COVID-19 – Canadian Tax and Business News, release #3
Our COVID-19 Canadian Tax and Business News updates are our way of informing our clients, friends and business associates with recent information that may help businesses and individuals while coping with the outcomes from the COVID-19 pandemic.
Our goal is to monitor the news and release relevant information as it becomes available.
Wage Subsidy for Employers
In our COVID-19 release #2, we discussed the wage subsidy of $25,000 that is available to qualifying small employers to help keep individuals on payroll. The subsidy will be equal to 10% of remuneration paid, up to a maximum of $1,375 per employee. Once we find out the government’s definition of qualifying small employers, we will communicate it through one of our releases.
The CRA announced that effective immediately, eligible employers that pay salary or wages from March 18th and up to June 20th are permitted to reduce the amount they are required to remit for payroll withholdings by the amount of the subsidy. This does not impact the amount to be withheld per employee and the withholdings should be calculated as normal. Employers simply have to remit less to the CRA.
For example, assuming an employee is paid $6,000 per month and the required amount to be remitted to the CRA for the month of April 2020 is $2,000 for this employee (including employee and employer portion of withholdings), the employer will only be required to remit $1,400 as they will be eligible for a $600 subsidy for this employee ($6,000*10%).
There is no information at this time if the wage subsidy will be taxable to employers.
New EI Measures
In our COVID-19 release #2, we discussed the Federal governments new EI measures for individuals supporting an individual in quarantine or self isolation and for individuals who have lost their job or are subject to reduced hours. Details regarding the new Emergency Support Benefit have not been released as of today. However, information regarding the Emergency Care Benefit has been released which we have summarized below.
Emergency Care Benefit (ECB)
The ECB will provide up to $900 bi-weekly for up to 15 weeks to qualifying individuals. The ECB will be available to:
- Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits.
- Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent, but do not qualify for EI sickness benefits.
- Parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not.
The ECB will be administered by the Canada Revenue Agency (CRA) and application for the ECB will become available in April. Individuals will need a CRA My Account or My Service Canada Account to apply online. There will also be a toll-free number with an automated application process. Qualifying individuals will have to attest their eligibility bi-weekly.
Records of Employment (ROE)
As a last resort, many employers are looking to layoffs during this financial downturn. With that comes the requirement to file ROE’s with Service Canada which can be a daunting task.
Below we have listed links to the Employment and Social Development Canada (ESDC) website that you may find helpful on how to prepare ROE. The link provides a step by step guide to file online. You can also obtain online ROE tutorials from the EDSC website (link below).
For businesses with third party payroll providers, please contact them for more information as to how they can assist with the ROE process.
Filing the ROE is crucial especially for employees looking to claim EI benefits during this time. Don’t delay and get ROE’s completed as soon as possible.
The links are:
How to complete the Record of Employment (ROE) form
CRA Audit and Collection Activities
On March 19, 2020 the CRA announced that collection activities on new debts will be suspended until further notice and flexible payment arrangements will be available to Canadian individuals and businesses who are unable to meet their payment obligations to the CRA. This is a welcoming relief especially for corporate taxpayer’s who may not otherwise qualify for the tax payment deferral discussed in our COVID-19 release #2.
The CRA also announced it will not contact small or medium sized businesses to initiate any GST/HST or Income Tax audits for the next four weeks. For audits currently ongoing, they will suspend interaction with taxpayers and representatives unless the legal deadline to reassess is approaching.
Taxpayers unable to meet filing or payment deadlines because of circumstances beyond their control, such as the impact of the COVID-19 virus, are encouraged to seek penalty and interest relief.
For more information, please visit the CRA publication.
As we all try to stay safe, we need to remind ourselves business will get back to normal but in the meantime let’s all do our part to get to normal as soon as we can. If you have any questions or require further information, don’t hesitate to reach out to us.
Get in touch by email: info@fazzaripartners.com or phone: 905.738.5758
