[Canada] COVID-19 Relief Updates for Payroll

As updates surrounding COVID-19 continue to develop, the media is reporting on proposed legislation as it relates to payroll. Wave is closely monitoring these updates to give you the most up to date and accurate information. At this point in time, here is what the Canadian government has provided. 

The Canadian Government has provided a tool to help both individuals and businesses understand what benefits are available to meet specific needs. Click here to access this resource.

Prime Minister Justin Trudeau's website provides news releases and updates from him on a day to day basis on different proposals to help businesses and individuals during this time. They are available here.

Table of Contents:

Proposals that could directly affect payroll

May 15, 2020 - Canada Emergency Wage Subsidy to be extended until August 29, 2020.
Adjustments to the program, including the revenue decline, is to be re-evaluated as businesses are re-opening.
Immediately and retroactively, eligibility has been extended to:

  • Partnerships that are up to 50-per-cent owned by non-eligible members;
  • Indigenous government-owned corporations that are carrying on a business, as well as partnerships where the partners are Indigenous governments and eligible employers;
  • Registered Canadian Amateur Athletic Associations;
  • Registered Journalism Organizations; and
  • Non-public colleges and schools, including institutions that offer specialized services, such as arts schools, driving schools, language schools or flight schools. 

Read the latest news release on these approved changes and further proposals: 

There was no mention as to whether or not this will also apply for the ten-percent Temporary Wage Subsidy for Employers. 

April 21, 2020 - Canada Emergency Wage Subsidy application process is said to be opening up on April 27, 2020. 
The CRA has also released a calculator to help you determine what your subsidy amount will be. This can be found here.

April 16, 2020 - Updates to the Canada Emergency Business Account (CEBA)
Eligibility for the CEBA has become more inclusive. Instead of the original requirement of having a total gross payroll in 2019 of $50,000 - $1 million, this is now $20,000 - $1.5 million. CEBA now has an FAQ page that you can read through here
The Prime Minister also mentioned commercial rent loans for small businesses are to come, with more information to follow in the coming days. 
Latest news release:

April 15, 2020 - Updates to the Canada Emergency Relief Benefit (CERB)
New eligibility rules announced to include more individuals in need:

  • Allow people to earn up to $1,000 per month while collecting the CERB.
  • Extend the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.
  • Extend the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.

April 11, 2020 - Bill C-14, the COVID-19 Emergency Response Act, No. 2, has received Royal Assent. This brings it into law.
Here's the latest news:

April 8, 2020 - More information on the Canada Emergency Business Account (CEBA)
CEBA is said to be available tomorrow, April 9, 2020. Businesses are to contact their financial institution directly.

The Canada Emergency Wage Subsidy (CEWS) proposal updates:
The Department of Finance has announced some changes to the CEWS proposal:

  • Eligible businesses will have the option to use January and February of 2020 to compare revenues, instead of year-over-year. 
  • For the month of March 2020, eligible businesses will only have to show a 15 percent revenue decrease to claim the subsidy.
  • Employers eligible for the CEWS be entitled to receive a 100-per-cent refund for certain employer-paid contributions to Employment Insurance. This refund would apply to the entire amount of employer-paid contributions in respect of remuneration paid to furloughed employees in a period where the employer is eligible for the CEWS.
  • Charities and non-profit organizations be allowed to choose to include or exclude government funding in their revenues for the purpose of applying the revenue reduction test.
  • Employers be allowed to measure revenues either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received).

 

March 30, 2020 - The Work-Sharing Program
"We are extending the maximum duration of the Work-Sharing program from 38 weeks to 76 weeks. The Work-Sharing program is offered to workers who agree to reduce their normal working hours because of developments beyond the control of their employers." 

Wave is closely monitoring further finalization and direction from the Canadian Government on how these measures are to be implemented via payroll. 

Employers: 

Ten-percent Wage Subsidy for Employers 

Important Update from the Department of Finance: "Those organizations that do not qualify for the Canada Emergency Wage Subsidy may continue to qualify for the previously announced wage subsidy of 10 per cent of remuneration paid from March 18 to before June 20, up to a maximum subsidy of $1,375 per employee and $25,000 per employer."
For more information on the newest proposed subsidy within this article, please see Canada Emergency Wage Subsidy .

From the CRA's webpage on the Canada Emergency Wage Subsidy:
"For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10 per cent wage subsidy for a period, any benefit from the 10 per cent wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period."

 

On March 20, 2020, the Canadian Revenue Agency (CRA) put out an FAQ regarding the temporary ten percent wage subsidy it is offering to employers to help retain employment during COVID-19. 

Read the CRA's FAQ here

Here is a quick overview with statements from the FAQ: 

"You are an eligible employer if you:

  • are a(n):
    • individual (excluding trusts),
    • partnership (see note below),
    • non-profit organization,
    • registered charity, or
    • Canadian-controlled private corporation (including a cooperative corporation) eligible for the small business deduction;
  • have an existing business number and payroll program account with the CRA on March 18, 2020; and
  • pay salary, wages, bonuses, or other remuneration to an eligible employee.

An eligible employee is an individual who is employed in Canada.

Partnerships are only eligible for the subsidy if their members consist exclusively of individuals (excluding trusts), registered charities, or Canadian-controlled private corporations (CCPCs) eligible for the small business deduction.

CCPCs are only eligible for the subsidy if they have a business limit for their last taxation year that ended before March 18, 2020, greater than nil (determined without reference to the passive income business limit reduction). For more information on whether your CCPC would have a business limit, see Small Business Deduction in the T2 Corporation Income Tax Guide.

For more information on whether your corporation is a CCPC, see Type of Corporation."

The wage subsidy has a limit of $1,375 per employee or $25,000 per employer, and only applies to wages paid out within the March 18, 2020 - June 19, 2020 timeframe. 

You will be able to benefit from this subsidy by reducing your federal or provincial/territorial remittance amount. This does not mean you are withholding less tax from your employees. This simply means that you are sending less income tax to the CRA come your remittance due date. Please see the FAQ article on how to determine your subsidy limit and subsidy amount. 

Please note that the CRA and Canadian Government are still working on how you are to report the subsidy, but for now you must keep record of: 

  • "the total remuneration paid between March 18, 2020, and June 19, 2020;
  • the federal, provincial, or territorial income tax that was deducted from that remuneration; and
  • the number of employees paid in that period."

Please see [Canada] COVID-19 Ten-percent Temporary Wage Subsidy for Employers on how Wave is handling this subsidy, and for further information.

Canada Emergency Wage Subsidy

Update May 15, 2020 - Canada Emergency Wage Subsidy to be extended until August 29, 2020.
Adjustments to the program, including the revenue decline, is to be re-evaluated as businesses are re-opening.
Immediately and retroactively, eligibility has been extended to:

  • Partnerships that are up to 50-per-cent owned by non-eligible members;
  • Indigenous government-owned corporations that are carrying on a business, as well as partnerships where the partners are Indigenous governments and eligible employers;
  • Registered Canadian Amateur Athletic Associations;
  • Registered Journalism Organizations; and
  • Non-public colleges and schools, including institutions that offer specialized services, such as arts schools, driving schools, language schools or flight schools. 

Read the latest news release on these approved changes and further proposals: 

 

If you are eligible, you can follow the CRA instructions to apply for this subsidy here.

 The Canadian Government has provided more information on this proposed relief measure on their webpage here.

Wave has also put together an FAQ based on available information.

Basic Overview 

Eligible employers are those who:

  • suffer a drop in gross revenues of at least 15 percent for March 2020 and 30 percent in April or May, when compared to either:
    • the same month in 2019; or
    • an average of revenues from January and February 2020
  • are individuals, taxable corporations, and partnerships consisting of eligible employers as well as non‑profit organizations and registered charities (public bodies are not included). 

The Canada Emergency Wage Subsidy would be calculated as outlined by the the Canadian Government:

"The subsidy amount for a given employee on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:

  • 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
  • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.

The pre-crisis remuneration for a given employee would be based on the average weekly remuneration paid between January 1 and March 15 inclusively, excluding any seven-day periods in respect of which the employee did not receive remuneration.

In effect, employers may be eligible for a subsidy of up to 100 per cent of the first 75 per cent of pre-crisis wages or salaries of existing employees. These employers would be expected where possible to maintain existing employees’ pre-crisis employment earnings."

All employers would be expected to at least make best efforts to pay employees the remaining 25 percent of wages.

There is no employer limit for this subsidy. 

Employers may be able to receive a refund of the employer portions of Employment Insurance premiums and Canada Pension Plan contributions. Employers will have to apply for the refund at the same time as applying for the subsidy.

You will be able to apply for this subsidy through your CRA-My Business Account once the process becomes available. You will have to re-apply each month.

Wave suggests setting up your CRA-My Business Account now so you can be ready to apply and receive this subsidy as soon as it becomes available.

More information and guidance on this new subsidy is said to be coming soon.

The Canada Emergency Business Account

Also known as CEBA, the Canada Emergency Business Account
"...provides much needed credit for small businesses to pay for immediate operating costs such as payroll, rent, utilities, insurance, property tax, or debt service."

CEBA's FAQ outlines eligibility requirements as follows:

  • "The Borrower is a Canadian operating business in operation as of March 1, 2020.
  • The Borrower has a federal tax registration.
  • The Borrower’s total employment income paid in the 2019 calendar year was between Cdn.$20,000 and Cdn.$1,500,000.
  • The Borrower has an active business chequing/operating account with the Lender, which is its primary financial institution. This account was opened on or prior to March 1, 2020 and was not in arrears on existing borrowing facilities, if applicable, with the Lender by 90 days or more as at March 1, 2020.
  • The Borrower has not previously used the Program and will not apply for support under the Program at any other financial institution.
  • The Borrower acknowledges its intention to continue to operate its business or to resume operations."

If you are eligible, you are to contact your financial institution directly. Each financial institution will have their own application process. That being said, you will most likely need your 2019 T4 Summary on hand, whether it's upon a request basis or mandatory. 

If the loan is repaid within two years, 25 percent (up to $10,000) of your loan amount will be forgiven. Otherwise, the remaining balance will become a three year term loan at a five percent interest rate.

CEBA is available now through financial institutions and credit unions.

Wave has put together an FAQ on the CEBA that includes detailed steps on where to find your T4 Summary within your Wave account: 

Records of Employment

You will need to issue a Record of Employment (ROE) when:

  • An employee requests one.
  • An employee has had or is anticipated to have an interruption of earnings of 7 consecutive days or more.

Reason for an interruption of earnings could include illness/self-quarantine, or shortage of work. For a complete list of reason codes used on the ROE, please see: Reason for issuing this ROE.

You can file an ROE with Service Canada either on paper or electronically. If you are filing on paper, you must give Part 1 (the original) of the ROE to your employee. If you are filing electronically, the employee copy is no longer required, as they will have immediate access online via their My Service Canada Account. 

Heads up! If your ROE Service with Wave is active, please note that Wave issues ROEs electronically via ROE Web. If your employee would like to see the ROE submitted via Wave, please direct them to their My Service Canada Account to view and download.

If you are issuing ROEs yourself and choose to file on paper, please let your employee(s) know that they must submit the paper ROE to Service Canada in order to apply for EI benefits.

Deadlines for issuing ROEs: 

If you are issuing a paper ROE, you must issue the ROE within 5 calendar days of the first interruption of earnings, or as soon as you are aware of the interruption of earnings. 

If you are issuing ROEs electronically, the deadline varies depending on your pay period frequency. If you have a pay period frequency of any of the following: 

  • Weekly 
  • Biweekly (every 2 weeks)
  • Semimonthly (twice a month)

Your deadline is 5 calendar days after the end of the pay period in which the interruption occurs. 

If you pay your employees on a monthly pay period frequency, your deadline is the earlier of the following 2 options:

  • 5 calendar days after the pay period in which the interruption occurs; or 
  • 15 calendar days after the beginning of the interruption.
For more information on offboarding employees and issuing ROEs within Wave, please see: 

Not sure if your ROE Service with Wave is active? Navigate to your Payroll Setup page to see if ROE Authorization is listed as "Active."

 

If you haven't authorized Wave to issue ROEs on behalf of your business, or your authorization appears "Inactive," we have instructions on how to set this up within your account here: Set up Wave to submit ROEs on your behalf.
This being said, the authorization process is controlled by Service Canada. Due to the current situation, the wait time for authorization may take longer than the expected 3-4 weeks. 
Because ROEs need to be issued within a specific timeframe, you may need to submit ROEs manually following the detailed instructions that Service Canada provides: 

Supplemental Unemployment Benefit Plans

You can use a Supplemental Unemployment Benefit Plan (SUBP) while your employees are on leave to help top-up their EI benefit payments. Please note that this plan must be registered with Service Canada prior to the effective date of the plan. These payments are able to be made through Wave Payroll after an employee has been placed on leave.

For more information on SUBPs and how to pay these through Wave, please see [Canada] Supplemental Unemployment Benefit Plans.

Employees:

Record of Employment

If you are an employee and believe you qualify for EI benefits, you should apply as soon as possible after you have stopped working. To apply for Employment Insurance benefits, please visit EI Sickness Benefits: apply.

You will need an ROE to apply for EI benefits. If your employer submitted the ROE electronically, it will be available for you in your My Service Canada Account, the same portal you will use to apply for benefits. 

Eligibility requirements, including required documents, are subject to change. For the most up to date requirements regarding EI benefits for those affected by COVID-19, please visit Service Canada's COVID-19 updates online. Please note that currently, for those in quarantine, you do not have to provide a medical certificate to apply for EI benefits.

If you are hoping to waive the one-week waiting period while in quarantine, Service Canada requires you to contact them via phone: 

  • Telephone: 1-833-381-2725 (toll-free)
  • Teletypewriter (TTY): 1-800-529-3742

Please note that you must have already completed the application for EI sickness benefits prior to calling.

To view electronic ROEs from past and current employers, you can log into your My Service Canada Account.

Heads up! If your employer issues ROEs through Wave, these are done electronically. If you would like to see the ROE submitted via Wave, please visit My Service Canada Account for immediate access to view and download.

Please note that if your employer is filing your ROE on paper, they are required to provide you with Part 1 (the original) copy of the ROE. This will also mean that in order to apply for EI benefits, you will be required to submit the paper ROE to Service Canada. 

Personal Income Tax Returns 

The deadline to file your personal income tax return with the Canadian Revenue Agency has been moved to June 1, 2020.

Furthermore, if you owe any money from your return, the payment of any income tax amounts that become owing on or after this week and before September 2020, deadline has been moved to August 31, 2020.

The new Canada Emergency Response Benefit 

April 15, 2020 update: New eligibility rules announced to include more individuals in need. This includes:

  • Allow people to earn up to $1,000 per month while collecting the CERB.
  • Extend the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.
  • Extend the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.

 

On April 1, 2020 the Canadian Government published this webpage with more details on how to apply for the Canada Emergency Response Benefit (CERB) with an FAQ. 

The have provided guidance on eligibility as: 

"To be eligible to receive the Canada Emergency Response Benefit (CERB) from Service Canada, the following must apply:

  • You must reside in Canada
  • You are 15 years of age or older at the time of application
  • You have stopped or will stop working for reasons related to covid-19, or because you are unable to work due to illness, or because you lost your employment for other reasons beyond your control; and
    • If you are submitting for your first benefit period, that you have stopped or will stop working for at least 14 consecutive days within the 4 week benefit period; or
    • If you are filing for a subsequent benefit period, you did not receive any employment or self employment income for the period for which you previously claimed the benefit and do not expect to receive any employment or self employment income in the 4 week benefit period
  • You have not quit your job voluntarily
  • You are not receiving nor have you applied for the CERB from the Canada Revenue Agency nor are you receiving Employment Insurance benefits for the same benefit period
  • You have earned a minimum of $5,000 in income within the last 12 months or in the 2019 calendar year from one or more of the following sources:
    • Employment income
    • Self-employment income"

From the Government of Canada's website

"We will provide a taxable benefit of $2,000 a month for up to 4 months to:

  • workers who must stop working due to COVID19 and do not have access to paid leave or other income support.
  • workers who are sick, quarantined, or taking care of someone who is sick with COVID-19.
  • working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures.
  • workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work.
  • wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance."

The Canadian government also has a question and answer webpage. The application process opens on April 6, 2020.

You can get ready to apply online by setting up your CRA My Account now, and signing up for direct deposit to get your benefit more quickly.

The Canadian Government plans on you being able to start receiving the benefit within ten days of application. You would be receiving it every four weeks and will be available from March 14 - October 3, 2020.

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