March 20, 2020

RE: Financial Action Plan Required: COVID-19

Further to our recent communications respecting employment-related matters, please find below information to assist you with immediate financial concerns, both for your business and personally.

The economic impact of COVID-19 has quickly become widespread across Canada and in particular Manitoba as evidenced by a declaration of a state of emergency in our province by our Premier today: (https://www.cbc.ca/news/canada/manitoba/manitoba-covid-19-updatefriday-1.5504177?fbclid=IwAR2xzj7qadjvcfqtPL07Bsc7EJsHA4rVoeNcR1k0-eTKnmAHTB3wQqtcoSM.) As you are well aware, almost all businesses and individuals are experiencing, or are expected to experience unprecedented financial hardships as a result of reductions in workforce (social distancing), a decrease in business and potential supply chain limitations.

F.H. Black & Company is dedicated to providing our clients with our unwavering support by supplying you with up-to-date information and advice to help you and your businesses financially weather the storm of the COVID-19 outbreak. For business owners, whether or not your business is currently experiencing a decline in operations, it is imperative that you review and assess your current and future projected revenues, expenses and cash flows for a period of not less than 4-6 months. The results of this assessment may cause you to reconsider some or all of the following aspects of your business:

  • Types of products/services currently being offered, whether there are other areas in which you can better serve your customers, or how current offerings can be provided to customers in a different way;
  • Level of staffing required to achieve the projected revenues; and
  • Cost-cutting measures available.

If cash flow shortages are anticipated, immediate action should be taken to the extent possible, with a view to retaining your business’ financial viability throughout the COVID-19 pandemic. The Government of Canada’s Economic Response Plan, together with Canadian financial institutions and the Canada Revenue Agency, are assisting both businesses and individuals in mitigating their cash flow risk through the following actions:

Access to Credit Facilities through the Business Credit Availability Program (BCAP)

  1. Business Development Bank of Canada will offer the following relief measures for qualified businesses:
    • Working capital loans from $100,000 up to $2 million at a reduced/discounted interest rate of 3.3%, with flexible terms and payment postponements for up to 6 months;
    • Postponement of payments for up to 6 months, free of charge, for existing BDC clients with total BDC loan commitment of $1 million or less;
  2. Export Development Canada (EDC) will offer Canadian exporters access capital.

Additional details regarding the Business Credit Availability Program (BCAP) to follow in the coming days.

Flexible Financing Repayment Solutions and Mortgage Default Management Tools

  1. Large Canadian banks will provide flexible financing repayment solutions to customers, on a case-by-case basis. Relief measures include up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit products.
  2. The Canada Mortgage and Housing Corporation (CMHC), other mortgage insurers and lenders will assist homeowners experiencing financial difficulty through payment deferral, loan re-amortization, and capitalization of certain expenses.
  3. The Bank of Canada has cut the borrowing interest rate to 0.75% to help ensure that financial institutions can continue to extend credit to both households and businesses.

Changes to CRA Administered Programs and Deadlines

Businesses

  1. A three-month wage subsidy for small businesses equal to 10% of remuneration paid during that period (maximum of $1,375 per employee and $25,000 per employer) will be available. To immediately participate in this subsidy, businesses can reduce their remittances of income tax withheld on employee remuneration.
  2. A Worksharing Agreement with the Government of Canada will be available. The program is designed to help small businesses share wage expenses with support from the federal government. EI benefits will be provided to help cover the wage shortfall that resulted from the reduction in working hours. Instead of laying off employees fully, you can keep them employed on a reduced workweek basis so that your business continues to function during this downturn.
  3. Payment of corporate income tax (Part I), including tax balances due and instalments, that become owing between March 18th and August 31, 2020, may be deferred until after August 31, 2020 without incurring interest or penalties.

Individuals

  1. Access to an Emergency Care Benefit providing up to $900 bi-weekly, for up to 15 weeks for workers, including self-employed, who are:
    • a. quarantined or sick with COVID-19 but do not qualify for EI sickness benefits
    • b. taking care of a family member who is sick with COVID-19 but do not qualify for EI sick benefits
    • c. parents with children who require care or supervision due to school closures, and are unable to earn employment income, whether they qualify for EI or not.
    • Applications for this benefit will be available in April 2020 through CRA MyAccount, My Service Canada Account, or by calling a toll free number (TBD).
  2. A one-time special Goods and Services Tax Credit (GSTC) payment will be available in May 2020, resulting in additional income to those who benefit from the GSTC credit by $400 for single individuals and $600 for couples.
  3. A one-time increase to the maximum annual Canada Child Benefit (CCB) payment amount for the 2019/2020 year. Families collecting CCB will receive an additional $300 per child in May 2020.
  4. Payment of personal income tax (Part I), including tax balances due and instalments, that become owing between March 18th and August 31, 2020, may be deferred until after August 31, 2020 without incurring interest or penalties.
  5. Personal tax filing deadline (for non self-employed individuals) has been extended from April 30th to June 1, 2020. Note: we encourage you to proceed with filing your personal income taxes by April 30, 2020 to ensure that any refunds due to you will be received in a timely manner, and that GSTC and CCB benefit entitlements for the 2020/2021 year are properly determined.

Note: the CRA does not expect to have further details available respecting the above proposed measures and how they will be administered until some time next week.

We understand that there is a lot of information to process and a lot of decisions to be made, both from a business and personal perspective. As a starting point, we strongly recommend that you reach out to your financial institutions as soon as possible to understand the relief measures available to you and your business, as well as the information that is required to be prepared and provided to the bank to facilitate this rearrangement.

As always, we are ready to work with you in any way that we can to help stabilize your personal finances and secure your business both operationally and financially.

Please contact us by phone or email should you require further information, or for guidance in managing your business through the COVID-19 pandemic.

• Harry Black, Managing Partner 204 230-9078

• Susan Black, Director of HR 204 996-8716

• Cari Franco, Director of Public Practice 204 999-3425

• Jordan Blahnik, Director of Accounting 204 990-6400

• Renee Rocan, Director of Audit & Assurance 204 297-8244

We will continue to provide you with information as it is released. Thank you for your continued business.

 

Stay safe and healthy.

Sincerely,

Harry Black, FCPA, FCMA

Managing Partner