COVID-19: Tax and Financial Measures Announced in Response to the Pandemic

Various authorities have implemented aid measures for individuals and businesses aiming to reduce the COVID-19 pandemic’s financial impacts. To help you find a solution that meets your needs, BCF has prepared a summary of the main measures deployed by governments and financial institutions.

Updated June 1^st, 2020: the changes made can be found hereafter, in italics.

Tax Measures

Government officials have announced tax measures that will allow taxpayers to defer payments of taxes and instalments. The objective of such measures is to increase the liquidity of taxpayers during these difficult times.

To facilitate adaptation required by social distancing measures and to ease the burden on taxpayers, authorities have also announced the extension of deadlines for filing and payment of tax returns. For instance, The Canada Revenue Agency (“CRA”) penalties and interest will not be charged if payments are made by the extended deadlines of September 1, 2020. This includes the late-filing penalty as long as the return is filed by September 1, 2020.

In addition to the extension of deadlines, Revenu Québec will also expedite the processing of business tax credit claims and tax refund claims.[1] Revenu Québec will also suspend its audit activities, except in situations involving a risk of fraud. However, in the circumstances of fraud, no contact will be initiated with taxpayers, unless it is necessary for the processing of a refund.[2]

On the other hand, the CRA is resuming a full range of audit work and adapting their practices to reflect the health and economic impacts of COVID-19. In prioritizing their resumption, they are focusing on higher dollar audits first, audits close to completion, and those with a strategic importance to the Government of Canada, provinces and territories, or their tax treaty partners. In addition, efforts to combat suspected fraud and other criminal activity are advancing.

In addition, Requirements for Information issued prior to March 16 and due after that date will be reviewed and taxpayers and third parties, including financial institutions, will be contacted where the CRA continues to require the information.

With regards to objections to be received on or after 18 March by Revenu Québec and CRA, the deadline is extended to 30 June 2020. The collection measures are also suspended until further notice  and flexible payment arrangements will be available.[3] In addition, unless otherwise noted, administrative income tax actions required of taxpayers by the CRA that are due after March 18, 2020, can be deferred to September 1, 2020. These administrative income tax actions include the other information returns, elections, designations and information requests that are due. Penalties and interest will not be applied if information returns, elections, designations, and information requests are filed and payments are made by September 1, 2020. 

The waiver of penalties and interest for 2019 T1 individual returns and trust returns described above also applies to form T1135 and any elections, forms and schedules that must be filed with the return, provided that they are filed by September 1, 2020.

For 2019 T2 corporate returns, the extension of the filing deadline applies for all purposes. In particular, the extension also applies to form T106, T1135, and any elections, forms and schedules that must be filed with the corporate return.

Details of the measures announced are as follows:

Filing of 2019 personal income tax returns [4]

Initial Due Date: April 30, 2020

New Federal Due Date: June 1, 2020

New Quebec Due Date: June 1, 2020

Filing of 2019 corporate income tax returns

Initial Due Date: No later than 6 months after the end of the tax year

New Federal Due Date: September 1, 2020. 

Applies to corporations that would otherwise have a filing deadline in June, July, or August 2020.

New Quebec Due Date: June 1st, 2020 for the returns due by May 31, 2020

Filing of 2019 tax returns for individuals who carried on a business (and their spouses)

Initial Due Date: June 15, 2020

New Federal Due Date: No change. Payment deadline has been extended to September 1, 2020.

New Quebec Due Date: No change

Filing of 2019 income tax returns for trusts whose taxation year-end date is December 31, 2019

Initial Due Date: March 30, 2020

New Federal Due Date: May 1, 2020

New Quebec Due Date: May 1, 2020 for trusts other than a Specified Investment Flow-Through (SIFT) trust). 

In other situations, the return for a fiscal year ending in 2019 must be filed no later than May 1, 2020, or the last day of the fifth month following the end of the fiscal year, whichever is earlier. However, where the last day of the fifth month following the end of the fiscal year is after March 16, 2020, the deadline for filing the return for that fiscal year will be May 1, 2020.

Filing of income tax returns for trusts

Initial Due Date: No later than 90 days after the end of the tax year

New Federal Due Date:

• May 1, 2020. Applies to trusts with a tax year end date of December 31, 2019.
• June 1, 2020. Applies to trusts that would otherwise have a filing due date on March 31, or in April or May 2020.
• September 1, 2020. Applies to trusts that would otherwise have a filing due date in June, July, or August 2020.

New Quebec Due Date: No specific

Filing of 2019 Partnership Information Returns where all the members of the partnership are individuals 

Initial Due Date: March 31, 2020

New Federal Due Date: May 1st, 2020

New Quebec Due Date: May 1, 2020

Filing of 2019 Partnership Information Returns where all the members of the partnership are corporations

Initial Due Date: No later than five months after the end of the tax year

New Federal Due Date: No change

New Quebec Due Date: Where the due date for filing this return would otherwise be after March 16, 2020 but before May 1, 2020, the due date is extended to May 1, 2020.

Payment of 2019 taxes for individuals

Initial Due Date: April 30, 2020

New Federal Due Date: September 1, 2020

New Quebec Due Date: September 1, 2020

This date also applies to the payment of the balance of the membership fee or the annual fee for registration in the Register of Companies.

Payment of taxes for a trust, other than a SIFT trust

Initial Due Date: No later than 90 days after the end of the tax year

New Federal Due Date: September 1^st, 2020 for all tax payments that become due on or after March 18, 2020 and before August 31, 2020

New Quebec Due Date: September 1 for any balance owing for the 2019 taxation year, that would be due on or after March 17, 2020

SIFT trust tax payment

Initial Due Date: No later than 90 days after the end of the tax year

New Federal Due Date: After August 31, 2020 for all tax payments that become due on or after March 18, 2020 and before August 31, 2020

New Quebec Due Date: September 1, 2020 for any balance that becomes due on or after March 17, 2020 and before August 31, 2020

Payment of 2019 corporate taxes

Initial Due Date: Two or three months after the end of the taxation year

New Federal Due Date: September 1^st, 2020 for all tax payments that become due on or after March 18, 2020 and before August 31, 2020

New Quebec Due Date: September 1 for any balance that becomes due on or after March 17, 2020 and before August 31, 2020

Payment of instalments due on March 17th, 2020 (corporations and SIFT)

Initial Due Date: March 17, 2020

New Federal Due Date: No change

New Quebec Due Date: September 1st, 2020

Payment of instalments due on June 15, 2020 (individuals and trusts)

Initial Due Date: June 15, 2020

New Federal Due Date: September 1^st, 2020 

Instalment penalties and interest will not be charged for this payment if it is made by the extended deadline of September 1, 2020.

New Quebec Due Date: September 1, 2020

Payment of instalments by a company

Initial Due Date: Monthly or quarterly

New Federal Due Date: After August 31, 2020 for instalments that become due on or after March 18, 2020 and before August 31, 2020

New Quebec Due Date: September 1, 2020 for instalments that become due on or after March 17, 2020 and before August 31, 2020

Payment of QPP, QPIP, HSF and RAMQ contributions (individuals)

Initial Due Date: April 30, 2020

New Federal Due Date: N/A

New Quebec Due Date: September 1, 2020

Deferral of Sales Tax Remittance and Customs Duty Payments

Initial Due Date: 

• Monthly filers must remit the amounts collected for the February, March and April 2020 reporting periods;
• Quarterly filers are required to remit amounts collected for the reporting period January 1, 2020 to March 31, 2020;
• Annual filers whose GST/HST return or instalment is due in March, April, or May 2020 are required to remit amounts collected and due for their previous fiscal year and GST/HST instalments for the current fiscal year.

New Federal Due Date: Businesses, including the self-employed individuals, can defer payments of the goods and services tax/harmonized sales tax (GST/HST) and customs import duties until June 30, 2020.

New Quebec Due Date: Businesses can defer, until June 30, 2020, their remittances for the QST remittances scheduled for March 27to June 1st,, without interest or penalties.

Instalment payments to be made during this period.

The deadlines for filing returns remain unchanged.

However, it is important to note that the payment of other Canadian taxes, including source deductions and non-resident withholding taxes, is not deferred.

Financial Support Measures

To ease the burden on taxpayers and corporations, a number of aid measures are being rolled out. In fact, on March 17, the six largest Canadian banks and Desjardins Group announced that they would offer payment deferrals as well as solutions adapted to the specific situations of their clients who have been financially impacted by the pandemic. Such measures include payment deferrals on mortgages for up to six months as well as the possibility of deferring payments on other credit products for individuals and small businesses.[8]

Extraordinary measures have also been proposed by the federal government[9], and the details relating to the Canada Emergency Wage Subsidy announced on April 1, 2020[10], which are further described below. Such measures will protect Canadian SMEs and their employees, notably through subsidies representing up to 75% of their employees' salaries. The objective is to help businesses maintain their workforce during these uncertain times. These major assistance measures are welcomed and are essential for the sustainability of our economy.

Canada Emergency Response Benefit (CERB)

Canadians in financial difficulty due to the Coronavirus outbreak will be able to get $2,000 a month for up to four months.

CERB would apply to wage earners as well as workers who do not normally have access to employment insurance, including self-employed individuals and contract workers, who  :

• Reside in Canada, who are at least 15 years old;
• Have stopped working because of reasons related to COVID-19 or are eligible for Employment Insurance regular or sickness benefits or have exhausted their Employment Insurance regular benefits between December 29, 2019 and October 3, 2020;
• Who had employment and/or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and,
• Who have not quit their job voluntarily.

When submitting your first claim, you cannot have earned more than $1,000 in employment and/or self-employment income for 14 or more consecutive days within the four-week benefit period of your claim.

When submitting subsequent claims, you cannot have earned more than $1,000 in employment and/or self-employment income for the entire four-week benefit period of your new claim.

Eligible sources of revenue for the $5,000 (before tax) or more must derive from one of the following sources   :

• employment income
• self-employment income
• provincial or federal benefits related to maternity or paternity leave

Workers who normally have access to employment insurance will also receive this benefit in lieu.

Benefits will be paid every four weeks and will be taxable. It is expected that the amounts will be paid within 10 days of the request.

No applications may be submitted after December 2, 2020.

Source: Government of Canada

Incentive Program to Retain Essential Workers (IPREW)

A new financial assistance program for individuals working essential jobs during the COVID-19 pandemic which will make up the difference between the Canada Emergency Response Benefit and an eligible individual's wages.

Eligible workers can apply for the program online beginning on May 19 and receive $100 for each week of qualifying work beginning March 15, 2020, and extending for a maximum of 16 weeks.

This means that, in addition to their wages, a worker could receive a taxable benefit of $400 per month, for a total of $1,600 for the full 16-week period.

Payments will be made every two weeks starting on May 27, 2020.

To be eligible under the program, the following conditions must:

• work part-time or full-time in one of the essential service sectors during the program period;
• receive gross wages of $550 or less per week;
• have an annual employment income of at least $5,000 for 2020;
• have a total annual income of no more than $28,600 for 2020;
• be at least 15 years old when you apply for assistance under the IPREW; and
• have been resident in Québec on December 31, 2019, and plan to reside in Québec throughout 2020.

Source: Government of Québec - IPREW

The Canada Emergency Wage Subsidy (75%)

This subsidy provides eligible employers with a wage subsidy of 75% of wages, up to a maximum of 12 weeks, retroactive to March 15, 2020.

The eligible employers are:

• individuals (including trusts)
• taxable corporations
• persons that are exempt from corporate tax (Part I of the Income Tax Act), other than public institutions: non-profit organizations, agricultural organizations, boards of trade, chambers of commerce, non-profit corporations for scientific research and experimental development, labour organizations or societies, benevolent or fraternal benefit societies or orders
• registered charities
• partnerships consisting of eligible employers

Public institutions are not eligible for the subsidy. This includes municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals.

The subsidy is intended for employers with an income decline of 15% for the month of March 2020 and at least 30% for subsequent months.  The decrease in revenue is calculated per month, between the period of March 15 to June 6, 2020, by comparing the income of the given month to that of the same month in 2019. For instance: 

 

• For the period of March 15, 2020 to April 11, 2020, the baseline revenues will be those of March 2019 or the average of January and February 2020. The required decrease in revenue must be 15%.
• For the period of April 11, 2020 to May 9, 2020, the baseline revenues will be those of April 2019 or the average of January and February 2020. The required decrease in revenue must be 30%.
• For the period of May 10, 2020 to June 6, 2020, the baseline revenues will be those of May 2019 or the average of January and February 2020. The required decrease in revenue must be 30%.

A request will have to be submitted every month.

In order to promote access to the subsidy for start-ups and growing companies, employers are allowed to compare their revenue using an average of their revenue earned in January and February 2020 rather than those for the months of the year 2019, to determine if he is eligible for the subsidy.

The eligible revenue generally includes revenue earned in Canadian form selling goods, rendering services and other use of resources.

For registered charities and non-profit organizations, they are allowed to choose whether or not to include revenue from government sources as part of the calculation.

For corporations resulting from an amalgamation, they will be able to qualify by using the income of the pre-merged corporation to establish the eligible income of its prior reference period.

Employers are allowed to calculate their revenues under the accrual method or the cash method, but not a combination of both. Employers select an accounting method when first applying for the CEWS and require to use that method for the entire duration of the program.

Eligible remuneration may include salary, wages, fees, commissions and other remuneration like taxable benefits. Severance pay and items such as stock option benefits or the personal use of a corporate vehicle are not part of eligible remuneration.

The subsidy amount for a given employee on eligible remuneration paid for the period between March 15 and June 6, 2020 is the greater of:

• 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
• the amount of remuneration paid, whichever is less and up to a maximum benefit of $847 per week, or 75% of the employee's pre-crisis weekly remuneration.

The pre-crisis remuneration for a given employee is based on the average weekly remuneration paid between January 1 and March 15 inclusively, excluding any seven-day periods in respect of which the employee did not receive remuneration.

A special rule applies to employees that do not deal at arm's length with the employer. The subsidy amount for such employees is limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of the lesser of $847 per week and 75% of the employee's pre-crisis weekly remuneration. The subsidy is only available in respect of non-arm's length employees employed prior to March 15, 2020.

Eligibility for the CEWS of an employee's remuneration is available to employees other than those who have been without remuneration for 14 or more consecutive days in the eligibility period, i.e., from March 15 to April 11, from April 12 to May 9, or from May 10 to June 6. Moreover, employee eligibility is based on whether the person is employed in Canada, not where they live.

Employees who have been laid off or furloughed can become eligible retroactively, as long as they are rehired and their retroactive pay and status meet the eligibility criteria for the claim period. The employer must rehire and pay such employees before they include them in the calculation for the subsidy.

The government asks businesses to make up the remaining 25%, if possible. The obligation of paying the remaining 25% is not yet determined and further details will follow as to the required measures and steps taken to make up the 25%.

We expanded the CEWS by introducing a new 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. This refund covers 100% of employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay and for which the employer is eligible to claim for the CEWS for those employees.  

Beginning April 27, 2020, a request will be able to be made electronically through a portal managed by the CRA. In the meantime, employers can use the Canada Revenue Agency’s calculator to determine the value of the subsidy : CRA's calculator 

The Canada Emergency Wage Subsidy (75%) is different from the CERB in that its purpose is to maintain employment.

The Prime Minister of Canada announces that the program is being extended until August 29th, 2020, to assist employers keep their workers on the payroll during the pandemic.

Source: Government of Canada & News Release - Prime Minister of Canada & CBC 

Goods and Services Tax Credit[11]

A special payment through the GST credit by early May 2020 to provide income assistance to those who need it most.

This measure will double the maximum annual GST credit for the 2019-2020 benefit year.

As a result, the federal government aims to increase the income of individuals benefitting from this measure by almost $400 for single individuals and almost $600 for couples.

This measure will inject over $5.5 billion into the economy.[12]

Source: Government of Canada

Temporary 3-month wage subsidy (10%)

The subsidy will be equal to 10% of wages paid during such period, for a maximum subsidy of $1,375 per employee and $25,000 per employer.

Employers benefitting from this measure will include corporations eligible for the small business deduction as well as non-profit organizations and charities.

The amount of the subsidy is:

• equal to 10% of the remuneration you pay from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee
• a maximum of $25,000 total per employer

Associated Canadian controlled private corporations will not be required to share the maximum subsidy of $25,000 per employer.

The funds from this loan shall only be used to pay non-deferrable operating expenses, including, without limitation, payroll, rent, utilities, insurance, property tax and regularly scheduled debt service. The funds may not be used to cover any payments or expenses, such as existing indebtedness, payments of dividends, distributions or increases in management compensation.

Employers who will have qualified for both the Canada Emergency Wage Subsidy (75%) and the Temporary 3-month Wage Subsidy (10%) will receive reduced payments for the Canada Emergency Wage Subsidy (75%).

Source: Government of Canada

Large Employer Emergency Financing Facility (LEEFF)

LEEFF will provide a bridge financing to Canada’s largest employers, whose needs during the pandemic are not being met through conventional financing, in order to keep their operations going. The objective of this support is to help protect Canadian jobs, help Canadian businesses weather the current economic downturn, and avoid bankruptcies of otherwise viable firms where possible. This support will not be used to resolve insolvencies or restructure firms, nor will it provide financing to companies that otherwise have the capacity to manage through the crisis. The additional liquidity provided through LEEFF will allow Canada’s largest businesses and their suppliers to remain active during this difficult time, and position them for a rapid economic recovery.

Key guiding principles in providing support through the LEEFF, include: 

• Protection of taxpayers and workers: Companies seeking support must demonstrate how they intend to preserve employment and maintain investment activities. Recipients will need to commit to respect collective bargaining agreements and protect workers’ pensions. The LEEFF program will require strict limits to dividends, share buy-backs, and executive pay. In considering a company’s eligibility to assistance under the LEEFF program, an assessment may be made of its employment, tax, and economic activity in Canada, as well as its international organizational structure and financing arrangements. The program will not be available to companies that have been convicted of tax evasion. In addition, recipient companies would be required to commit to publish annual climate-related disclosure reports consistent with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, including how their future operations will support environmental sustainability and national climate goals.
• Fairness: To ensure support across the Canadian economy, the financing is intended to be applicable to all eligible sectors in a consistent manner.
• Timeliness: To ensure timely support, the LEEFF program will apply a standard set of economic terms and conditions.

Source: News release - Prime Minister of Canada 

Employment Insurance Work-Sharing Program

Provides benefits to workers who agree to reduce their regular work hours, increasing the eligibility of Work-Sharing agreements to 76 weeks, relaxing eligibility requirements and simplifying the application process.

Source: Government of Canada

Canada Employment Insurance Benefits

Employment Insurance sickness benefits provide up to 15 weeks of income replacement to eligible claimants who are unable to work due to COVID-19, to care for a family member suffering from COVID-19, due to quarantine, or who must stay home to care for their children.

Source: Government of Canada - Employment

Temporary Aid for Workers Program - Government of Quebec in partnership with the Red Cross

This program provides financial assistance to meet the needs of employees and self-employed individuals who, due to isolation to counter the spread of the COVID-19 virus, are unable to earn their full work income and who are not eligible for another financial assistance program.

The, tax-free, lump-sum amount to be granted is $573 per week, for a period of 14 days of isolation.

The coverage period for an eligible person could be extended to a maximum of 28 days.

However, on April 8, 2020, the Minister of Labour, Employment and Social Solidarity announced that the program will end on April 10, 2020. This decision was made following the implementation of the Canada Emergency Benefit on April 6.

Any application made to the program before April 10, 2020 at 4:00 p.m. will be processed according to the process set out in the program.

Source: Temporary Aid for Workers Program

Registered Retirement Income Fund

Reducing required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25%.

Source: Government of Canada

Office of the Superintendent of Financial Institutions

OSFI has taken a number of actions to build resilience of federally regulated financial institutions during the COVID-19 crisis. These measures include lowering the Domestic Stability Buffer (“DSB”) by 1.25% of risk weighted assets, effective as of March 13, 2020. The DSB was set at 2.25% of risk weighted assets, effective as at April 30, 2020. With this announcement, the DSB requirement is now set at 1.00%.

Moverover, OSFI is suspending all of its consultations and policy development on new or revised guidance until conditions stabilize. This includes the new proposed B-20 benchmark rate for uninsured mortgages. As a result, the benchmark rate as currently published by the Bank of Canada will remain in force until further notice.

Source: OSFI

Montreal – Deferral of the second instalment of municipal taxes

The June 1, 2020 deadline has been extended to July 2, 2020.

Source: Montreal

Quebec City - Deferral of the second instalment of municipal taxes

• May 4 payment : deferred to August 4;
• July 3 payment : deferred to September 3;
• September 3 deferred : deferred to November 3.

Source: Quebec City

Longueuil – Deferral of the instalment of municipal taxes 

The following relief measures apply to businesses and individuals:

• 2nd instalment: now Wednesday, May 6, 2020
• 3rd instalment: now Monday, July 6, 2020
• 4th instalment: now Tuesday, September 8, 2020

Source: City of Longueuil

Westmount - Deferral of the instalment of municipal taxes

The new due date for the 2nd instalment of the municipal tax accounts has been extended to Monday, June 29, 2020.

The interest and penalty rates will be at 0% from March 12 to June 29th.

Source: City of Westmount

Trade Measures

In order to limit economic uncertainty, the provincial government also announced on March 19, 2020 extraordinary measures, which will tie in with the federal government’s measures. In fact, considering many Quebec businesses are experiencing the global economic slowdown’s repercussions, the provincial government announced $2.5 billion in assistance for businesses facing liquidity issues associated with the COVID-19 pandemic.

These emergency assistance measures will be incorporated into existing programs through Investissement Québec, including through loans and loan guarantees of up to $50,000 for companies from all sectors of activity. Advantageous loan conditions will also be provided to help businesses deal with the pandemic. Repayment terms for existing loans issued by Investissement Québec will also be eased.

Canada Emergency Commercial Rent Assistance (CECRA)

CECRA offers forgivable loans to eligible commercial property owners so that they can reduce the rent owed by their impacted small business tenants for the months of April, May and June, 2020.

More specifically, the AUCLC program can be summarized as follows:

• Canada Mortgage and Housing Corporation will provide forgivable loans to eligible commercial property owners.
• The loans will cover 50% of the gross rent owed by impacted small business tenants during the 3-month period of April, May and June 2020.
• The property owner will be responsible for no less than half of the remaining 50% of the gross rent payments (paying no less than 25% of the total). 
• The small business tenant will be responsible for no more than half of the remaining 50% of the gross rent payments (paying no more than 25% of the total).

The eligibility criteria for property owners are the following: 

• Own property that generates rental revenue from commercial real property located in Canada. 
• Be property owner of the commercial real property where the impacted small business tenants are located.
• Have a mortgage loan secured by the commercial real property, occupied by one or more small business tenants.
• Entered or will enter into a rent reduction agreement for the period of April, May, and June 2020, that will reduce impacted small business tenant’s rent by at least 75%: the rent reduction agreement with impacted tenants includes a moratorium on eviction for the period of April, May and June 2020.
• Have declared rental income on your tax return (personal or corporate) for tax years 2018 and/or 2019. 

The eligibility criteria for property owners are the following: 

Impacted small business tenants that are businesses, including non-profit and charitable organizations who:

• pay no more than $50,000 in monthly gross rent per location, 
• generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level), and
• have temporarily ceased operations (i.e. generating no revenues), or has experienced at least a 70% decline in pre-COVID-19 revenues: to measure revenue loss, small businesses can compare revenues in April, May and June of 2020 to that of the same month of 2019. They can also use an average of their revenues earned in January and February of 2020.  

The $20 million gross annual revenue threshold is based on the small business tenant’s 2019 financial revenue. The small business tenant would use whatever 12-month period their company used to calculate its financials.

If the small business tenant or its ultimate owner produces consolidated statements, then the tenant would use revenues reported for the group level of companies.

Alternatively, if the small business tenant does not produce consolidated statements, then it is the specific revenue of the tenant that applies for the $20 million test.

The exceptions relating to who is eligible for the CECRA are:

• Where the commercial property owner is not and is not controlled by an individual holding federal or provincial political office.
• Where the government is the landlord of the small business tenant and they are federally, provincially, or municipally owned properties,.
• Where there is a long-term lease to a First Nation, or Indigenous organization or government, the First Nation or Indigenous organization or government is eligible for CECRA for small businesses as a property owner.
• Where there are long-term commercial leases with third parties to operate the property (for example, airports), the third party is eligible as the property owner.
• Also eligible are post-secondary institutions, hospitals, and pension funds, as well as crown corporations with limited appropriations designated as eligible under CECRA for small businesses.

It is important to note that commercial properties with a residential component and multi-unit residential mixed-use properties would equally be eligible with respect to their small business tenants. Moreover, properties with or without a mortgage are eligible under CECRA for small businesses.

Where the property is newly constructed or recently purchased, you may be still eligible for CECRA for small business, provided the other program requirements are met.  This includes having entered into a lease with the eligible tenant on or before April 1, 2020.

The program provides retroactive support for the months of April, May and June 2020.  In fact, property owners may be asked to reimburse amounts paid by small business tenants during this period.

The deadline for applications is August 31, 2020.

Property owners will still be able to apply for assistance after the 3-month period provided they can demonstrate that they were eligible during those months.

Source: Governement of Canada & CMHC 

Flexibility for Outstanding Loans and Loan Guarantees

Fonds local d'investissement ("FLI") will implement easing measures relating to outstanding loans and loan guarantees.

A three-month moratorium has been introduced for the repayment (principal and interest) of loans already granted by FLI.

Interest accrued during this period will be added to the loan balance. This measure is in addition to the moratorium already in place under most investment policies in effect in the RCMs, which can be as long as twelve months.

Source: Gouvernement du Québec – Ministère de l’Économie et de l’Innovation (available in French only)

Enhancement to the small business assistance program

Montréal has enhanced the measure implemented by the government of Québec to support eligible businesses that need less than $50,000 in solvency. An envelope of $40 million has been set aside for Montréal companies. This assistance will be granted in the form of a loan at 3% interest by PME MTL, Montréal’s business support network. All loans will have a six-month moratorium and the city will assume the interest portion during that period.

Source: Montréal

Canada Emergency Business Account

A $40,000 loan, guaranteed by the government, interest-free for the first year.

An amount of $10,000 may be non-refundable, if certain conditions are met.

To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 per cent (up to $10,000).

The Government of Canada has expanded the eligibility criteria in order to ensure farmers without payroll can now access the CEBA. To qualify under the expanded eligibility criteria, applicants with payroll lower than $20,000 would need to have a business operating account at a participating financial institution, have a CRA business number, have filed a 2018 or 2019 tax return and have non-deferrable expenses between $40,000 and $1.5 million.

This program is now available at various financial institutions and credit unions.

Source: Government of Canada & Statement

Postponement of the 2nd instalment to the Sociétés de développement commercial

The deadline for the second instalment of contributions to the Sociétés de développement commercial is postponed by three months. The new deadline is September 1, 2020.

Source: City of Montréal

Canada Border Services Agency

The CBSA has decided to provide for a 45 business days grace period for late accounting penalties for transactions released from March 11, 2020, to May 14, 2020, inclusively. Clients will not have to submit an application to have late accounting penalties waived.

The grace period will be subject to review as the situation evolves, in which case an update to this notice will be issued.

Source: CBSA

Advisory services

BDC offers "Business Continuity Plan and Templates for Entrepreneurs".

Source: BDC

Small Business Loan Offer

Provides entrepreneurs with small business loans of up to $100,000 through a fully online application process.

Source: BDC

Purchase Order Working Capital Loans Offer

Offers purchase order working capital loans to cover up to 90% of a purchase order amount with shorter term financing options.

Source: BDC

Working capital loans of up to $2 million

Working capital loans of up to $2 million with flexible terms and deferral of repayments for up to 6 months for BDC-eligible businesses.

Source: BDC

Deferral of repayments for up to 6 months

Deferral of repayments for up to 6 months, free of charge, for existing BDC clients with a total BDC loan commitment of $1 million or less.

Source: BDC

Rate reduction

BDC offers reduced rates for new eligible loans.

Source: BDC

Concerted Temporary Action Program for Businesses

Investissement Québec offers financing for businesses suffering from a temporary lack of liquidity caused by the pandemic, in the form of a loan guarantee or loan of a minimum value of $50,000.

This financial assistance is available to businesses operating in Québec, including cooperatives and other social economy enterprises with commercial activities. Eligible businesses are those that find themselves in a precarious situation and temporary difficulty as a result of COVID-19. They must show that their financial structure offers realistic prospects for profitability. Businesses cannot be under the protection of the Companies’ Creditors Arrangement Act or the Bankruptcy and Insolvency Act.

Businesses must show that their cash flow issues are temporary and that the liquidity shortage stems from:

• A problem involving the supply of raw materials or products (goods or services)
• An inability, or a substantially decreased ability, to deliver goods, products or services

Source: Program Details (available in French only)

Programme actions concertées pour le maintien en emploi (PACME)

PACME aims to provide direct support to businesses and the self-employed workers by providing grants for human resource training.

Eligible beneficiaries of the program include:

• Employers
• Self-employed workers
• Cooperatives
• Non-profit organizations

Eligible expenses for the program are:

• Salary of workers in training for a maximum of $ 25/hour
• Trainers' fees for a maximum of $ 150/hour
• Indirect costs for trainers
• Indirect costs for workers in training
• Several other costs required for training activities
• Limit of $ 100,000/business or reduction of the subsidy to 50% if the expenses are between $ 100,000 and $ 500,000

PACME can be combined with all other measures announced by the federal and provincial governments. Ex : If a company benefits from the Canada Emergency Wage Subsidy (75%), the remaining 25% may be reimbursed by PACME.

Duration of the program : Until September 30, 2020, or until the budgetary envelope of $ 100 million has been used up.

Source: Gouvernement du Québec - PACME details (available in French only)

Relief measures by the Fonds de solidarité FTQ

The Fonds offers all organizations that would have received a loan from its network, a six-month deferral of principal and/or interest payments related to the loans (depending on the organization's choice).

This measure is intended to alleviate short-term financial pressure for companies in its network, which includes the Fonds régionaux de solidarité FTQ.

This temporary relief will also be implemented by the Fonds locaux de solidarité FTQ, benefitting RCMs and other organizations managing local funds.

Source: FTQ

Fondaction - CSN Respite

Deferral, for a period of 3 months beginning March 13, 2020, of loan payments, principal and interest, for all portfolio companies.

FondAction will handle all current investment files, as well as new files.

Source: Fondaction (available in French only)

FondAction to devote $40 million to Quebec SMEs in the agri-food sector

The Fonds will allocate $40 million to Quebec small and medium companies in the sector over the next year to ensure the vitality of these businesses.

To get through this challenging period, FondAction has made its financing offer more flexible for companies in the sector that need development capital for projects of $500,000 or more.

Source: Fondaction

The Caisse de dépôt et de placement du Québec established a $4-billion envelope to support Québec companies temporarily impacted by COVID-19

The funds will be used to address the specific liquidity needs of companies, whether or not in CDPQ’s portfolio, that namely meet the following criteria:

• Have been profitable before the COVID-19 crisis
• Have a promising growth outlook in their sector
• Seek financing of over $5 million.

CDPQ will continue to deploy the financial and operational expertise of its teams to help the selected companies in developing innovative and structuring financial solutions. These solutions could include various financial instruments based on companies’ needs in the current conditions.

Source:CDPQ

Business Credit Availability Program (BCAP)

BCAP will support access to financing for Canadian businesses in all sectors and regions.

This program includes:

Loan Guarantee for Small and Medium-Sized Enterprises

Through the Business Credit Availability Program, EDC is working with financial institutions to guarantee 80% of new operating credit and cash flow term loans of up to $6.25 million to small and medium-sized enterprises.

This financing support is to be used for operational expenses and is available to both exporting and non-exporting companies.

This program is now available at various financial institutions and credit unions.

Co-Lending Program for Small and Medium-Sized Enterprises

Through the Business Credit Availability Program, BDC is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.

The program offers differing maximum finance amounts based on business revenues.

Financed amount: 

• 80 % provided by BDC
• 20 % provided by your financial institution

This support is available until or before September 30, 2020.

This program is now available at various financial institutions and credit unions.

BDC’s Mid-Market Financing Program

BDC’s Mid-Market Financing Program will provide commercial loans ranging between $12.5 million and $60 million to medium-sized businesses whose credit needs exceed what is already available through the Business Credit Availability Program and other measures.

BDC anticipates that qualifying companies will have annual revenues in excess of approximately $100 million.

More details will be made available soon.

EDC’s Mid-Market Guarantee and Financing Program

EDC’s Mid-Market Guarantee and Financing Program will bring liquidity to companies who tend to have revenues of between $50 million to $300 million, to sustain operations during this uncertain period. EDC will continue to work with Canadian financial institutions to guarantee 75 per cent of new operating credit and cash-flow loans – ranging in size from $16.75 million to a maximum of $80 million. These expanded guarantees are available to exporters, international investors and businesses that sell their products or services within Canada. 

More details will be made available soon.

Source: Government of Canada

Relief Measures by Movement Desjardins

Financing:

• Temporary changes to line of credit terms
• Moratorium on principal payments across all industries
• Fast-tracked approval
• Refinancing for certain loans

Credit cards:

• Temporary reduced interest rate of 10.9%
• For all credit card holders who obtain a payment deferral for a credit card or Accord D financing product
• Reduced interest rate applies for the duration of the payment deferral

Commercial vehicle insurance:

• Refund of commercial vehicle insurance premiums

Group insurance:

• Free psychological counselling for group insurance plan members and their families

Source: Desjardins

Fundraising campaign launched by Facebook

Creation of a US$100 million donation program to help small and medium-sized enterprises (SMEs) around the world whose businesses are compromised by the Coronavirus crisis.

Source: article

Over $10 billion in additional support largely targeted to small and medium-sized businesses

BDC and EDC are working with private sector lenders to coordinate financing solutions for individual businesses, including in specific sectors such as air transportation and tourism as well as the oil and gas sector.

Source: Government of Canada

Farm Credit Canada

Short-term credits for farmers and the agri-food sector to be increased.

Source: Government of Canada

 

For a summary of the measures adopted by the courts, read our article "COVID-19: What You Need to Know About Tax Disputes".

For 25 years, BCF's mission has been to support our local businesses. We understand the issues you face and our Corporate Finance and Taxation team are available to help you benefit from the resources at your disposal to minimize the financial impacts of the COVID-19 pandemic. Please do not hesitate to contact our team for support on the applicability of these newly announced measures.

[1] Nouvelles mesures pour faciliter la vie des citoyens et des entreprises, Revenu Québec –  Available in French only.  [2] Mesures d'assouplissement pour les citoyens et les entreprises, Revenu Québec – Available in French only  [3] Canada’s COVID-19 Economic Response Plan :Support for Canadians and Businesses, Department of Finance Canada  [4] Soutien supplémentaire aux entreprises canadiennes pour faire face aux répercussions économiques de la COVID‑19, Ministère des Finances du Canada  [5] Additional Support for Canadian Businesses from the Economic Impact of COVID-19, Governement of Canada  [6] Canada’s COVID-19 Economic Response Plan :Support for Canadians and Businesses, Department of Finance Canada  [7] Revenu Québec : La date limite pour produire et transmettre la déclaration de revenus pour l’année d’imposition 2019 d’un particulier décédé au cours de cette année, mais avant le 1er décembre 2019, est reportée au 1er juin 2020, Revenu Québec – Available in French only  [8] « Les six principales banques canadiennes offrent des sursis de paiement », La Presse, 17 mars 2020.  [9] Canada’s COVID-19 Economic Response Plan :Support for Canadians and Businesses, Department of Finance Canada  [10] The Canada Emergency Wave Subsidy, Department of Finance Canada, April 1, 2020. [11] Royal sanction required  [12] Canada’s COVID-19 Economic Response Plan :Support for Canadians and Businesses, Government of Canada