Help for Canadian Small Businesses during COVID-19

Dear To all my dear Canadians,

Small businesses are the heart of the Canadian economy, but many are struggling to make payroll right now as the country takes necessary steps to address the coronavirus pandemic. Our Prime Minister Trudeau and all Premiers must act quickly to protect small businesses, enable small businesses to retain the people they employ – and you can help, by contacting your MP and MPP, and let them know, of your support for small businesses.

As a Chartered Professional Accountant in Public Accounting, serving small businesses and individuals since 1988, I have personally seen two global recessions, 1991 and 2009, thus I came to know the challenges small businesses face and how you can help protecting small businesses.

While there have been some assistance announcements from CRA and the Federal Government, as stated below, some of these helps may be too late for most small businesses.

Based on my direct experience with owners-managed small businesses, one quick and effective way, is for both Federal and Provincial Governments, to issue a Payroll Tax Credit to small businesses’ Payroll Remittances, a Credit may be an average of Company’s LAST 3 months of payroll remittances.

For example, if a small business had the Total Monthly Payroll Remittances, $ 35,000, $ 40,000, $ 45,000 for December 2019, January 2020 and February 2020 respectively, then that business will be issued a Payroll Tax Credit of $ 40,000.

This $ 40,000 Payroll Tax Credit will have an immediate and positive effect, it will enable small businesses to retain critical cash, to pay the fixed overheads, to retain the employees, while having no revenue earned during this lockdown period.

Let’s make sure Canada and small businesses are ready to rebound. I encourage you to contact your MP and MPP today.

Yours Truly

Thomas Tang, LPA, CPA, CGA, B.Comm.

SUPPORTING BUSINESSES

The CRA will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today 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.

COMMENT BY THOMAS: Great News for all Canadians & Businesses, a taxpayer/business owing $ 10,000 will see 5% or $ 500 penalty waived, plus 1% interest for each full month waived, so for 4 full months, May to August, another $ 400 interest will be waived, totalling $ 900 for those who owes CRA, $ 10,000 on April 30, 2020. 

Self-employed and their spouse or common law partner

For self-employed individuals or those who have spouses or common-law partners that are self-employed, the deadline to pay any balance due for your individual income tax and benefit return has been deferred to August 31, 2020, however your income tax and benefit returns still need to be filed by June 15, 2020.

Temporary wage subsidy for employers

As part of the Government of Canada’s commitment to supporting businesses, and in response to the COVID-19 pandemic, the Government announced a temporary wage subsidy for employers for a period of three months. Effective immediately, eligible employers (non-profit organizations, charities, and certain Canadian Controlled Private Corporations) that pay remuneration to an employee, such as salary, wages, or taxable benefits, on or after March 18th and before June 20th, are permitted to reduce remittances of federal, provincial, or territorial income tax by the amount of the subsidy. This measure is only applicable to remittances made to the CRA.

COMMENT BY THOMAS: This subsidy is very critical for all Canadian Businesses who want to keep their employees after the COVID-19 is over. Most Canadian businesses operate under CCPC, Canadian Controlled Private Corporation, the word “Certain CCPC” needs to be clarified, it is not known which type of CCPC are not qualified for this temporary wage subsidy for employers, at the time of this writing.

New Loan and Payments Deferral on existing Loans through BDC and EDC

-Increase the credit available to small, medium, and large Canadian businesses. As announced on March 13, a new Business Credit Availability Program will provide more than $10 billion of additional support to businesses experiencing cash flow challenges through the Business Development Bank of Canada and Export Development Canada. The Government is ready to provide more capital through these financial Crown corporations.

Chartered Banks’ Loan/Mortgage Payment Extensions

The six largest financial institutions in Canada have made a commitment to work with personal and small business banking customers on a case-by-case basis to provide flexible solutions to help them manage through challenges, such as pay disruption due to COVID-19, childcare disruption due to school or daycare closures, or those suffering from COVID-19. As a first step, this support will include up to a six-month payment deferral for mortgages, and the opportunity for relief on other credit products. The Government of Canada will continue to monitor evolving economic conditions and seek greater relief measures should it be necessary.

COMMENT BY THOMAS: Every chartered bank has begun to offer help to individuals and small business clients, please contact your bank, and make a request for an extension of any loan/mortgage that you may have, immediately today.  

SUPPORTING INDIVIDUALS

Filing Deadline Extension

The deadline to file your income tax and benefit return will be deferred until June 1, 2020. The CRA will allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today 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.

Stable Funding, so Lenders Can Keep Lending to Canadians during COVID19

The federal government launches an Insured Mortgage Purchase Program to purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). As announced on March 16, this will provide stable funding to banks and mortgage lenders and support continued lending to Canadian businesses and consumers. CMHC stands ready to further support liquidity and the stability of the financial markets through its mortgage funding programs as necessary.The Government will enable these measures by raising CMHC’s legislative limits to guarantee securities and insure mortgages by $150 billion each.

Support for workers 

Canadians should not have to worry about paying their rent or mortgage or buying groceries because of the COVID-19 crisis. To support workers and their families, the Government of Canada is taking action to:

-Provide additional assistance to families with children by temporarily boosting Canada Child Benefit payments. This measure would deliver almost $2 billion in extra support.

-Introduce an Emergency Care Benefit of up to $900 bi-weekly for up to 15 weeks to provide income support to workers who must stay home and do not have access to paid sick leave. This measure could provide up to $10 billion to Canadians, and includes:

-Workers, including the self-employed, who are sick, quarantined, or who have been directed to self-isolate but do not qualify for Employment Insurance (EI) sickness benefits.

– Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent or other dependents who are sick, but do not qualify for EI sickness benefits.

-EI-eligible and non EI-eligible working parents who must stay home without pay because of children who are sick or who need additional care because of school closures.

-Introduce an Emergency Support Benefit delivered through the Canada Revenue Agency to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment.

-Provide additional assistance to individuals and families with low and modest incomes with a special top-up payment under the Goods and Services Tax (GST) credit. This measure would inject $5.5 billion in the economy.

-Waive, for a minimum of six months, the mandatory one-week waiting period for EI sickness benefits for workers in imposed quarantine or who have been directed to self-isolate, as announced on March 11.

-Waive the requirement for a medical certificate to access EI sickness benefits.

-Extend the tax filing deadline for individuals to June 1, and allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today 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. This measure will result in households having more money available during this period.

-Provide eligible small businesses a 10 per cent wage subsidy for the next 90 days, up to a maximum of $1,375 per employee and $25,000 per employer. Employers benefiting from this measure would include corporations eligible for the small business deduction, as well as not-for-profit organisations and charities.  This will help employers keep people on their payroll and help Canadians keep their jobs.

-Provide increased flexibility to lenders to defer mortgage payments on homeowner government-insured mortgage loans to borrowers who may be experiencing financial difficulties related to the outbreak. Insurers will permit lenders to allow payment deferral beginning immediately.

In addition, to provide targeted support for vulnerable groups, the Government is investing to: 

-Reduce minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25 per cent for 2020 in recognition of volatile market conditions and their impact on many seniors’ retirement savings.

-Implement a six-month, interest-free, moratorium on Canada Student Loan payments for all individuals who are in the process of repaying these loans.

-Provide $305 million for a new distinctions-based Indigenous Community Support Fund, to address immediate needs in First Nations, Inuit, and Métis Nation communities.

-Support women and children fleeing violence by providing up to $50 million to women’s shelters and sexual assault centres to help with their capacity to manage or prevent an outbreak in their facilities. This includes funding for facilities in Indigenous communities.

-Provide an additional $157.5 million to address the needs of Canadians experiencing homelessness through the Reaching Home program.

URL LINKS – Sources of Information
https://pm.gc.ca/en/news/news-releases/2020/03/18/prime-minister-announces-more-support-workers-and-businesses-through

https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html#temporary-wage