As businesses assess the ongoing impact of the COVID-19 pandemic on their operations, knowing what government programs exist and how to access them will be critical for recovery.
Measures vary from new credit and loan programs to extending federal tax filing deadlines to wage subsidies to deferring municipal property taxes – all of which will support qualifying businesses.
MNP has compiled a brief list of the latest federal and provincial incentives to provide a pathway through the pandemic, including where you can find more detailed information.
One of the latest federal incentives is the 75 per cent wage subsidy announced March 26, 2020. Qualifying businesses will be able to draw on the subsidy for up to three months retroactive to March 15, 2020.
As well, the new Canada Emergency Business Account guarantees interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover operating costs when revenues have been temporarily reduced.
The Business Development Bank of Canada (BDC) created a $10-billion Business Credit Availability Program as part of the federal efforts to support Canadian businesses. The new relief measures for qualified businesses include 36-month working capital loans of up to $2 million, principal payment postponements during the first 12 months and 40 per cent of the loan to be repaid within the remaining 24 months.
To be eligible, the business must be viable and in good standing. For more information, visit the BDC website.
The Small and Medium Enterprise Loan and Guarantee Program is being offered in partnership with Canadian chartered banks and other qualified financial institutions. By applying to BDC or Export Development Canada (EDC), qualified Canadian businesses can access further total funding capacity of $40 billion through co-lend term loans for operational cash flow requirements. For more information, click here.
The federal government announced Goods and Services Tax (GST) / Harmonized Sales Tax (HST) remittances, as well as customs duties and sales tax owed on imports, will be deferred until June 30, 2020.
Federal and several provincial governments have also extended the filing deadline for income tax returns. You can see the deadlines for federal, Alberta and Quebec income taxes here.
Property tax represents a large cost to real estate companies. To help, provinces and municipalities have offered non-residential and commercial property owners help with property tax payments, cancelled increases and / or other measures as tenants shut down in response to the COVID-19 crisis. For more detailed information on deferrals and programs, click here.
In Ontario, the provincial government announced a series of tax incentives to help businesses and individuals manage through the dramatic reduction in revenues, including:
- Temporary doubling of the Employer Health Tax (EHT) exemption: Government proposing to retroactively raise the current EHT exemption from $490,000 to $1 million for 2020.
- Interest and penalty relief: Five-month program beginning April 1, 2020 for Ontario businesses that miss any filing or remittance deadlines under select provincially administered taxes.
- New Regional Opportunities Investment Tax Credit: A new 10-per-cent refundable Corporate Income Tax credit for capital investments
- Postponement of Property Tax Reassessment: Assessments for the 2021 taxation year will continue to be based on the same valuation date that was in effect for the 2020 taxation year.
Many Canadian municipalities and provinces declared local states of emergency in early to mid-March 2020 in response to the pandemic – coinciding with many entities’ fiscal year ends. When preparing financial statements, management will need to consider the existing and anticipated effect of COVID-19 on the organization’s activities and their ability to continue as a going concern. These include future expected profitability / cash flows, ability to meet debt repayment and other obligations and the ability to obtain financing or other cash injections (if needed).
Further tools, strategies and insights
MNP has launched the COVID-19 Business Advice Centre to give Canadian businesses the answers and insights they need to move forward through this unprecedented crisis. With updated tax alerts, resilience strategies and industry-specific insights you can count on, MNP is here to support Canadian businesses from coast to coast.
Michael Dimitriou is the regional managing partner for MNP’s Eastern Ontario region and a member of the MNP board of directors and quality assurance executive. He has nearly three decades of experience in assurance and advisory services in a wide range of industries.