The Government of Canada has introduced support programs for Canadian businesses facing financial hardship as a result of the novel coronavirus (“COVID-19”) pandemic. These programs seek to address the wide variety of issues faced by businesses and self-employed individuals adversely impacted by COVID-19 including retaining employees, avoiding layoffs and/or re-hiring employees; providing access to credit; deferring income tax, sales tax remittance and/or customs duty payments; providing rent assistance; and supporting financial stability. This article addresses federal programs that have been announced to date which are generally available to Manitoba businesses and self-employed individuals; however, it is important to note that there are Federal programs available for specific industries and sectors of the economy over and above those referred to in this article.
Canada Emergency Wage Subsidy (“CEWS”) applications open on April 27, 2020. CEWS will be in place for a twelve-week period, from March 15 to June 6, 2020. CEWS is intended for businesses suffering a significant loss in gross revenues. The subsidy generally covers 75% of an employee’s wages – up to $847 per week – for employers of all sizes and across all sectors who have suffered a drop in gross revenues of at least 15% in March, 2020 and 30% in April and May, 2020. Manitoba employers who meet eligibility requirements for the CEWS are entitled to receive a 100% refund for certain employer contributions to Employment Insurance (“EI”) and the Canada Pension Plan paid in respect of employees who are on leave with pay. https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html
The Temporary 10% Wage Subsidy is a three-month measure that will allow eligible Manitoba employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (“CRA”). Eligible employers include individuals (excluding trusts), certain partnerships, not for profit organizations, registered charities and Canadian-controlled private corporations with an existing business number and payroll account with CRA as of March 18, 2020 who provide remuneration to eligible employees. https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
Work-Sharing (“WS”) is a program that helps Manitoba employers and employees avoid layoffs when there is a temporary decrease in business activity outside of the employer’s control. WS provides EI benefits to eligible employees who agree to reduce their normal working hours a minimum of 10% and a maximum of 60% and equally share available work with other employees in the business. It is a three-part agreement between employer, a unit of employees and the Government of Canada. A WS agreement has to be at least six consecutive weeks long and the maximum duration has been extended from 38 weeks to 76 weeks for employers impacted by COVID-19. https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html#h4.04
The Business Credit Availability Program (“BCAP”) is provided through the Business Development Bank of Canada (“BDC”) and Export Development Canada (“EDC”) who work with private sector lenders to coordinate credit solutions for individual businesses. BCAP is multifaceted and includes loan guarantees for small and medium-sized enterprises and a co-lending program for small and medium-sized Enterprises. BCAP is now available at financial institutions and credit unions. https://www.canada.ca/en/department-finance/programs/financial-sector-policy/business-credit-availability-program.html
Canada Emergency Business Account (“CEBA”) provides interest-free loans of up to $40,000 to small businesses and not-for-profits businesses, to assist in covering their operating expenses during a period where their revenues have been temporarily reduced. To be eligible, these businesses will need to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019. Applications for CEBA are made at the businesses’ financial institutions and credit unions. https://ceba-cuec.ca/
Manitoba rural businesses and communities can contact the Western Economic Diversification (“WD”) for business support for entrepreneurs, innovation funding and support, funding for not for profit organizations and community support. The Federal Government is providing $287 million to support rural businesses and communities by providing them with access to capital through the Community Futures Network. https://www.ic.gc.ca/eic/site/icgc.nsf/eng/h_07662.html
The Industrial Research Assistance Program (“IRAP”) seeks to assist innovative and early-stage businesses. The Government of Canada is investing $250 million to assist innovative, early-stage companies that are unable to access other COVID-19 business supports. IRAP provides advice, connections, and funding to help Canadian small and medium-sized businesses increase their innovation capacity and take ideas to market. https://nrc.canada.ca/en/research-development/research-collaboration/nrc-covid-19-programs
Futurpreneur Canada provides assistance to young entrepreneurs. The Federal Government is providing $20.1 million in support for Futurpreneur Canada to continue supporting young entrepreneurs across Canada who are facing challenges due to COVID-19. The funding will permit Futurpreneur Canada to provide payment relief for its clients for up to 12 months. Futurpreneur Canada also provides mentoring, how-to and templates and networking opportunities. https://www.futurpreneur.ca/en/
Small and medium-sized Manitoba businesses unable to access other support measures may be eligible for financing through WD. The Government of Canada has invested $675 million to support to small and medium-sized Manitoba businesses that are unable to access other COVID-19 business supports. https://www.ic.gc.ca/eic/site/icgc.nsf/eng/h_07662.html
The Federal Government is allowing businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 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. Extensions for filing include individuals, corporations, trusts, and charities. Https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-filing-payment-dates.html
The Government of Canada is allowing businesses, including self-employed individuals, to defer until June 30, 2020 payments of the GST/HST, as well as customs duty owing on their imports. Any GST/HST payment that becomes owing from March 27, 2020 until May 31, 2020 can be deferred until the end of June, 2020. For GST and customs duty payments for imported goods, deferral will include amounts owing for March, April and May, 2020. H
There is Government of Canada support for self-employed individuals. The Canada Emergency Response Benefit (“CERB”) provides a taxable benefit of $2,000 every 4 weeks for up to 16 weeks to eligible workers who have lost their income due to COVID-19. The CERB is available to workers who meet all of the following conditions: they live in Canada and are at least 15 years old; stopped working because of COVID-19 or are eligible for EI regular or sickness benefits; have not voluntarily quit their job; and had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application. Effective April 15, 2020 eligibility rules for CERB were changed as follows: CERB allows people to earn up to $1,000 per month while collecting the CERB; CERB was extended to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19; and CERB was extended to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19. Applicants to EI should not apply for CERB. https://www.canada.ca/en/services/benefits/ei/cerb-application.html
The Government of Canada announced up to $306.8 million in funding to help small and medium-sized Indigenous businesses, and to support Aboriginal Financial Institutions that offer financing to these businesses. In particular, the funding will allow for short-term, interest-free loans and non-repayable contributions through Aboriginal Financial Institutions, which offer financing and business support services to First Nations, Inuit, and Métis businesses. Financial support for Indigenous businesses will be provided through Aboriginal Financial Institutions, and administered by the National Aboriginal Capital Corporations Association and the Métis capital corporations in partnership with Indigenous Services Canada.
The federal government is providing financial support for federally regulated pension plan sponsors. Specifically, it is providing immediate, temporary relief to sponsors of federally regulated, defined benefit pension plans in the form of a moratorium, through the remainder of 2020, on solvency payment requirements for defined benefit plans.
The Government of Canada is expanding its revised Insured Mortgage Purchase Program (“IMPP”). It will purchase up to $150 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation. https://www.cmhc-schl.gc.ca/en/media-newsroom/news-releases/2020/cmhc-expands-insured-mortgage-purchase-program
The Bank of Canada has acted in several ways to support the economy including lowering interest rates, intervening to support key financial markets and providing liquidity support for financial institutions. https://www.bankofcanada.ca/markets/market-operations-liquidity-provision/covid-19-actions-support-economy-financial-system/
The Office of the Superintendent of Financial Institutions announced it is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets. This action will allow Canada’s large banks to inject $300 billion of additional lending in to the economy.
On April 24, 2020 the Federal Government formally announced the Canada Emergency Commercial Rent Assistance (“CECRA”) program for small businesses that, will seek to provide loans and/or forgivable loans to commercial property owners who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May, and June, 2020.
The Manitoba Government has also implemented a number of initiatives to support Manitoba businesses throughout the COVID-19 and to complement the above noted Federal programs.
The Manitoba Gap Protection Plan (“MGPP”) is a $120 million initiative to support small and medium-sized businesses with a non-interest bearing forgivable loan of $6,000 to businesses that do not qualify under Federal programs. To be eligible for MGPP a business must have been operational on March 20, 2020, have temporarily ceased or curtailed operations as a result of a COVID-19 public health order and been harmed by the health order, be registered and in good standing with the Manitoba Business and Corporate Registry, have not qualified for Federal Government COVID-19 grant support and have an email address and bank account. https://news.gov.mb.ca/news/?archive=&item=47600
On April 24, 2020, the Manitoba Government announced a $120 million plan called the Summer Student Recovery Plan (“SSRP”) to help students find employment over the summer and stimulate the Manitoba economy. Under the SSRP the funds are available to employers to access a seven dollar per hour wage subsidy up to a maximum of $5000 per student for an employment period from May 1 to September 4, 2020. The program is open to Manitoba and International students aged 15-29 and employers can be subsidized for up to five students. Reimbursement for the businesses will come at the end of the summer student’s employment and businesses must have proof of payment for the student’s wages.
In addition, the Manitoba Government has launched a new call centre to help businesses, non-profits and charities to connect with support programs; extended the April and May, 2020 tax filing deadlines for Retail Sales Tax until June 22, 2020 for small and medium businesses with monthly RST remittances of no more than $10,000; not charged interest or penalties for Manitoba Hydro, Centra Gas, Workers Compensation Board and Manitoba Public Insurance (“MPI”); not disconnected customers of Manitoba Hydro and Centra Gas; relaxed ordinary practices on policy renewals and collections at MPI; not charged interest on Manitoba Liquor and Lotteries receivables from restaurants, bars and specialty wine stores; and not charged interest on education property taxes. https://news.gov.mb.ca/news/index.html?item=47380&posted=2020-04-03
For more information:
- Canada’s COVID-19 Economic Response Plan: Support for Businesses https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses
- Answer a few questions to get a personalized list of Federal support https://innovation.ised-isde.canada.ca/s/?language=en
- Manitoba’s COVID-19 Information for Businesses https://www.gov.mb.ca/covid19/business/index.html
Note: this article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Please contact a member of Taylor McCaffrey LLP’s labour and employment law team for answers to specific questions and/or advice.