CANADIAN NEWS April 09, 2020
Trudeau Announces Changes to Virus Relief Measures
Companies only have to show a 15% revenue decline to be eligible for the 75% wage subsidy.
Prime Minister Justin Trudeau has announced changes to the COVID-19 Economic Response Plan, in response to concerns that some businesses and individuals were being excluded from taking advantage of benefits.
Among the modifications: The Canada Emergency Wage Subsidy Program, under which the government will cover up to 75% of employees’ pre-coronavirus salary, will now be available to businesses that can show a year-over-year revenue decline of 15%, a change from 30% as previously announced. They can also now use January and February of 2019 when looking at revenue, instead of limiting it to March of last year.
The amendment is in response to those who have said that a large number of companies wouldn’t be able to qualify. The Canadian Council of Innovators (CCI) conducted a recent survey and found that 94% of tech firms, based on current criteria, would not.
“[The revenue loss] measurement is only appropriate for a small number of static, traditional businesses,” said the CCI in its report, “and is not appropriate for high-growth firms in Canada’s technology sector or SMEs that experience monthly recurring revenue.”
Said Trudeau during the news conference: “Our government understands that not all businesses operate the same way and that’s why we’re making changes to include as many of you as possible.” He added that the jobs report this week will “be a hard day for the country.”
The wage subsidy program will still run from March 15 to June 6, as originally announced, and will subside three-quarters of an employee’s pay up to $58,700, to a maximum of $847 a week. Air Canada has announced that, thanks to the subsidy, they plan to rehire 16,500 workers.
Additionally, in an effort to support students looking for summer work, Trudeau announced that organizations planning to participate in the Canada Summer Jobs Program will receive 100% subsidies for the cost of hiring students. They’ll also be extending the timeframe for placement until the winter, since job starts will be delayed.
To help small businesses and young people affected by COVID-19, we’re making changes to Canada Summer Jobs. We’re extending the timeframe for job placement, giving CSJ employers a subsidy of up to 100% to cover the cost of hiring each employee, and more: https://t.co/j5IdPMfikp
— Justin Trudeau (@JustinTrudeau) April 8, 2020
Meanwhile, the application portal for the Canada Emergency Response Benefit (CERB), which provides $500 a week for 16 weeks until Oct. 3, opened on Monday, when a million Canadians applied. This temporary income support program benefits those who have been forced to stop work due to the coronavirus, including the self-employed. But there’s been some confusion on the difference between the CERB and regular Employment Insurance (EI).
“Initially, when the CERB was announced, it was intended to be something that would be payable to workers who would not be eligible for EI. For example, the self-employed, or those who needed to stay home to care for children, who could no longer go to daycare or school due to the emergency closures,” Stephanie Kalinowski, pension and benefits lawyer with Hicks Morley LLP, told CBC Kitchener-Waterloo. “[They] seem to have decided to expand the emergency benefit and essentially replace EI with the CERB in order to get money into people’s hands much faster than they felt they could under the EI system.”
Kalinowski added that someone applying for maternity or paternal benefits, for example, which remain under the EI umbrella, would not be eligible for the CERB in that instance. If an employee doesn’t feel safe at work because of health fears, but has not been laid off by their employer, they would also not qualify for the CERB.
“One thing that is clear, is that the CERB is not available to individuals who are voluntarily not working,” explained Kalinowski. “So [that] would be a question … the government would have to answer for people in that situation.” Additionally, those who have been laid off and are taking advantage of gig work where they can would also not qualify, since the CERB currently requires that beneficiaries have no income at all. That’s not the case for EI.
Businesses will also still be able to apply for the Canada Emergency Business Account, through the Business Credit Availability Program, for bank-administered loans of up to $40,000 that are interest-free until the end of 2022.
But experts are concerned that many businesses will be excluded from this program as well. For example, qualifying for the loans requires that businesses have paid out at least $50,000 in salaries last year, which may exclude the self-employed and other sole proprietors with few staff members and low payroll numbers.
“If you don’t get these loans and you can’t qualify, you’re in some serious trouble if your rent is due and you’re given no relief for that,” Alex Ghani, an accountant with Toronto-based CPA Solutions, told the CBC this week. “The biggest concern I find is the sole proprietor or the unincorporated individual who gets no access.”
In his announcement about the relief changes, Trudeau said, “We will be doing more,” adding, “just like we will do more for those who need help but are not eligible to receive the benefits we’ve announced so far. We’re also working around the clock to ensure that our front-line workers have everything they need to save lives and stay safe.”
The announcements come as cases continue to climb in Canada. Trudeau said no one’s sure when it will peak, but that social distancing measures appear to be helping and they will have to continue for “many more weeks” to come. He promised that the government will continue testing and contact-tracing, as provinces release alarming case and fatality projections.
The changes will be made official after Parliament is recalled to pass it; currently, MPs are working to figure out a way to convene in a health-conscious manner. The initial legislation was passed last month, when the wage subsidy stood at just 10% of pre-virus paychecks.