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  • Kaman Kwok Inc.

Canada's COVID-19 Economic Response Plan for Small Business Owners

Since the early 2020 breakout of COVID-19, the federal government has initiated a series of support measures to assist Canadian small business owners with overcoming this challenging period. In this post, we provide an overview and detail important details on some of the relevant initiatives, which apply to small business owners:

Canada Emergency Wage Subsidy (CEWS)

Canadian employers who have seen a drop in revenue, due to the COVID-19 pandemic, may be eligible to apply CEWS to cover part of the employees’ wages, retroactive to March 15, 2020. This subsidy has been extended to June 2021. The employers can receive up to 75% of eligible remuneration paid, depending on the percentage drop in revenue. The deadline to apply is January 31, 2021, or 180 days after the end of the claim period, whichever comes later. Find out more about whether your business qualifies and the application process here.

Canada Emergency Business Account (CEBA)

CEBA provides interest-free loans of up to $40,000; 25% of which is forgivable if repaid by December 31, 2022, to small businesses and non-profits facing COVID-19 related revenue declines but have ongoing non-deferrable costs, such as rent, utilities, insurance, taxes and wages. Under tax rules, the portion of the loan that can be forgiven is taxable income at the time which the loan is received. The government recently proposed to expand the CEBA to include an additional interest-free $20,000 loan, 50% of which would be forgivable if repaid by December 31, 2022. More information will be released soon.

The deadline to apply is December 31, 2020 through the corporate banks and credit unions. There are two streams under which an organization can apply – the Payroll Stream and the Eligible Non-Deferrable Expense Stream. Find out more about CEBA and your eligibility to apply here.

Canada Emergency Rent Subsidy (CERS)

CERS provides a rent and mortgage subsidy of up to 65% of eligible expenses to qualifying businesses, charities and non-profit organizations. This support is available directly to tenants experiencing pandemic-related revenue declines and the subsidy will cover part of the commercial rent or property expenses. Qualifying organizations that have been significantly restricted by a mandatory public health order issued by a qualifying public health authority can receive an additional 25% of rent support through the Lockdown Support.

CERS and the Lockdown Support subsidies are retroactive to September 27, 2020, until June 2021. The deadline to apply is within 180 days of the end of each claim period. To find out more about the application process and eligibility, please click here.

The best advice is timely - if you have any questions or would like clarity for your tax situation, we are your resource. Find out how we can best support you.

Please note: The details of the initiatives outlined in this article are subject to change as the government continuously reviews the economic impact of COVID-19 on Canadian small businesses. In the coming months, new or revised measures may be set forth to address new or continuing economic issues. Details noted herein reflects our knowledge at the time and date of publication and may no longer be applicable when future changes are introduced.

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