The long awaited press conference from Finance Minister Bill Morneau took place on April 1.
Not a lot of good news – unanswered questions.
1. More information did come out about the Canada Emergency Response Benefit (CERB) for individuals.
2. The one thing that Finance Minister said today is that they are developing and implementing programs in weeks, that typically would take a year or two. So they aren’t going to be perfect. They will not have thought of every single scenario. And unfortunately, they aren’t going to be able to help every single business. There are going to be some business casualties as a result of this COVID-19 Pandemic.
Temporary Wage Subsidy
This program is unchanged. It represents 10% of the gross wages that you pay in a pay period and provides you with immediate cash relief by reducing the source deductions that you have to remit to CRA.
Canada Emergency Wage Subsidy (CEWS)
Please take note that Trudeau has called Parliament to return. This program is still not passed into law, and so all information is still preliminary.
New Announcements today:
– The earliest that any funds will be available for this program is 6 weeks
– It will be retroactive to March 15th, 2020
Program Detail Recap: Federal subsidy to pay 75% of employee wages for up to 3 months up to a max of $847/week/employee
– The 75% subsidy is based upon what is actually paid to the employee (this is the first time we’ve heard this)
– Business, Charity or Not-for-Profits
– Businesses experiencing at least a 30% revenue reduction resulting from the COVID-19 pandemic will be eligible
– The revenue comparison period is over prior year (ie.March 2020 vs. March 2019) for March, April, and May
– It was mentioned that if the business did not have March 2019 comparatives (ie. a startup), they are trying to determine other comparative options such as month over month comparatives. This determination is not definitive.
– There will be an online portal on the CRA website through which to apply
– The portal will become available in the next 3 weeks to apply
– The payment to the business will be provided through direct deposit
– Attest that you are doing everything you can to pay the 25% top up
– You need to re-apply every month to collect
– It was reinforced as well that they are approaching the funding as pay first and police later. But they will be heavily policing these subsidies to ensure that businesses are not taking advantage of the system, and there will be stiff consequences for those that do take advantage
The biggest takeaways:
– There is going to be a cash crunch with businesses over the next 6 weeks that still have employees but haven’t laid off employees
– There is no short term fix for those employees that have been laid off already.
– The indications from government are to use the $40K line of credit Canada Emergency Business Account (CEBA) – to get businesses through until the subsidy is received. Still no portals to apply for the CEBA.
– Unclear as to whether this will be a taxable subsidy for the business – the 10% TWS was, so it’s likely that this could be as well
– This was mentioned, but again not confirmed: the business has to prove that they paid the employee 75% of their wages. It is unclear as to how this would work for those businesses that have no revenue and cannot cash flow the payment of the employees without the subsidy
– If you don’t currently have direct deposit set up with CRA, do it now through CRA My Account. Prime Minister Trudeau suggested it today in his conference and the site went down because of the volume of visitors. So I would recommend it be done now, rather than 3 weeks from now when everyone else will be trying to do it.
– No answers for those businesses who primarily have contractors. All language so far is that it is for employees. Independent contractors would have to apply for the CERB.
Canada Emergency Response Benefit
Some additional details emerged on this program. New or clarifying details only denoted below.
– Payment of $2000/month, paid monthly Starts April 6th
– Payment to be received in 3 business days for Direct Deposit, 10 business days by cheque
– Minimum Age of 15
– Stopped working because of COVID-19 or are eligible for EI or sickness benefits
Earned $5000 in income in 2019 or 12 month period prior to application
– Self employment and/or Maternity/Parental Benefits can be included
If you expect to be without income for at least 14 consecutive days
– If you are already collecting EI, you cannot collect CERB
Application Process (from April 6th):
– Inside CRA My Account – COVID-19 Banner to apply
– Toll Free number- 1-800-959-2019
– Will need to apply and confirm eligibility every 4 weeks
– If you have already applied for EI but have not started receiving benefits, your application will automatically be transferred over to the CERB program.
– They have staggered application dates based upon the month of your birth to prevent the website from crashing