COVID-19 Update: Support for Businesses

**This details of support for businesses have since changed, please refer to our latest blogpost on the subject of support for businesses here**

Extension of Time to Pay Corporate Taxes
Corporations are being allowed to defer, until September 1, 2020 the payment of any income tax amounts that become owing on or after March 18 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.

Note that this deferment does not apply to any other taxes (payroll withholdings, non-resident withholdings, Part IV tax on intercorporate dividends, etc.) imposed under the Income Tax Act.

Corporate tax returns are still required to be filed within six months after the year-end. There has been no word on whether penalties will be levied on late filed corporate tax returns.

HST Relief
So far, there has been no mention of any relief to filing HST returns or remitting any balance owing. Businesses should continue to file their HST returns on a timely basis and remit any HST owing when due.

Wage Subsidies
Eligible small employers are being given 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.

Please see this related blog post: Temporary Wage Subsidy for Qualified Employers

Issuing Record of Employment
If your employees are directly affected by the coronavirus (COVID-19) and they are no longer working, you must issue a Record of Employment (ROE).

When the employee is sick or quarantined, use code D (Illness or injury) as the reason for separation (block 16). Do not add comments.

When the employee is no longer working due to a shortage of work because the business has closed or decreased operations due to coronavirus (COVID-19), use code A (Shortage of work). Do not add comments.

When the employee refuses to come to work but is not sick or quarantined, use code E (Quit) or code N (Leave of absence), as appropriate. Avoid adding comments unless absolutely necessary.

Extending the Work-Sharing Program

The Government of Canada has put in place Work-Sharing (WS) temporary special measures for employers affected by the downturn in business due to COVID-19. WS temporary special measures are only available to employers either directly or indirectly experiencing a downturn in business due to COVID-19.

WS is an Employment Insurance (EI) program that helps employers and employees avoid layoffs when there is a temporary decrease in business activity beyond the control of the employer. The program provides EI benefits to eligible employees who agree to reduce their normal working hours and share the available work while their employer recovers. The goal of the program is for all participating employees to return to normal working hours by the end of the agreement.

Effective March 15, 2020 to March 14, 2021, the Government of Canada is introducing the following temporary special measures:

a. extend the maximum duration of WS agreements from the current 38 weeks to 76 weeks
b. waive the mandatory waiting period between agreements, and
c. ease recovery plan requirements for the duration of the WS agreement

These measures extend the duration of Work-Sharing agreements by an additional 38 weeks, for a total of 76 weeks. The mandatory waiting period has also been waived so that employers with a recently expired agreement may immediately apply for a new agreement, without waiting between applications and ease Recovery Plan requirements for the duration of the WS agreement.

The employer and the employees (and the union, if applicable) must agree to participate in a WS agreement and must apply together.

The guide to determining whether your business is eligible, and the conditions required to apply can be found through this link:

https://www.canada.ca/en/employment-social-development/services/work-sharing/guide-applicant.html

This program must be applied for through Service Canada.

Establishing a Business Credit Availability Program

The government has established a Business Credit Availability Program (BCAP) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses, through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).

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.

As a first step, businesses in need of credit support should contact their financial institution.

Disclaimer: The COVID-19 tax policies in the above article are changing rapidly as the governments introduce new measures. Certain details have yet to be published. We will aim to update them as soon as they are available.