The following is a reminder of some important COVID support programs, deadlines and reporting obligations to be aware of. Generally, all assistance from the government is taxable in the period received.
10% Temporary Wage Subsidy
This program relates to wages paid in respect of the period March 18 to June 29, 2020. You can access our full summary of the program here.
Form PD27 10% Temporary Wage Subsidy Self-Identification Form for Employers should be completed by those employers who claimed or wish to claim the Temporary Wage Subsidy. If you have not yet claimed it, CRA advises that it should be completed prior to filing T4’s to avoid exception reports. T4’s are due by the end of February 2021. The form can be accessed here.
Canada Emergency Wage Subsidy (CEWS) – Extension & Deadlines
The federal government provides a subsidy for wages paid to employees where an entity has experienced a decline in revenue. This program began in March 2020 and is extended until June 2021. The amount of the subsidy depends on the percentage by which revenue has decreased (Revenue Reduction Percentage) for each Qualifying Period (four-week periods beginning March 15, 2020).
For Qualifying Periods starting July 5, 2020 the program is available to all entities who have experienced any decrease in revenue, provided all other criteria are met. The amount of the subsidy for these periods will fluctuate depending on the Revenue Reduction Percentage.
The deadline to apply for CEWS depends on the Qualifying Period applied for and is the later of (i) January 31, 2021 and (ii) 180 days after the end of the Qualifying Period, summarized as follows:
|Qualifying Periods||Corresponding Dates||Required Revenue Reduction Percentage||Application Deadline|
|1||March 15 to April 11||≥ 15%||January 31, 2021|
|2 – 4||April 12 to July 4||≥ 30%||January 31, 2021|
|5||July 5 to August 1||> 0%||January 31, 2021|
|6 – 13||August 2 to March 13, 2021||> 0%||180 days after the end of the Qualifying Period|
Generally, when determining the Revenue Reduction Percentage, revenue is calculated based on generally accepted accounting principles but excluding revenue from non-arm’s length parties. However, special elections allow alternative methods which may provide an opportunity to allow certain entities to qualify for the program where they otherwise may not. After June 2020 (beginning in Period 5) there is some added flexibility in the determination of the reference periods for the purposes of calculating the Revenue Reduction Percentage calculations. The CRA online calculator can be accessed here.
Canada Emergency Business Account (CEBA) – Deadline & Additional Funding
The details of an extended CEBA forgivable loan program were announced on December 4, 2020 and our detailed memorandum can be found here.
The deadline to apply for the full $60,000 CEBA loan, or the $20,000 additional loan, is March 31, 2021.
Canada Emergency Rent Subsidy (CERS)
This program that began in October 2020 is embedded in the Income Tax Act and linked with the CEWS legislation. It replaces the more complex Canada Emergency Rent Assistance Program that ended in September 2020.
It provides a refundable subsidy for certain costs incurred where COVID-19 has negatively impacted revenue. It is available to tenants and, in certain circumstances, owners. Read our full summary of the CERS here.
The deadline to apply for CERS is 180 days after the end of the Qualifying Period.
T4 Payroll Reporting Requirements
For the 2020 tax year, in addition to reporting employment income in Box 14 of an employee’s T4 slip, new information codes will be necessary showing employment income for various periods. Additional codes may be added before the February 28, 2021 filing deadline; however, to date CRA has released the following:
- Code 57: Employment income – March 15 to May 9
- Code 58: Employment income – May 10 to July 4
- Code 59: Employment income – July 5 to August 29
- Code 60: Employment income – August 30 to September 26
Ontario Small Business Support Grant
On December 21, 2020, the Ontario government announced assistance for small businesses in the form of a grant of up to $20,000. The assistance is to help compensate for decreased revenue resulting from the recent province-wide shutdown. Applications will be available starting January 2021.
Businesses will be able to use the support in whatever way makes the most sense for them.
To receive the grant, a small business must:
- Be required to close or restrict services subject to the province-wide shutdown effective 12:01 a.m. on December 26th
- Have fewer than 100 employees at the enterprise level
- Have experienced a minimum of 20% revenue decline comparing April 2020 to April 2019 revenues
Businesses that are not eligible include those that were already required to close prior to the introduction of modified Stage 2 measures and essential businesses permitted to operate with capacity restrictions. The restriction for already closed businesses will no doubt result in confusion, criticism and potential reconsideration. Such businesses may also be eligible for Ontario property tax and energy rebates.