What supports will business owners receive to stay open and meet payroll during the COVID-19 crisis?
This morning, Prime Minister Justin Trudeau and Finance Minister Bill Morneau made announcements to assist business owners to stay open and meet payroll. Premier Doug Ford and Provincial Finance Minister Rod Phillips followed up with their own announcement this afternoon.
Federal Government Supports
The Federal Government announced $55 Billion to assist local businesses in maintaining liquidity by deferring tax filing and tax payments. The tax filing deadline has been extended to June 1, 2020, and tax payments have been postponed until "after August 31, 2020."
This tax deferral will apply both to tax balances already due, as well as installments. No interest or penalties will accumulate on these amounts during this period.
For the next four weeks, for the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interactions.
Small and medium sized businesses that have a payroll for employees are eligible to apply for a 10% wage subsidy for up to 3 months, up to a maximum of $1,375 per employee and $25,000.00 per employer. This wage subsidy will be available immediately upon approval by Parliament. Details on how to apply have not yet been released.
Access to Credit
The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) are providing more than $10 Billion of additional support, targeting small and medium size businesses. BDC and EDC are working with private sector lenders to "coordinate credit solutions for individual businesses."
The Office of the Superintendent of Financial Institutions (OSFI) announced it is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets, effective immediately. That means Canada's largest banks are now allowed to inject a further $300 Billion of additional lending into the economy that was previously unavailable.
Ultimately, the intention is to open up more credit options for small and medium size businesses. Further details are pending.
Funding this size requires Parliamentary Approval
You are probably wondering why you will not be receiving these supports immediately, especially if your business has been affected by emergency orders to shut down. Funding (budget) announcements of this size require Parliamentary approval. Last week Parliament was shut down to help stop the spread of the virus. It appears Parliament will be recalled to hold an emergency session to debate and vote on these proposed funding packages. Further details will come out then.
Provincial Government Supports
Premier Ford and Finance Minister Phillips announced this afternoon that they were waiting for the Federal Government before unveiling their own economic and fiscal statement with support for individuals and businesses. They announced this afternoon that their economic and fiscal statement will be revealed next Wednesday, March 25, 2020.
We are closely monitoring this ever-shifting legal landscape. Stay tuned as we learn more.
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