 31, 2020, without the accrual of interest or penalties.
The CRA will not initiate any post assessment GST/HST or Income Tax audits in the four weeks commencing on March 18, 2020 for small or medium businesses, and will temporarily suspend audit interactions for the vast majority of businesses.
Changes to the Canada Account
The Canada Account is used by the Federal Government to support exporters when such support is deemed to be in the national interest.
The Minister of Finance will be able to determine the limit of the Canada Account in order to deal with exceptional circumstances, to allow the government to provide additional support to Canadian companies through loans, guarantees or insurance policies.
Canada Emergency Business Account
On March 27, 2020, the Prime Minister also announced the launch of a new Canada Emergency Business Account for qualifying small business loans. Under this program, small and medium sized businesses will be eligible for loans of up to $40,000. As well, GST, HST and import duty payments will be deferred to the end of June.Further details will be made available as they are released in the coming days.
Mortgage and Credit Support
Canada’s big six banks announced that, effective March 17, 2020, 6-month payment deferrals would be available for mortgages, to be assessed on a case-by-case basis. The big six banks also announced that other flexible solutions and opportunities for relief would be available to customers facing financial disruptions as a result of COVID-19.
The Federal Government, through the Canada Mortgage and Housing Corporation (“CMHC”), will provide increased flexibility by permitting lenders to allow payment deferral on homeowner CMHC-insured mortgages beginning immediately.
On March 25, 2020, the Ontario Government released Ontario’s Action Plan: Responding to COVID-19 (March 2020 Economic and Fiscal Update). The plan includes $3.7 billion in direct supports as well as tax and other deferrals to help individuals and businesses navigate the COVID-19 crisis.
Childcare Cost Benefit
The Plan provides for a one-time payment of $200 per child (up to 12 years of age) and $250 for children with special needs to assist parents with the extra costs associated with the closure of schools and daycares.
Guaranteed Annual Income System Support
The Plan proposes to double the Guaranteed Annual Income System maximum payment for low-income seniors to $166 per month for individuals and $332 per month for couples for a 6-month period starting in April 2020.
Ontario Student Assistance Program (OSAP) Relief
The Ontario Government will temporarily suspend OSAP loan repayments with no accrual of interest between March 30, 2020 and September 30, 2020.
Increase in Electricity Cost Relief
The Ontario Government will increase electricity cost relief programs by approximately $5.6 billion for 2020-21, and has set electricity prices at off-peak prices 24 hours a day for 45 days to support more affordable electricity bills.
Expansion of Low-income Energy Assistance Program (LEAP)
The Ontario Government will expand the eligibility for the Low-income Energy Assistance Program and will ensure that electricity and gas services are not disconnected for nonpayment during the COVID-19 crisis.
Temporary Increase to Employer Health Tax
The Employer Health Tax is a payroll tax paid by employers based on their total annual Ontario remuneration.
The Plan proposes a temporary increase in the Employer Health Tax exemption from $490,000 to $1 million for 2020.
New Regional Opportunities Investment Tax Credit
The Plan proposes a new 10% Regional Opportunities Tax Credit that would be available to eligible Canadian-controlled private corporations that construct, renovate or acquire qualifying commercial and industrial buildings in designated regions in Ontario. The credit will be available for expenditures in excess of $50,000 up to a maximum of $500,000 for qualifying investments.
The Ontario Government will provide a five-month period without penalties or interest for businesses to file returns and make payments under certain provincial tax programs. The relief period will run from April 1, 2020 to August 31, 2020.
The Ontario Government will also defer property tax payments municipalities make to school boards by 90 days to facilitate municipal property tax relief measures, and is postponing the planned property tax reassessment for 2021.
Deferral of Workplace Safety and Insurance Board Payments
Employers will be allowed to defer payments to the WSIB for a period of 6 months without interest accrual or penalties. All WSIB employers will be automatically eligible.
To ease pressure on businesses in Alberta, corporate income tax balances and instalment payments will be deferred until August 31, 2020, effective March 19, 2020. This measure provides an estimated $1.5 billion in available access to cash to enable employers to focus on continuing to pay employees, address debts, and sustain operations during this pandemic period.
Further, effective March 23, 2020, the provincial government is reversing the budgeted increase to education property tax, and will instead maintain the 2019 property tax requisition amounts. This will save businesses an estimated $32 million.
The provincial government also announced on March 23, 2020, that it will defer its portion of six months’ worth of education property tax on non-residential properties until October 2020. Employers will be responsible for only 50% of the education property tax that would otherwise have been owed for 2020, however, the government has clarified that these amounts will be re-payed in subsequent years. Repayment plans are currently being devised by government. In the interim, municipalities are expected to set education property tax rates as they normally would, but defer collection. The provincial government estimates that this deferral amounts to approximately $458 million in liquidity for businesses to continue operations and pay employees.
On March 23, 2020, the provincial government encouraged commercial landlords to pass on these savings to tenants through reduced or deferred lease payments, which will allow more employers to continue paying employees and stay in business. Employees may also benefit from a six month interest free moratorium on student loans and mortgage payments beginning March 30, 2020. Individuals will not need to apply for the repayment pause.
Deferring Workers’ Compensation Board Premiums
In addition to the tax deferral and related measures above, the provincial government announced on March 23, 2020, that Alberta Workers’ Compensation Board (“WCB”) premiums owed by businesses will be deferred until 2021, at which point they will become due. This will benefit an approximate 184,000 private sector employers.
In addition, small and medium sized businesses will only have to pay half of their required WCB employer premiums, with the government absorbing the other half of premiums owed, which amounts to an estimated $350 million. This will benefit approximately 183 businesses in the province.
Employers who have already paid a portion of their WCB premiums can have those amounts refunded upon request, or have the amount paid credited to their account. These measures will amount in total to approximately $1.1 billion in temporary savings for employers.
Of note is that these measures will not affect benefits for injured workers, and simply functions as a significant deferral on employer WCB premiums.
Adjustments from Provincial Banks and Credit Unions
Premier Kenney also announced on March 18, 2020 that ATB Financial will offer small businesses the opportunity to apply for a payment deferral on loans and lines of credit for up to six months, as well as access to additional working capital. Further solutions are still being considered, and other businesses can also access support on a one-on-one basis at this time.
Provincially regulated credit unions are adopting similar measures to ease difficulties encountered in meeting loan payments and sustaining short-term cash flow. Individuals are encouraged to contact their credit unions directly to develop a personalized plan.
Employment Insurance Benefits
On March 25, 2020, the Alberta government launched its Emergency Isolation Support payment program to bridge Alberta employees until the Federal government’s Canadian Emergency Response Benefit payments become available in April. The Emergency Isolation Payment is budgeted to provide $1,146 as a one-time payment to employees in self-isolation, who are also not eligible for, and not receiving EI benefits during this time. The $1,146 one-time payment matches two normal maximum EI payments, equivalent to approximately $573 each.
Measures for Businesses in the Energy Sector
The Alberta government also announced on March 20, 2020, that the Alberta Energy Regulator fees we be waived for 6 months to relieve energy producers of approximately $113 million in levies.
Further, the terms of mineral agreements expiring in 2020 will be extended by 1 year to bolster industry certainty and provide time to develop new and ongoing plans.
COVID-19 Action Plan
The B.C. government has announced its COVID-19 Action Plan, which includes new financial measures to assist B.C. workers and businesses affected by COVID-19.
B.C. Emergency Benefit
A one-time, tax-free B.C. Emergency Benefit of $1,000 will be available for workers whose ability work has been affected by the COVID-19 outbreak. This payment will be available to individuals who are eligible for federal Employment Insurance as a result of the impact of COVID-19, including the new federal Emergency Care Benefit and the Emergency Support Benefit. This means workers that are typically not EI-eligible, such as self-employed workers, will be able to access the B.C. Emergency Benefit, which is expected to become available by May 2020.
“Top-Up” to B.C. Climate Action Tax Credit
The Province will also provide a “top-up” to the B.C. Climate Action Tax Credit in July 2020. This payment will go to 86% of individuals and families, in amounts of up to $218 for adults and $64 per child. This builds on the regular B.C. Tax Credit Payment, which ordinarily gives $43.50 and $12.75 per child. Once an individual files a 2019 income tax return, they will become eligible for the increase.
Many tax filing and payment deadlines will be deferred to September 30, 2020, including those related to:
- municipal and regional district taxes;
- the carbon tax;
- the motor fuel tax;
- the tobacco tax; and
- the employer health tax.
PST registration requirements on e-commerce services and sweetened carbonated drinks, which had been announced as part of the 2020 Budget, will be delayed. The increase in the carbon tax, which was set to take place on April 1, 2020, will also be delayed. The timing for re-introduction of these measures will be reviewed by September 30, 2020.
Business and light- and major-industry property classes (Class 4, Class 5, and Class 6) will also have their school tax cut in half. The B.C. government has been clear they expect the resultant savings from this measure will pass on to their tenants in triple-net leases.
Student Loan Relief
As of March 30th, all student loan payments will be paused until September 30, 2020.
Deferral of Payments to B.C. Hydro and ICBC
B.C. Hydro customers can defer bill payments or arrange for flexible payment plans, with no penalty. Those experiencing reduced income can defer hydro bills and access the B.C. Hydro Crisis Funds, up to $600.
ICBC will extend deferrals up to 90 days.
Support for Tourism, Arts and Culture Sectors
The Province indicated that it has built in support for the Tourism, Arts and Culture sectors to assist them in surviving, and recovering from, the immediate COVID-19 crisis. Details on this support are to come, but the Province has allocated $1.5 for economic recovery; in particular, to provide stimulus where needed, to encourage investment and develop B.C.’s competitiveness.
PRINCE EDWARD ISLAND
Job Protection Measures
The Government of PEI has committed to providing funding of $25 million to its Emergency Contingency Fund in an effort to support PEI workers affected by the COVID-19 pandemic, including individuals who are self-employed and small business owners.
The Province has initiated the Emergency Income Relief for the Self-Employed program, through which eligible applicants may access maximum funding of $500 per week for the period of March 16 to March 29, 2020. This period will be reviewed as required. To be eligible for this funding individuals must:
- Have declared business income on their most recent tax return.
- Business income must be their primary source of income.
- Be able to demonstrate direct financial losses resulting from the COVID-19 isolation measures at the time of application.
- Not be EI eligible or receiving any other income support (i.e. Business Interruption Insurance).
The Emergency Working Capital Financing program provides working capital financing of up to $100,000 to assist small businesses in PEI during this unprecedented disruption to business caused by the COVID-19 pandemic. Loans under the program are subject to a fixed interest rate of 4% per annum.
For an applicant to be eligible for assistance, the following criteria must be met:
- Existing small businesses (start-ups not eligible) located and operating in the Province of PEI, and have been generating revenue on PEI
- Registered to conduct business within the Province of PEI
- The applicant has a satisfactory credit rating and must not have any defaulted outstanding debt obligation on file in the Province’s Central Default Registry
The details of the loan are as follows:
- Up to a maximum of $100,000 per company
- The loans will bear interest at fixed rate of 4% per annum, commencing at first disbursement and accruing during the term of the loan.
- Repayment of this loan will commence 12 months after the first disbursement, with the balance outstanding to be repaid over the remaining 5 year period (for a total term of 6 years).
- Loans are secured by:
- Promissory Note for the full amount of the loan
- Personal guarantees of the business owner(s)
- General Security Agreement
- No application fee
PEI has also initiated the Emergency Relief – Worker Assistance Program, a temporary program which will provide financial support to employers to assist their workers who have been impacted by reduced hours at work as a result of the COVID-19 pandemic. The program is available to registered private sector businesses in PEI that employ workers who have experienced a reduction of at least 8 hours per week during the two week period of March 16 to March 29, 2020.
Employers who meet the program criteria are eligible to receive a maximum of $250 per week, per worker that has experienced the minimum required reduction of 8 hours per week. Employers will receive a 50% advance upon approval of their application, and the final 50% will be provided upon receipt of payroll verification.
Self-Isolation Support Program
Saskatchewan has implemented the Self-Isolation Support Program, which will provide $450 per week, for a maximum of two weeks to residents forced to self-isolate that are not covered by federal support measures. The Program is anticipated to cost a total of $10 million, and will mostly benefit self-employed residents of Saskatchewan meeting the following eligibility criteria:
- They have contracted COVID-19 or are showing symptoms;
- They have been in contact with an individual infected with COVID-19;
- They have recently returned from international travel and have been required to self-isolate;
- They are not eligible for compensation including sick leave, or vacation leave from their employer
- They do not have private insurance covering such disruptions
- They are not covered by other programs such as federal employment insurance that has been updated.
PST Remittance Deferral
Effective March 20, 2020, Saskatchewan businesses who are unable to remit their PST due to cash-flow concerns will have relief from penalty and interest charges. Over the course of three-months, the government estimates a potential deferral of up to $750 million in PST collections. Businesses that are unable to file their provincial tax return(s) by the due date may submit a request for relief from penalty and interest charges on the return(s) affected.
At this time, audit program and compliance activities have been suspended to allow businesses time to focus on the health and safety of their customers and staff, reduce impacts to their business operations, and minimize the spread of the virus through reduced audit travel.
Business Support Measures
As of March 20, 2020, the Government of Nova Scotia has committed to invest $161 million to address cash flow and access to credit needs for small and medium-sized businesses in the province.
The province’s Small Business Loan Guarantee Program has been adjusted to provide the following:
- deferring principal and interest payments until June 30
- enhancing the program to make it easier for businesses to access credit up to $500,000
- for those who might not qualify for a loan, the government will guarantee the first $100,000
The province has deferred the following payments until June 30, 2020:
- all government loans, including those under the Farm Loan Board, Fisheries and Aquaculture Loan Board, Jobs Fund, Nova Scotia Business Fund, Municipal Finance Corp. and Housing Nova Scotia.
- small business fees, including business renewal fees and workers compensation premiums (a list of fees will be posted online early next week)
Further measures taken by the Government of Nova Scotia include:
- small businesses which do business with the government will be paid within five days instead of the standard 30 days
- ensuring more Nova Scotians can access the internet to work from home, by providing $15 million as an incentive to providers to speed up projects under the Internet for Nova Scotia Initiative and complete them as soon as possible
Planning is currently under way to help support Nova Scotia’s fishing and aquaculture industries. The government loan deferrals referenced above apply to the fishing and aquaculture industries, but further measures are expected to specifically support these industries.
On March 20, 2020, the Government of New Brunswick tabled various measures aimed at helping support businesses, as follows:
- WorkSafe NB is deferring premiums for businesses for three months
- Late penalties for business property taxes (due by May 31, 2020) may be waived if the business suffered undue financial challenges due to COVID-19
- The Department of Post-Secondary Education, Training and Labour is creating critical sector adjustment committees to help minimize the impact of business closures, and to mitigate the impact across the Province.
Further measures taken by the Government of New Brunswick to help the provinces businesses are as follows:
Deferral of Interest Payments and Principal Payments on Existing Loans
On a case by case basis, the Government of New Brunswick will be deferring loan and interest repayments for up to six months on existing provincial loans. This assistance is available to any business that has a loan with an existing Government of New Brunswick department.
Operating Loans for Small Businesses
In support of the province’s small businesses, the Government of New Brunswick is providing operating loans up to $200,000, with no interest payments in the first 12 months.
Working Capital Injection for Mid-to-Large Employers
Upon request from the province’s mid-to-large size employers (not defined), New Brunswick will provide working capital in excess of $200,000 to help employers manage the impacts of COVID-19.
NEWFOUNDLAND & LABRADOR
Job Protection Measures
In conjunction with measures taken to ensure that Newfoundland residents will self-isolate upon return to the province following travel outside of Canada, the province has committed to provide compensation to private sector employees that are unable to work to provide continuation of pay. Details on the program are yet to be released. Provincial public sector employees affected by self-isolation requirements will continue to be paid as usual.
We will continue to update our clients with information as soon as it becomes available. If you have any questions about this topic, other COVID-19 related questions, or would like assistance with developing and/or reviewing pandemic plans, please do not hesitate to contact a Mathews Dinsdale lawyer, or refer to the Firm’s COVID-19 website resources.