The global COVID-19 pandemic has caused devastation to the economies of countries around the world. The need for forced physical distancing, which is necessary to slow and eventually stop the spread of the disease, has led to many businesses and entire industry sectors to be shut down indefinitely. In response, the federal government has instituted or proposed a number of programs, policies, and measure that are intended to provide support to individuals, businesses, and industries.
There are a number of programs currently in place or being discussed that are intended to provide financial support to individuals in Canada. For those that are experiencing a loss of income as a direct result of the COVID-19 pandemic and the related shutdowns, the Canada Emergency Response Benefit (“CERB”) has been made available. The CERB is available to residents of Canada who are at least fifteen years old, have not voluntarily quit their job but have stopped or decreased their work because of COVID-19, or are eligible for regular Employment Insurance (“EI”) benefits, and who made at least $5,000 in 2019 or in the twelve months immediately preceding their application for the CERB. CERB-eligibility was recently expanded to include seasonal workers who have exhausted their EI benefits and other individuals who have recently exhausted their EI benefits and are unable to find a job. The CERB provides $2,000 every four weeks to eligible recipients, for up to a maximum of sixteen weeks. Recipients are now allowed to earn income of up to $1,000 per month while receiving the CERB.
Another support measure for individuals that is being proposed is a temporary salary top-up for low-income essential workers. This proposed program would be available to essential workers earning less than $2,500 per month on a full-time basis. The federal government would provide a transfer to provincial and territorial governments who would share in the cost of topping up the salaries of these low-income essential workers. It has not yet been stated what the amount of the top-up would be, but more details are expected to be announced in the very near future.
Some other forms of assistance available to individuals include an increase to the Canada Child Benefit, whereby parents will receive up to an additional $300 per child; a one-time special Goods and Services Tax payment, which has already been provided to low- and modest-income families; an extension of the deadline for filing 2019 income taxes to June 1, 2020; and a deal with Canadian financial institutions, which permits banks to defer up to six monthly mortgage periods for homeowners who have been financially affected by the COVID-19 pandemic. The government is also proposing the Canada Emergency Student Benefit, which would provide $1,250 per month from May to August 2020 to eligible students and new graduates or $1,750 per month for those eligible students and recent graduates who have dependants or disabilities.
The federal government has also implemented or proposed a number of programs that are intended to provide support to Canadian businesses, in an attempt to prevent businesses from shuttering for good. One such program is the Canada Emergency Wage Subsidy (“CEWS”), which is available to Canadian businesses that have seen a decline in their gross revenues of at least 15% in March and 30% in April and May of this year. Through the CEWS, the federal government covers 75% of an employee’s wages up to a maximum of $847 per week. The CEWS will remain available from March 15 to June 6, 2020. Businesses who take advantage of the CEWS will also be given a full refund of contributions that they make to EI or the Canada Pension Plan.
Another measure that the federal government has introduced to assist businesses is the Canada Emergency Business Account (“CEBA”). CEBA assists small businesses and not-for-profit organizations who had a payroll between $20,000 and $1,500,000 in 2019, by providing loans of up to $40,000 that will be interest-free if repaid by December 31, 2022. Also, if the loans are repaid by that date, $10,000 of the loan will be forgiven and the business will not have to pay that amount back.
One urgent concern that many businesses are currently facing is the possibility that they will be unable to continue to afford their rent. Non-essential businesses have been ordered to close and, without a source of income, many businesses are in danger of breaching their commercial leases. In response, the federal government has announced the Canada Emergency Commercial Rent Assistance (“CECRA”), which will be administered by provincial governments, who will adopt their own plans, such as Ontario’s Ontario-Canada Emergency Commercial Rent Assistance (“OCECRA”).
In order to qualify, commercial property owners must have small business tenants who pay a gross rent of $50,000 per month or less and who are non-essential small businesses whose revenues have decreased by 70% as a result of COVID-19. Those who qualify are required to reduce their clients’ rent to 25% of the rent related to fixed costs and forgive the remaining 75%. It is currently unclear what exactly will be considered “fixed costs.” Commercial landlords must also agree not to carry out any evictions while they are receiving assistance under the OCECRA.
In exchange, the landlords will be allowed to apply for forgivable loans of up to 50% of those tenants’ rent related to fixed costs for the months of April, May and June 2020. However, it is unclear whether this will only apply to commercial properties that are subject to a mortgage or whether the 50% recoverable loan will be provided directly from the government to landlords or whether it will be provided to landlords through their lending institutions.
The COVID-19 pandemic has had an unprecedented effect on the lives of individuals and the economic interests of businesses. There still remains a great deal of uncertainty regarding how the country will respond and rebound. In order to minimize the negative effects that are felt, it is important for individuals and business owners to be aware of and take advantage of the support and assistance that is available to them. New developments are arising on a weekly, and sometimes daily, basis, so it is necessary to stay informed and try to keep up to date with the ever-changing news.