Helping small businesses navigate government programs during the COVID-19 crisis 

With the widespread repercussions of the COVID-19 pandemic, many small businesses are looking to professional accountants for guidance (Getty Images/Anchiy)

COVID-19 is taking an ever-more devastating economic toll, especially on small businesses and their employees. Closures, reduced hours, layoffs—businesses are doing the best they can to navigate the unknown. But the situation is already proving difficult for many.

As Jasmin Guénette, VP of national affairs at the Canadian Federation of Independent Business, points out, “According to our most recent survey, only 20 per cent of small businesses are fully open and 39 per cent are worried about permanent closure.”

Governments continue to offer steadily growing measures of financial relief for those affected, so keeping up-to-date is paramount.

CPA Canada remains in constant contact with the CRA and government, relaying members’ feedback and concerns. 

“We are positioned to bring forward issues identified by our members to make the government aware of the challenges faced by tax practitioners and their clients,” says Bruce Ball, CPA Canada’s vice-president, taxation. “CPA Canada is providing resources and information to keep our members informed during these unprecedented times.”

All government announcements with helpful links are posted regularly on a special tax updates page. CPA Canada has also compiled and posted two lists of concerns from members about the COVID-19 tax and employer support measures. Both lists have been shared with the federal government and CPA Canada is working hard to get clarification on each of these points. These summaries can be found here.

Due to overwhelming demand, CPA Canada’s tax group recorded a special webinar on April 3, which garnered over 10,000 views in English and more than 1,000 views in French. The webinar has since been removed because federal government announcements made portions of its content outdated. A second webinar based on updated information and government measures is planned. As more information becomes available, CPA Canada will continue to provide updates and resources for members. You are encouraged to visit the federal government COVID-19 tax updates page for more information.

CPA Canada is also providing other resources to help members help small businesses and others. On the dedicated CPA Canada COVID-19 section you will find a multitude links to helpful information and tools from CPA Canada, provincial CPA bodies and authoritative international sources.

Here is a summary of what has been announced so far.

GOVERNMENT SUPPORT

The federal government has announced a number of measures designed to support individuals, such as the Canada Emergency Response Benefit. It is also introducing several programs that are meant especially for small- and medium-sized businesses. These include measures designed to help them:

• Reduce/defer payments (more time to pay income taxes, as well as a deferral in GST and HST).

• Avoid layoffs (two temporary wage subsidy programs and an extension of the work-sharing program). 

• Gain access to credit (through the Canada Emergency Business Account and the Business Credit Availability Program).

With all of the new programs and changes, here is a recap of what’s been announced, in case you have lost track. (For more on small businesses, see Coping with the COVID-19 crisis: What small businesses can do to survive.) 

INCOME TAX DEADLINES

On March 18, 2020, the federal government announced extensions on several tax deadlines. Further extension-related announcements were made on March 26 and 27. The government’s approach is to shift most filings that were otherwise due after March 18 and before June 1 to June 1, 2020. Specific exceptions apply for trusts, partnerships and NR4s (now due May 1). Also, the deadline was not extended for making claims under the Scientific Research and Experimental Development (SR&ED) program. Income tax payment deferrals were also provided to September 1, 2020. (See CRA’s detailed chart for all income tax deadlines and deferrals.)

GST/HST DEFERRAL

Since its initial March 18 announcement, CRA has also provided more clarification on GST/HST. For GST remittances, the CRA will allow all businesses to defer, until the end of June 2020, any GST/HST payments or remittances that become owing on or after March 27 and before June 2020. And, while it did not extend the filing deadline for GST returns, the CRA does understand the difficulties some taxpayers are facing. As it points out in a Q&A page on GST/HST, “Those who are able to, should continue to file their GST/HST returns on time, reporting their net tax for the reporting period to help facilitate tax compliance and administration. However, recognizing the difficult circumstances faced by businesses, the CRA won’t impose penalties where a return is filed late provided that it is filed by June 30th.”

The Quebec government will apply the same policy for QST returns.

In terms of filing, CRA encourages registrants to file returns electronically if possible. This will help reduce processing delays and may mean that refunds will be received faster. 

WAGE SUBSIDY PROGRAMS

To date, the federal government has announced two temporary wage subsidy programs: a 10 per cent program called the Temporary Wage Subsidy (TWS); and a 75 per cent Canada Emergency Wage Subsidy (CEWS). More changes to the CEWS were announced on April 8, 2020, and there were some significant changes, so be sure to check CPA Canada’s COVID-19 tax update page for more details. 

TEMPORARY WAGE SUBSIDY (TWS)

As Ball, explains in his tax blog, this subsidy was introduced on March 25 with the passage of Bill-C-13. It is available for eligible employers from March 18 to June 19, 2020 and equals 10 per cent of remuneration paid during that period. The TWS is capped at $1,375 per employee and $25,000 per employer.   

On March 25, the Department of Finance Canada released a Notice of Ways and Means Motion that Ball says provides “welcome clarity on how the subsidy will work.” In particular, he says, the Department of Finance Canada made it clear that individuals and partnerships can qualify.   

Ball adds that, on April 1, 2020, the federal government confirmed that the TWS is still available for eligible employers who don’t qualify for the newly introduced 75 per cent Canada Emergency Wage Subsidy (CEWS; see below).

More details on eligibility and how the rules work are available in the blog and on CRA’s FAQ page. Note that this subsidy is claimed by reducing source deductions, not including CPP and EI amounts. 

CANADA EMERGENCY WAGE SUBSIDY (CEWS)

The CEWS would provide a 75 per cent wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020. 

The program was originally announced in late March and the Department of Finance Canada released more information on April 1 and again on April 8. In addition to the Department of Finance Canada backgrounder, be sure to check the CPA Canada tax update page for more information on the changes. 

This subsidy is available to both large and small businesses; partnerships and taxable corporations; and non-profit organizations and charities. 

Employers may be eligible for both the CEWS and the TWS; however, any benefit from the TWS would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy. Note that where an employer qualifies for both programs, the TWS can be claimed now while the CEWS program is being geared up.

Ball adds that employers that do not meet the conditions for the CEWS can claim the TWS, assuming that they meet the conditions for that program. 

Note: All information was accurate at time of publishing. In the meantime, you can check out CPA Canada’s regularly updated COVID-19 resources page, including a compilation of tax updates, external resources and online news articles.

MORE COVID-19 UPDATES

Learn what small businesses can do to survive the impact of the global pandemic. Also, read about what employers and employees need to do to keep everyone at work safe and how to stay clear of scams related to COVID-19. For those working from home, these tips will ensure you stay productive.