Trudeau announces support for businesses facing COVID‑19 impacts
By Helicopters Staff
Canadian Prime Minister, Justin Trudeau, on March 27 announced additional measures to support businesses dealing with the economic impacts of the COVID‑19 pandemic. The new measures, which are part of the government’s COVID-19 Economic Response Plan (ERP), are aimed at helping Canadian businesses protect jobs. The ERP already commits more than $107 billion in support.
The new measures include a 75 per cent wage subsidy for qualifying businesses, for up to three months, retroactive to March 15, 2020. On March 30, Trudeau then announced eligibility criteria for the program: All businesses and non-profit organizations, regardless of size, seeing a drop of at least 30 per cent in revenue due to COVID-19 will qualify for the government’s 75 per cent wage subsidy program.
Other highlights of the new measures, which focus on supporting small businesses in particular, include:
• Allowing businesses, including self-employed individuals, to defer all Goods and Services Tax/Harmonized Sales Tax (GST/HST) payments until June, as well as customs duties owed for imports. This measure, explains the government, is the equivalent of providing up to $30 billion in interest-free loans to Canadian businesses. The deferral to June of GST/HST payments, as well as customs duties owing on imports, will generally apply to remittances that become due in March, April, and May. These amounts would normally have been due to the Canada Revenue Agency and the Canada Border Services Agency as early as the end of March. This measure will take effect immediately, through existing authorities.
• Launching the new Canada Emergency Business Account. This program will provide up to $25 billion to eligible financial institutions so they can provide interest-free loans to small businesses. These loans – guaranteed and funded by the Government of Canada – will ensure that small businesses have access to the capital they need, at a zero per cent interest rate. The new Canada Emergency Business Account will provide funding to eligible financial institutions so that they can provide interest-free loans in the form of lines of credit of up to $40,000 to businesses with payrolls of less than $1 million. A quarter of this loan (up to $10,000) is eligible for complete forgiveness.
• Launching the new Small and Medium-sized Enterprise Loan and Guarantee program that will enable up to $40 billion in lending, supported through Export Development Canada and Business Development Bank, for guaranteed loans when small businesses go to their financial institutions to help weather the impacts of COVID-19. Export Development Canada will provide guarantees to financial institutions so that they can issue new operating credit and cash flow term loans of up to $6.25 million to small and medium-sized businesses. These loans will be 80 per cent guaranteed by Export Development Canada, to be repaid within one year.
“Small businesses are the backbone of our economy, and an important source of good jobs across this country,” said Trudeau. “They are facing economic hardship and uncertainty during the COVID-19 pandemic, and that is why we are taking action now to help them get the financial help they need to protect their workers and pay their bills.”
In announcing these new measures, the Government of Canada states that it understands some sectors have been disproportionally impacted by the COVID-19 pandemic and that it plans to monitor all developments, and take further action in the near term.
Earlier ERP measures introduced by the government to support businesses affected by COVID-19 include:
• Providing eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10 per cent of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration.
• Extending the maximum duration of the Work-Sharing program, from 38 weeks to 76 weeks, for workers who agree to reduce their normal working hours because of developments beyond the control of their employers.
• Establishing a Business Credit Availability Program, largely targeted to small- and medium-sized businesses, through the Business Development Bank of Canada and Export Development Canada. These organizations are working closely with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation, and tourism.
• Increasing credit available for farmers and the agri-food sector through Farm Credit Canada.
• Deferring the payment of income taxes. The government is allowing all taxpayers to defer, until after August 31, 2020, the payment of income tax amounts owed on or after March 18 and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.