ECONOMIC-RESPONSE-PLAN

In light of the recent threat of COVID-19 to the livelihoods of businesses, business-owners and employees, the Prime Minister announced on March 18th, 2020 the Government of Canada’s COVID-19 Economic Response plan which will provide up to $27 billion in direct support to Canadian workers and businesses.

Here are some of the main highlights for business owners of Canada’s COVID-19 Economic Response Plan, with many details and updates still to come:

For Businesses:

  1. Extension of Tax Deadlines and Delays on Audits
    • All businesses can defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020 for balances due and installments, with no interest and penalties to accumulate during these periods
    • The deferral will not apply to any tax withholdings such as payroll or Part XIII withholdings
    • MARCH 25th UPDATE: GST/HST and Custom Duty payments have been deferred until June 2020, Alberta tax has been deferred until August 31, 2020
    • CRA will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks
    • CRA will temporarily suspend audit interaction with taxpayers and representatives
  2. Temporary Wage Subsidy
    • To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months
    • The subsidy will be equal to 10% 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
    • Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities
    • MARCH 25th UPDATE: the Temporary Wage Subsidy has been increased to 75% instead of 10%, and can be backdated to March 15th 2020
  3. Business Credit Availability Program (BCAP) 
    • Will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses
    • BDC and EDC are cooperating with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism
  4. Lowering the Domestic Stability Buffer
    • The Office of the Superintendent of Financial Institutions (OSFI) announced it is lowering the Domestic Stability Buffer by 1.25%of risk-weighted assets, effective immediately
  5. The Bank of Canada Lowered Interest Rates
    • Cutting the interest rate to 0.75% as a proactive measure considering the negative shocks to Canada’s economy arising from COVID-19
  6. Canada Emergency Business Account
    • MARCH 25th UPDATE: The new Canada Emergency Business Account allows banks to offer $40,000 loans to qualifying businesses
    • Will be interest free for the first year
    • Under certain conditions, $10,000 of this loan can be forgivable

Visit the CRA website for more details. Many details and updates are still to come; please check our social media pages for more information.

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