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March 31, 2020

Canadian Government Implements Virus Relief Measures

Among the benefits is the Emergency Wage Subsidy, which will cover 75% of salaries.

By  Sara Lavenduski

In response to the economic impact of the coronavirus, the Canadian government has put new initiatives into place to bolster businesses and help individuals across the country.

Last week, a CA$107 billion ($75 billion US) relief package of stimulus and aid, called the Economic Response Plan, moved quickly through Parliament to Royal Assent as at least a million Canadians applied for unemployment, equivalent to about 5% of the workforce.

The day after the relief package was approved, the government announced a massive expansion of the Emergency Wage Subsidy; originally, employees of companies that had lost revenue as a direct result of the virus would receive 10% of their salary from the government. That has been expanded to 75% of their salary on the first $58,700 of what they were earning, up to $847 a week per person for the next three months, backdated to March 15. Every company in Canada is eligible, regardless of size, as long as revenue has fallen by at least 30% because of the virus.

empty outdoors

A Toronto restaurant’s outdoor patio is shut down in the wake of mass business closures.

In a news conference on March 30, Prime Minister Justin Trudeau said the money is “a bridge to better times” and will protect hardworking employees so they can buy essential items and have a job to go back to. He added that the government is “trusting [business owners] to do the right thing” and cautioned that there would be “serious consequences” if companies tried to “game the system.”

Finance Minister Bill Morneau and Small Business Minister Mary Ng had been scheduled to provide more details on the plan, including estimated cost, on March 31. But Morneau is now self-isolating after a UN official he and other members of Parliament had met in mid-March has tested positive for the virus.

For individual workers, the new Canada Emergency Response Benefit (CERB), administered by the Canada Revenue Agency, provides a taxable benefit of $2,000 a month for up to four months to those who can no longer work because of layoffs, quarantine or care for a loved one. For those who qualify, Employment Insurance will still be available through Service Canada. The government suggests that individuals take a steps to prepare for CERB once they begin accepting applications next week.

Other measures include an extension of the Work-Sharing Program from 38 weeks to 76 weeks. The program provides Employment Insurance benefits to eligible employees who have reduced their usual working hours while their employer recovers from a downturn in business.

The government also announced a Business Credit Availability Program (BCAP) that will provide $65 billion worth of additional credit support to businesses, including those in oil and gas, air transportation, exportation and tourism, through the collaboration of the Business Development Bank of Canada and Export Development Canada with private lenders.

Included in BCAP is the new Canada Emergency Business Account, which will provide interest-free loans up to $40,000 to struggling businesses and not-for-profits to help with operating costs, as long as they paid between $50,000 and $1 million in total payroll in 2019. The program also includes loan guarantees and a co-lending program for Small and Medium Enterprises (SMEs).

Meanwhile the Bank of Canada is working on lowering interest rates, supporting key financial markets and providing much-needed liquidity for financial institutions, while Goods and Services Tax (GST) and Harmonized Sales Tax (HST) payments have been deferred to June 30.

“The best advice I can give right now is to maximize the support of your network,” says Ann Baiden, CEO and founder of Innovatex Solutions Inc. (asi/231194) in Richmond Hill, ON. “Be in constant contact with your team, fellow businesses owners, lawyer, accountant and HR. The details of the government’s plan are fluid and as business owners, we need to ensure that we’re maximizing our options. There are still a lot of questions, but we’re a community and together, we will conquer this.”

Canadian business owners and employees should look at the full list of relief program measures and speak to their financial advisors and individual lenders for more detailed information.