Support for Canadian Businesses in Response to COVID-19

On March 18, 2020 the government and its various partners announced further measures to support Canadian businesses in these challenging times.

CRA Tax Relief for Canadian Businesses

The Canada Revenue Agency will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020.  This relief would apply to tax balances due, as well as installments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period. Please note that this relief only applies to corporate tax under Part I of the Income Tax Act. It does not apply to tax on dividend income, GST/HST or payroll withholdings.

The announcement stated that the Canada Revenue Agency will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives. We assume that this applies to audits already initiated. There was also no definition provided for “temporarily”.

Temporary Wage Subsidy for Small Canadian Businesses

The government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Canadian businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.

Business Development Bank of Canada and Export Development Canada Support Small and Medium-Sized Canadian Businesses

The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) will provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses. This will be an effective tool for helping viable Canadian businesses remain resilient during these very uncertain times.