With the COVID-19 pandemic being an on-going issue that continues to impact Canadian businesses, the federal government has created a new subsidy program and made some changes to their existing COVID-relief programs.  Please see below for details:

Canada Emergency Business Account (CEBA): 

Launched in April, 2020, the CEBA program provided up to $40,000 in interest-free loans to small businesses and not-for profits to finance expenses that could not be deferred.    If the loan is repaid on or before December 31, 2022, then 25% of the loan will be forgiven.

What has changed?

  • Businesses that did not have a business bank account as of March 1, 2020 can now apply
  • The application deadline has been extended to December 31, 2020
  • The support is being expanded from $40,000 to $60,000 with 50% of the additional $20,000 loan amount being forgivable, if repaid on or before December 31, 2022.
  • The expanded support will be available to all previous and new CEBA applications
  • This expansion is now available to apply for.  Contact your bank for more information, or let us know if you have ay questions.

Canada Emergency Rent Subsidy (CERS):

This is a new subsidy program for businesses, non-profit organizations and charities that have experienced a drop in revenue due to COVID-19.   Both renters and property owners may apply.

Who can apply?

  • Those who meet at least ONE of the following:
    1. Had a CRA businesses number as at September 27, 2020
    2. Had a payroll account on March 15, 2020 or another person or partnership made payroll remittances on your behalf
    3. Have purchased the business assets of another person or partnership who meets the 2 conditions above, and have made an election under the special asset acquisition rules Learn more about the special asset acquisition rules on the CEWS FAQ page
    4. Meet other prescribed conditions that might be introduced (none at this time)

And,

  • Are an eligible business, charity or non-profit

Eligibility Criteria

  • Experienced a drop in revenue
    1. There is no minimum drop required to qualify
    2. The rate your revenue has dropped is only used to calculate the subsidy you will receive for the qualifying periods

And,

  • Have eligible expenses respecting Qualifying Property used in the course of ordinary business activities
    1. Renters
      • Rent, including rent based on percentage of sales and other related expenses in a net lease.  Rent expenses cannot total more than $75,000 per location and $300,000 per entity per period.
      • You cannot include:  GST, damages, interest or penalties.
    1. Owners
      • Property taxes
      • Property insurance
      • Interest on commercial mortgages
      • Payments made to non-arm’s length entities are not eligible

How much is the subsidy? 

The subsidy amount depends on the reduction in revenue experienced by the business.  See the chart below for how to calculate:

REVENUE LOSS RENT SUBSIDY CALCULATION
Up to 50% CERS = Revenue loss percent x 0.8
Between 50% and 70% CERS = 40% + (1.25x(revenue loss – 50%)
70% and greater CERS = 65%

Businesses that were required to shut down due to a public health other are eligible for maximum 90% subsidy.

How to apply:

Apply through your CRA online account.   Step by step instructions available here:  https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy/cers-how-apply.html  The application is currently open for the period September 27 to October 24, 2020.   The next period (October 25 to November 21) will be open for applications on November 30.

A CERS application must be filed no later than 180 days after the end of a claim period.

See the Government of Canada site for more information:  https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy.html

Canada Emergency Wage Subsidy (CEWS):

An employer who has experienced a drop in revenue due to the COVID-19 pandemic may be eligible for a subsidy to cover part of its employee wages, retroactive to March 15th. This subsidy helps businesses re-hire workers and/or prevent further job loss.

What has changed? 

In November, the Canadian government made the following changes:

  • The subsidy is extended until June, 2021
  • The maximum subsidy rate for Periods 8 to 10 will remain at 65% (40% base rate + 25% top up)
  • Beginning in Period 8 the top-up rate and base rate are now calculated using the same one-month revenue drop
  • The deadline to apply is January 31, 2021 or 180 days after the end of the claim period, whichever comes later
  • Starting in Period 9, the calculation for employees on leave with pay now aligns better with EI benefits
  • You can now calculate pre-crises pay (baseline remuneration) for employees who were on certain kinds of leave retroactive to Period 5. Click here for more info: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-who-employees.html#baselineremuneration

If you have any questions about eligibility, or would like our office to assist with assessing eligibility and  preparing application(s) on  your behalf, do not hesitate to contact us at 204-949-9113.

FHB & Co.