Dear clients and readers,
I hope you are staying safe and healthy. In an effort to stay connected with you about important financial matters during the COVID-19 pandemic, I’ll be communicating important information that could impact your bank account. I deeply respect your time and will get straight to the point with every message.
Today I am sharing what we know about the Canadian financial aid package, and how to access it. For our American clients and readers, I strongly suggest that you keep a close watch on the state-level relief strategies that are rolling out over the coming days.
GOVERNMENT BENEFITS FOR INDIVIDUALS OUT OF WORK
Employment Insurance (EI). If you were traditionally employed (receiving a T4), and
have lost your job due to no fault of your own, this is the most likely benefit you will receive. All of the regular qualification rules apply for EI sickness benefits. The only change is that the one week waiting period has been removed. The max benefit is $573 weekly. Apply right away to determine eligibility.
The Emergency Response Benefit (available in April). The proposed Canada Emergency Response Benefit (CERB) is a taxable benefit that would provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic. The CERB would be a simpler and more accessible combination of the previously announced Emergency Care Benefit and Emergency Support Benefit.
The CERB would cover Canadians who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19, as well as working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures. The CERB would apply to wage earners, as well as contract workers and self-employed individuals who would not otherwise be eligible for Employment Insurance (EI).
Additionally, workers who are still employed, but are not receiving income because of disruptions to their work situation due to COVID-19, would also qualify for the CERB.
For the above benefits, apply through the CRA My Account secure portal, through a My Service Canada Account or by calling a toll-free number the government plans to introduce, which will be equipped with an automated application process.
Note that there will also be a temporary boost to the Canada Child Benefit and GST payments for Canadians who already receive these benefits.
FOR SMALL BUSINESSES
Wage Subsidy. Currently this is only available to corporations and that could change. The subsidy will be equal to a maximum of 75 per cent of remuneration paid during that period. It is calculated when you submit your next payroll remittance or can be claimed at the end of the year. Your tax professional can help you with these calculations.
Corporate Taxes Owing. You can defer income taxes owing from March 18 – August 31 until after August 31, 2020. This will be a big help for the December 31, 2019 year ends that have taxes owing March 31, 2020. There is no deferral for GST or payroll remittances.
Sole Proprietorships. The deadline will still be June 15, 2020, but you will have until September 1, 2020 to pay your taxes.
Interest-free Loans. The interest-free loans will be made available with government backing through commercial banks and can be up to $40,000, if a business repays the loan by the end of 2022, 25 per cent of the loan would be forgiven.
Further details for small business support from the government are available HERE
Laying off staff (permanent or temporary) is inevitable for most small businesses at the moment. As a business owner myself, I believe that transparency is key. If layoffs are a possibility, speak openly to your staff. Let them know where they can find help if they are laid off (see the above section for individuals). Most workers should be able to collect EI or the personal benefits the government is offering.
PAYMENT RELIEF FOR INDIVIDUALS AND BUSINESSES
The big six Canadian banks have committed to working directly with Canadians, and their businesses, to provide temporary payment relief if needed. You’ll need to call your financial institution to work out the details as the banks are assessing eligibility on a case by case basis.
It is my wholehearted belief that we are going to get through this difficult time. But, we need to keep connected on financial best practices and exercise good financial judgement. The number one thing you can be doing to stay financially strong during this time is protect your precious resources. Simply put, cut non-essential spending and redirect that money towards your emergency cushion.
Our team will keep you informed about money matters that will impact your bank account.
In the meantime, we wish you and your family good health.
Missed our last update? Click here to read our personal financial tips during this period of uncertainty.