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During the COVID-19 pandemic, the Government of Canada and the Province of British Columbia
have introduced a series of relief programs for individuals and businesses.
In our previous article, we discussed personal benefits.
In this article, we will look at the main business support programs:

On the business side, the main federal and provincial measures include:

• The Canada Emergency Business Account (CEBA): $40,000 interest-free loan
• The Temporary 10% Wage Subsidy for employers
• The Canada Emergency Wage Subsidy (CEWS) – 75% wage subsidy
• The planned Canada Emergency Commercial Rent Assistance (CECRA) program,
  expected to be launched around mid-May 2020, providing commercial rent support

1. $40,000 Interest-Free Loan – Canada Emergency Business Account (CEBA)

One of the key eligibility criteria for CEBA is total payroll in 2019.
The business must show, using the 2019 T4 Summary, that its 2019 payroll was between
$20,000 and $1,500,000.

One important point is how these loan funds are used.
Eligible uses include:

• Paying unavoidable operating expenses such as wages and rent
• Other fixed operating costs that cannot be deferred

The funds cannot be used to:

• Repay existing loans or other debt
• Pay shareholder dividends
• Increase compensation for management or owners

We strongly advise against altering your 2019 payroll records in order to qualify for CEBA.
Making retroactive changes to payroll in this sensitive period could create serious compliance risks.

2. Temporary 10% Wage Subsidy

The 10% Temporary Wage Subsidy applies to eligible wages paid between
March 18, 2020 and June 19, 2020.
Eligible employers calculate the subsidy themselves and reduce the amount of
income tax they remit on their payroll deductions.

Key points when calculating this subsidy:

• Maximum subsidy per employee: $1,375
• Maximum total subsidy per employer: $25,000
• The subsidy can only reduce the income tax portion of payroll remittances —
  it cannot reduce CPP (pension) or EI (employment insurance) contributions.

Because the accuracy of the 10% subsidy calculation directly affects the accuracy of the
75% CEWS subsidy, we strongly recommend carefully reviewing the rules
or consulting a professional accountant.

Note that not all employers who pay wages are eligible for the 10% subsidy.
Some businesses whose controlling shareholders are non-residents of Canada
may not qualify as CCPCs (Canadian-Controlled Private Corporations) and therefore do not qualify for this subsidy.

3. 75% Canada Emergency Wage Subsidy (CEWS)

The most important eligibility factor for the 75% CEWS is the decline in business revenue.
If a business experiences a sufficient drop in revenue for March, April, or May 2020,
the government may subsidize 75% of eligible employees’ wages for up to 12 weeks,
from March 15 to June 6, 2020.

Some business owners ask: “What exactly is the required revenue decline percentage?”
There are two different comparison methods for measuring revenue drop,
and there are also two acceptable accounting methods for calculating revenue.
Because of this complexity, we highly recommend consulting a professional to calculate and confirm eligibility.

Another common question: “How do we determine which employees are eligible?”
According to the government’s official guidance, if an employer does not pay an employee
any wages for a period of 14 or more consecutive days within a claim period,
then that employee is not eligible for the 75% wage subsidy for that period.

Interaction Between CEWS and CERB

Because there is a close connection between business wage subsidies and the
Canada Emergency Response Benefit (CERB) for individuals,
employers must be careful.

If an employee is receiving CERB, the employer must be very cautious in deciding whether to apply for CEWS
for that employee.
If the employer claims the wage subsidy for an employee,
that employee cannot receive CERB for the same period.

The CRA has announced that there will be a special code on the 2020 T4 slip
to report wage amounts covered by CEWS.
This will allow the CRA to verify whether individuals also received CERB for the same pay periods.

Employees who were previously laid off or on leave can be rehired retroactively,
and employers may pay them back wages for earlier periods.

However, if those employees already received CERB for that same period,
they will be required to repay CERB after receiving retroactive wages.
In other words, you cannot collect both wage subsidy–funded income and CERB for the same time.
Only one benefit is allowed.

A special reminder: employees cannot refuse a legitimate recall-to-work request from their employer
and still expect to receive CERB.
If an employee chooses not to return to work voluntarily, they may no longer meet the definition of
“involuntarily unemployed,” which could result in losing both their wages and their CERB benefits —
a lose-lose situation.

4. Canada Emergency Commercial Rent Assistance (CECRA)

The Canada Emergency Commercial Rent Assistance (CECRA) program has published some initial details.
Businesses that have ceased operations due to the pandemic, or that have experienced
a revenue drop of 70% or more, and whose monthly rent is under $50,000,
may qualify.

Additional conditions:

• The property owner (landlord) must have a mortgage on the commercial property.
• The government will cover 50% of the monthly rent for April, May, and June 2020.
• The tenant will pay 25% of the rent.
• The landlord must agree to forgive the remaining 25% of the rent for those months.

Effectively, the landlord, the government, and the tenant jointly share the burden of rent for these three months.
This program is expected to launch in mid-May 2020.
We will continue to provide updated information as more details are released — stay tuned.