As your trusted advisors, HGA Group wants to keep you apprised of Canada’s and Alberta’s COVID-19 responses which may be relevant to you and your business.
Federal government aid package and changes
On March 18, the federal government announced an $82 billion COVID-19 emergency response package for Canadians and businesses. The aid package includes:
• Temporarily boosting Canada Child Benefits payments and boosting GST credits for low-income families.
• Wage subsidy for any employers that are a charity, not for profit organization or a business that is eligible to claim the small business deduction.
o The subsidy will be equal to 10% of remuneration paid over the next three months up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Employers will still withhold the usual amount of income tax, CPP and EI from their employees but can then reduce the income tax portion of the remittance required to be paid to the government by the above subsidy amount.
• This subsidy will apply to nearly all employers that HGA advises so please take advantage of this benefit. If you work with a payroll service provider (ie: Payworks, ADP, Ceridian etc.), please contact them for details on how to process this subsidy through their system. If you require assistance with processing your own payroll, please contact your HGA advisor.
• Reducing the required minimum withdrawals from Registered Retirement Income Funds (RRIFs).
• A new Emergency Care Benefit for individuals who do not qualify for EI (ie: self-employed individuals) who must stay home and do not have access to paid sick leave, providing up to $900 biweekly for up to 15 weeks, starting in early April.
• A six-month, interest-free reprieve on student loan payments.
• Extending the personal tax filing deadline to June 1 and the deadline for filing trust returns to May 1.
• Even though the deadline has been extended, we still encourage you to provide us with your information to prepare and file your return as soon as possible so that any benefits you may be entitled to that are based on your 2019 filing can still be processed (GST Benefit, Canada Child Benefit etc.)
• Allowing personal and corporate taxpayers to defer tax payments until after August 31, 2020 for amounts or instalments that become owing on or after today and before September 2020. No interest or penalties will accrue on these specific amounts.
• Since nobody likes giving the government an ‘interest-free’ loan, stop making all personal and corporate tax instalment payments that are due from today forward to preserve cash flow. No interest will be charged on the deficient instalment payments.
• Any tax balances that became owing prior to today will still accrue interest and be required to be paid in a timely manner. However, the extent of CRA and Alberta Finance’s collection efforts during this time of emergency are likely to be limited so we recommend you govern your cash flow needs accordingly.
• Effective immediately, Canada’s ‘Big 6’ Banks along with ATB and other lenders have announced that they will allow for up to six months of payment deferral on mortgage payments and other loans, determined on a case by case basis. Should you require this, please contact your bank immediately.
• Some banks have also indicated that they are offering similar principal or payment deferral to their business clients. Please contact your bank immediately to discuss.
Employment Insurance (EI)
The federal government has waived the one-week waiting period for employment insurance (EI) to assist workers and business affected by COVID-19. EI sickness benefits provide up to 15 weeks of income replacement and is available to eligible claimants who are unable to work because of illness, injury, or quarantine.
For more details, please visit Service Canada or the March 18 Department of Finance announcement.
Alberta Employment Standards Code
Premier Kenney announced that employees who are in self-isolation or caring for another with COVID-19 can take 14 days of paid-protected leave, retroactive to March 5. The changes remove the requirement for workers to give employers medical notes and employers are forbidden from laying off or terminating an employee on leave, unless the employer shuts down the business. Employees self-isolating due to COVID-19 do not require a medical note to access leave.
Temporary lay offs
Employers may be able to temporarily lay off employees, if the employer’s business has been negatively impacted, but the employer wishes to maintain an employment relationship without terminating the employment. There is a risk that, unless the employment contract grants an employer the right to a layoff, an employee could treat this as constructive dismissal. The maximum duration of a temporary layoff is 60 total days within a 120-day period.
An employer must provide the employee with a written layoff notice, and notice is based on the length of time the employee has been employed by the employer. In certain circumstances, the employer does not need to give notice of the temporary layoff if the circumstance is unforeseeable. In such situations, the employer should give notice “as soon as practicable.”. The impact of COVID-19 may fall within this exception. The situation with COVID-19 is ever changing, and it is always best to give notice to avoid possible violations of the Code. We recommend seeking legal advice in specific situations.
More information about temporary layoffs and the Alberta Employment Standards Code can be found here. Should you require legal advice on any employment matters, we would be happy to coordinate connecting you with legal counsel.
The federal Work-Sharing program is implementing temporary special measures to support employers and employees affected by the downturn in business caused by COVID-19.
The Work-Sharing Program supports businesses that need to reduce the working hours of some or all their employees without having to fully lay them off. This allows for these employees to receive reduced pay for their reduced hours worked while still being able to access employment insurance benefits to help bridge the gap between their normal pay and the reduced pay.
• There is a 30-day waiting period between application and when this program can be put in place. If you foresee requiring this program, we highly recommend you visit the link below, review the ‘Eligibility’ page and, if you qualify, begin the application process so that it can be available to you should it be required.
• More information is available at the Work-Sharing temporary special measures page.
Support for entrepreneurs
The federal government increased the amount of funding available via the Business Development Bank of Canada (BDC) for small business loans, working capital loans, and purchase order financing.
• If your business is facing current or anticipated cash flow challenges, please first approach your current lenders for payment/principal deferral. Subsequent to this, please follow the link above to inquire as to your eligibility for additional funding through BDC to assist with this short-term flow need.
The uncertainty and disruption caused by COVID-19 may disrupt the ability of a party to fulfill its obligations. There may be circumstances where a party may be able to assert a force majeure event in order to excuse its non-performance under a contract without incurring liability. This would be the occurrence of an event which is outside the reasonable control of a party, and which prevents that party from performing its obligations under contract. It may allow for the termination or adaption of a contract if supervening events affect performance.
Determining this will require detailed legal analysis. Jason Banack at HGA Law is available to have these discussions with you.
Should you require assistance in navigating these financing options, please contact HGA.
As your trusted advisors, HGA is here to help. If you have questions about how COVID-19 may impact your business, please contact Natalie Pon CPA at email@example.com. We will be sending periodic updates as more information is released.