[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.

Ten-percent Wage Subsidy for Employers 

Canada Emergency Wage Subsidy 

The Canada Emergency Business Account

Records of Employment

Supplemental Unemployment Benefit Plans

Proposals/changes that could directly affect payroll

October 9, 2020 - the Canadian Government is planning a Canada Emergency Rent Subsidy, where qualified businesses can receive rent support directly, rather than through landlords. More information is to be released shortly. Furthermore, the Canada Emergency Business Account (CEBA) application deadline is to be extended to December 31, 2020 - along with an along with access to an interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000.
Read the latest news release here: 

September 23, 2020 - Canada Emergency Wage Subsidy to be extended until summer of 2021. Government webpages have yet to be updated. Wave will update this page as more information is released. 
Read the speech from the throne: 

August 27, 2020: New T4 requirements released. There will be an additional requirement for reporting employment income on the T4 for specific periods of the tax year 2020. For more information, please see: 

August 4, 2020: The CRA has released Form PD27, 10% Temporary Wage Subsidy Self-Identification Form for Employers that all eligible employers must submit if receiving this subsidy, the Canada Emergency Wage Subsidy (CEWS) or both. For more information, please see:

July 27, 2020Bill C-20, An Act respecting further COVID-19 measures has received Royal Assent.
As well as introduce the items listed from the draft legislature, the proposed amendments to the CEWS previously introduced in Bill C-17, An Act respecting additional COVID-19 measures will also be included in these changes.

July 20, 2020 - Bill C-20, An Act respecting further COVID-19 measures introduced into Parliament. Canada Emergency Wage Subsidy proposed to be redesigned, extended until December 19, 2020.
The following have been proposed in the draft legislature: 

  • Allow the extension of the CEWS until December 19, 2020, including redesigned program details until November 21, 2020;
  • Allow employers with a revenue decline of less than 30 per cent to access CEWS;
  • Provide a gradually decreasing base subsidy to all qualifying employers;
  • Introduce a top-up subsidy of up to an additional 25 per cent for employers that have been most adversely affected by the pandemic;
  • Provide certainty to employers that have already made business decisions for July and August by ensuring they would not receive a subsidy rate lower than they would have had under the previous rules;
  • Address certain technical issues identified by stakeholders. 

Read the latest news release on these proposed changes: 

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 

Update August 4, 2020: The CRA has released Form PD27, 10% Temporary Wage Subsidy Self-Identification Form for Employers that all eligible employers must submit if receiving this subsidy, the Canada Emergency Wage Subsidy (CEWS) or both. For more information, please see:

 

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 September 23, 2020 - Canada Emergency Wage Subsidy to be extended until summer of 2021. Government webpages have yet to be updated. Wave will update this page as more information is released. 
Read the speech from the throne: 

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.

The Canada Emergency Business Account

October 9, 2020 update: Canadian Government announces extension to CEBA application deadline to be extended to December 31, 2020. As well, additions to the program: 

  • Enable businesses, and not-for-profits eligible for CEBA loans—and that continue to be seriously impacted by the pandemic—to access an interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000.
  • Half of this additional financing would be forgivable if repaid by December 31, 2022.

Read the news release here: 

 

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.

 

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