Finance Minister and Deputy Premier Carole James introduces the provincial government’s COVID-19 Action Plan with Premier John Horgan
The federal government has reached an agreement in principle with the provinces and territories on the Canada Emergency Commercial Rent Assistance program for small businesses
**Updated on April 24. Please check back for further updates as new information becomes available**
As businesses and workers throughout B.C. struggle with plunging revenue and job losses from the COVID-19 pandemic, the federal and provincial governments have stepped up with multibillion-dollar relief efforts. Whether you’re an employer, an employee or an independent contractor, here’s a rundown of income and other support.
Ottawa’s COVID-19 Economic Response Plan includes income support and tax deferrals for individuals, businesses, nonprofits and registered charities. Parliament recently approved a $73-billion wage subsidy.
Canada Emergency Commercial Rent Assistance (CECRA)
The federal government has reached an agreement in principle with the provinces and territories on CECRA, which will lower rent by 75 percent for small businesses, nonprofits and charities affected by COVID-19.
The program, which offers forgivable loans to qualifying commercial property owners, will cover 50 percent of three monthly rent payments from eligible small business tenants that are experiencing financial hardship in April, May and June.
The loans will be forgiven if the property owner agrees to reduce the tenant’s rent by at least 75 percent for those three months—and not to evict them while the deal is in place. The tenant would cover the rest of the rent, up to 25 percent.
To qualify, small businesses must be paying less than $50,000 per month in rent and have temporarily halted operations or lost at least 70 percent of revenue during the pandemic.
CECRA will also be available to nonprofits and charities.
Support for small and medium-sized businesses
On April 17, Prime Minister Justin Trudeau announced that the federal government will give $675 million to regional development agencies across the country and $287 million to support rural business and communities, including providing access to capital through the Community Futures Network of Canada.
The federal government is also giving $20.1 million to Futurpreneur Canada, which offers funding and mentorship for aspiring business owners aged 18 to 39, so it can provide payment relief to its clients for up to 12 months.
The Industrial Research Assistance Program (IRAP), a long-running National Research Council effort that helps small and medium-sized businesses build their innovation capacity and bring ideas to market, will receive $250 million. This funding will assist innovative early-stage companies that can’t access existing business support.
To register your interest in the IRAP Innovation Assistance Program, click here.
Canada Emergency Wage Subsidy (CEWS)
Covering businesses, nonprofits and registered charities, this new subsidy is open to employers of all sizes that suffer a drop in gross revenue of at least 30 percent in March, April or May versus the same period in 2019. The CEWS program will run for 12 weeks, retroactive to March 15. It covers 75 percent of the first $58,700 of an employee’s salary, which works out to payments of $847 a week. The subsidy is based entirely on salary or wages paid, and employers are expected to do their best to top up salaries to 100 percent of the maximum wages covered.
The federal government proposed these improvements to the original CEWS program:
- To measure revenue loss, employers can compare revenue from March, April and May 2020 to that of the same month of 2019—or, to give them more flexibility, to an average of revenue earned in January and February 2020.
- For March, CEWS will reduce the 30-percent revenue drop benchmark to 15 percent, to account for fact that many businesses didn’t start feeling the effects of the crisis until partway through the month.
- Once an employer is eligible for a specific period of the CEWS program, they automatically qualify for the next one. For example, if your revenue fell more than 15 percent in March, you would qualify for the first and second periods of the program, covering remuneration paid between March 15 and May 9. Likewise, an employer with a revenue drop of 30 percent in April would qualify for the second and third periods, covering May 10 through June 6.
- In recognition of the challenges that non-profits and registered charities face in measuring revenue, they can choose whether or not to include government assistance when applying the revenue decline test. Having chosen an approach, an organization must maintain it throughout the program period.
- Employers can measure revenue on the basis of accrual accounting (as it is earned) or cash accounting (as it is received). Once an employer settles on an accounting method, they must stick to it throughout the program period.
- CEWS will compensate employers for contributions to the Canada Pension Plan, Employment Insurance, the Quebec Pension Plan and the Quebec Parental Insurance Plan on behalf of eligible employees on leave with pay due to COVID-19.
10% Temporary Wage Subsidy for Employers
Organizations that aren’t eligible for CEWS may continue to qualify for a temporary subsidy of 10 percent of salary or wages paid from March 18 through June 19. This subsidy maxes out at $1,375 per employee and $25,000 per employer.
Canada Emergency Response Benefit (CERB)
CERB covers people who are facing unemployment; sick, quarantined or in directed self-isolation; and unable to work. It offers a monthly taxable benefit of $2,000 for up to four months to:
- Workers who must stop working due to COVID-19 and don’t have access to paid leave or other income support;
- Workers who are sick, quarantined or taking care of someone who is sick with COVID-19;
- Working parents who must stay home without pay to care for children who are sick or need additional care because of school and daycare closures;
- Workers who still have employment but aren’t being paid because there isn’t enough work and their employer has asked them not to show up;
- Wage earners and self-employed people, including contract workers, who wouldn’t otherwise be eligible or employment insurance.
Work-Sharing program extended
To help avoid layoffs, the federal government is extending the maximum duration of the Work-Sharing program from 38 weeks to 76. The program is available to workers who agree to reduce their normal hours due to developments beyond their employer’s control.
Access to credit
The feds have launched a Business Credit Availability Program (BCAP) to provide $65 billion in support via Business Development Bank of Canada (BDC) and Export Development Canada (EDC). The program, which will roll out in the three weeks after March 27, has three main components:
- The Canada Emergency Business Account, which offers interest-free loans of up to $40,000 to small businesses and nonprofits to help cover operating costs while their revenue has been reduced. To qualify, organizations must demonstrate that they paid between $20,000 and $1.5 million in total payroll in 2019.
- A loan guarantee for small and medium-sized enterprises. EDC is working with financial institutions to issue new operating credit and cashflow term loans of up to $2.65 million.
- A co-lending program for SMEs. BDC is working with financial institutions to co-lend term loans for operational cashflow needs. Eligible businesses can receive loans of as much as $6.25 million.
Support for farmers
The federal government is supporting Farm Credit Canada with an additional $5 billion in lending capacity to producers, agribusinesses and food processors. The goal is to help farmers and processors deal with cashflow problems and lost sales, respectively.
Deferred income tax payments
Businesses can now defer, until after this August 31, payment of any income tax that became owing on or after March 18 and before September 2020. The relief applies to tax balances due and instalments, and no interest or penalties will accumulate during this period.
Deferred sales tax remittance and customs duty payments
Businesses, including self-employed individuals, can defer GST and HST payments until June 30, 2020, along with customs duties owing on their imports. For GST and HST, the remittances covered by the deferral vary for monthly, quarterly and annual filers. For GST and customs duty on imported goods, deferral includes amounts owing for March, April and May.
The provincial government’s COVID-19 Action Plan includes $5 billion in income support, tax relief and direct funding for people, businesses and services, according to a recent press release from Premier John Horgan’s office.
The plan, which builds on the federal government’s COVID-19 economic plan, dedicates $2.8 billion to help people and fund the services they need during the crisis. Another $2.2 billion will provide relief to businesses and help them recover after the pandemic.
B.C. Business COVID-19 Support Service
This new service, operated by Small Business BC, offers a single point of contact for businesses with questions about support from the provincial and federal governments, industry and community partners. Advisers will be available six days a week by phone in several languages, and there’s a call-back feature to help manage high volumes.
B.C. Emergency Benefit for Workers
For anyone whose ability to work has been affected by the crisis—including workers who have been laid off, those who are sick or quarantined, and people caring for children and sick family members—there’s a tax-free B.C. Emergency Benefit of $1,000. This benefit is a one-time payment for British Columbians receiving federal employment insurance or the new Canada Emergency Response Benefit (see above) as a result of COVID-19. Workers receiving the benefit can be EI-eligible or not, so it covers the self-employed.
As of April 1, the COVID-19 Action also included several provincial tax changes. Click here for updates.
Deferred tax payments
The provincial government has extended the deadline for these taxes until September 30:
- Employer health tax on businesses with payroll over $500,000
- Sales taxes: provincial sales tax (including municipal and regional district tax on short-term accommodation), carbon tax, motor fuel tax and tobacco tax
Delayed 2020 budget PST changes
The government has also postponed these two tax changes announced in its 2020 budget:
- Eliminating the PST exemption for sweetened carbonated drinks
- Expanded PST registration requirements for e-commerce
Delayed carbon tax increase
Until further notice, carbon tax rates will remain as is. The province has also postponed a tax measure in the 2020 budget aligning carbon tax rates with the federal carbon pricing backdrop.
Reduced school tax rates for business
The provincial government has further reduced the school property tax rate for commercial properties. The result is an average 25-percent reduction in the total property tax bill for most businesses, for a total of as much as $700 million in relief. This enhances the 50-percent school property tax break previously announced for classes 4, 5, and 6.
Enhanced B.C. climate action tax credit
In July 2020, thanks to this one-time payment—which boosts the regular climate action tax credit—as many as 86% of British Columbians will get extra money. Eligible families of four will receive up to $564, while eligible individuals will receive up to $218.
For more details on provincial support for businesses and workers, click here.