This article was reviewed by Jay Brecknell, CFP®.
Federal Government Help for Business Owners
Earlier this week the federal government announced they are rolling out a new Canada Emergency Wage Subsidy program for businesses. We have been waiting for further details on how to qualify for this benefit. The wage subsidies are intended to enable business owners to continue paying their employees instead of laying them off, even if their business is unable to operate during this challenging time.
While it’s still unclear when applications for the Canada Emergency Wage Subsidy will become available, employers will need to apply via their CRA My Business Account portal. For more info, click here
What’s the criteria and who is eligible to apply?
- Your business has experienced a 30% drop (or more) in arms-length revenues compared to the same period last year (For example March 2020 vs March 2019 revenues)
- Provides up to a 75% wage subsidy for the first $58,700 of salary per employee
- Up to a maximum of $847/week for employees who may otherwise have been laid off
- Employers are expected to fund the remaining 25% salary out of their own pocket if possible
- Available to employers for up to 12 weeks, retroactive to March 15th
- Any size business can apply, including charities and non-profits (public employers such as municipal and local governments, Crown corporations, universities, schools and hospitals will not be eligible to apply)
- If combined with the 10% wage subsidy, the maximum allowable subsidy will still equal 75%
- Wage subsidies received will be considered taxable income for the business
- Employees receiving the CERB or regular EI benefits will not be eligible to receive subsidized wages for the same period (i.e. no “double dipping” allowed)
Employers who do not qualify for the 75% Canada Emergency Wage Subsidy may be able to take advantage of the Temporary Wage Subsidy of 10% announced on March 18th. This temporary subsidy allows employers to reduce the amount of payroll deductions they would normally remit to CRA.
In addition, a new Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and charities in order to help cover operating costs during this period of uncertainty. Organizations with a total payroll between $50,000 to $1 million for 2019 should qualify. Even better, 25% of each loan (up to $10,000) will be eligible for complete forgiveness.
For more information about these initiatives aimed at helping business owners and employees, go to https://www.canada.ca/en/department-finance/economic-response-plan/covid19-businesses.html
See our article on Canada Emergency Response Benefit (CERB)