[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. 

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

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).

April 1, 2020 - More information on the Canadian Emergency Wave Subsidy
Canadian Finance Minister Bill Morneau explained during a press conference that eligible employers will have to apply online via a CRA portal that is soon to come. Employers will have to provide proof that they are experiencing the 30% revenue decrease, and will have to reapply month to month. Eligible employers will also have to attest that they are trying as hard as possible to pay their employees the remaining 25% of wages. Subsidy funds are to be made available within 6 weeks of application.

In regard to the previous Temporary Wage Subsidy: 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.

Here is the latest news release.

March 30, 2020 - the Canadian Emergency Wage Subsidy 
Prime Minister Justin Trudeau provided further detail on the changes to the Temporary Wage Subsidy for Employers, including a name change to the Canadian Emergency Wage Subsidy. Changes include an increase from the ten percent subsidy to up to a 75 percent subsidy on the first $58,700 of wages per employee, or $847 a week. The changes will be retroactive from March 15, 2020. Furthermore, the Prime Minster announced eligible business are those that have seen a reduction in revenue of at least 30% due to COVID-19, including nonprofit organizations, charities, and large or small companies. Further details on this change and implementation are to be communicated by the Department of Finance and CRA before the end of the month.

Changes to the Temporary Wage Subsidy for Employers announced March 27, 2020
Prime Minister Justin Trudeau announced changes to the Temporary Wage Subsidy for Employers that includes an increase from the ten percent subsidy to up to a 75 percent subsidy as well as a limit change. The changes will be retroactive from March 15, 2020. Further details on this change and eligibility criteria are to be communicated by the Department of Finance and CRA before the end of the month. 

As of March 25, 2020 the Canadian Government has decided to replace the Emergency Care Benefit and Emergency Support Benefit for individuals with one benefit: The New Canada Emergency Response Benefit.  You can read the news release regarding this change here.
More information on this benefit is provided in the Employees section of this article.

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.

Note: 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.

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

For more information on whether your CCPC is eligible for the small business deduction, see Small Business Deduction in the T2 Corporation Income Tax Guide."

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

 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

April 8, 2020 update: Finance Minister Bill Morneau announced at a press conference today that the Canada Emergency Business Account will be available tomorrow, April 9, 2020.

Also known as CEBA, the Canada Emergency Business Account
"...will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced."

Eligible organizations will need to demonstrate that they had a total gross payroll between $50,000 to $1 million in 2019. 

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. 

The Canadian government has yet to publish a webpage with full details on this specific part of the COVID-10 Economic Response Plan. So far, it is listed here under "Access to Credit."

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 

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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