Top 3 Government Programs Assisting Canadians Financially Against COVID-19

The Ontario Premier just announced that we’re extending the lockdown until mid May.  All non-essential services are not allowed to be open until then. 

I’m not sure about you, I’ve also been feeling a bit paralyzed.  

We’re trying to contribute and we’re trying to give back.  As an accountant, the easiest thing I can do is to share what I know about the government programs available to help all of you out there.  

I follow all the new government funding and subsidies available to help Canadians.  I’ll share what I know and help interpret some of these new programs to real estate agents and real estate investors. 

For Individual Taxpayers, including Tenants:

Canadian Emergency Response Benefit $2,000 a month

• It was open for registration last week.  Here’s a video to walk you through how to apply for it.  Super easy process. 
• You must re-apply for every period.  This is in a way like claiming Employment Insurance.  If you earn self-employed income or employment income again, you may get disqualified to claim this $2,000 a month benefit. 
• $2,000 is a taxable benefit.  You will need to pay tax on this $2,000 taxable benefit when you file your personal income tax for 2020. 
• You must declare that you’re receiving less than $1,000 monthly employment income or self-employment income or government maternity/parental leave benefits (this was released April 15 in Justin Trudeau’s speech) OR you must stop working for 14 consecutive days in your initial application.

• To qualify, you had to earn at least $5,000 employment income or self-employed income in 2019 or within the last 12 months.  
• If you are subsequently determined to be ineligible (after you get the money), you will be required to repay the benefit. 
• You can apply online via MyCRA account or call 1-800-959-2019 or 1-800-959-2041

For businesses:

Canada Emergency Business Account $40,000 interest-free loan 

• Available for small business owners who have payroll over $50K to $1M 
• Small business owners include sole-proprietorships and partnerships.  You do NOT need to be a corporate owned business to qualify.  
• You do, however, need to prove that your business paid a minimum of $50K in T4 income to your employees in 2019 to qualify.  
• You can apply through your business bank.  In other words, if you have a regular personal chequing account with a bank, chances are, you won’t qualify.  You need to have an ACTIVE business chequing/operating account with the Lender on or prior to March 1, 2020. 
• It is interest free until December 31, 2022
• If you repay before December 31, 2022, you will only repay $30,000.  $10K is forgiven. 
• Here’s a quick Youtube video to show you how I applied for this loan. 

Canada Emergency Wage Subsidy 75% 

• To qualify for the subsidies, your business must demonstrate a decline in revenue.  You can calculate revenue decline using cash or accrual basis.  
• Based on the chart below (posted from Canada.ca website), if you have a decline in revenue between March 2020 and March 2019 over 15% (OR a decline of over 15% in revenue between March 2020 and the average of January & Feb 2020 ), you would qualify for wage subsidy Period 1 and Period 2.  
• To qualify for Period 3, it is safe to say that you need to have a decline in revenue in April 2020 over April 2019 by 30% (or decline in revenue in April 2020 over the average of January & February 2020) OR you have a decline in revenue in May 2020 over May 2019 by 30% (or decline in revenue in May 2020 over the average of January & February 2020)
• Admittedly, it can be somewhat misleading.  Just on the safe side, make sure you follow the criterion set out on the website.  Also speak to your accountant specifically about your situation.

• The cap per employee is $847 in subsidies per week.  Even if you have a higher paying employee, the maximum you can get under this program is $847.
• Application will be open in the next couple of weeks – stay tuned for the application process Youtube video. 
• Application will be available on My Business Account portal via CRA’s website
• It’s worthwhile mentioning, you cannot add a non-arm’s length person as your employee now.  If you hire your family members before March 15, this subsidy will apply to them. If you hire them subsequently, these subsidies will not apply. 

Temporary 10% Wage Subsidy

• If you don’t qualify for the 75% wage subsidy (i.e. you are not able to show the drop of revenue), you will still qualify for the 10% wage subsidy if you are an employer. 
• As long as you have a payroll account (i.e. including couples who have nannies on payroll), you are eligible for the 10% wage subsidy, provided that you have a payroll account with CRA on March 18, 2020. 
• You can qualify for $1,375 per employee up to a maximum of $25K total per employer. 
• No application is required.  Simply reduce the amount of source deduction you need to send to CRA on a monthly basis. 
• You may qualify for both 75% wage subsidy and this 10% wage subsidy but you can only claim the 75% one.  

As a business owner, you may also consider apply for the work-sharing program.  In short, this program pays for a portion of the employee’s income via EI and you pay for the portion you’re working on.   You will need to submit an application 10 calendar days prior to the requested start day.