COVID-19: New Federal Wage Subsidy

On March 27, 2020, Prime Minister Justin Trudeau announced that the Federal Government would be increasing its investment in small and medium sized businesses in response to COVID-19.

Specifically, the Prime Minister announced that the exiting federal wage subsidy, which until March 27, 2020, covered 10% of the wages paid by small and medium sized businesses up to a maximum of $25,000 per employer, would be expanded to cover 75% of those wages paid by eligible businesses for up to three months, retroactive to March 15, 2020. No maximum amount available to eligible businesses has yet been announced, or attached to this increased benefit.

The Prime Minister advised Canadians, during his daily press conference, that this increased wage subsidy will help businesses stay open and keep people on the payroll during this difficult period. Moreover, he expressed his government’s hope that the availability of the expanded wage subsidy would motivate some small and medium sized businesses to reopen and recall employees who had been previously laid off; even when the demands of work may not require it.

The CERB and EI Benefits remain available to those who are currently unable to work or who have lost their jobs as a result of COVID-19. See our previous article for a detailed analysis of the CERB and available EI Benefits.

During the same press conference, the Prime Minister also announced further actions on the part of the federal government aimed at stabilising and protecting SMEs. In particular, he announced that the Federal Government will permit all businesses and self employed people to defer Goods and Services Tax and/or Harmonized Sales Tax payments, as well as duties charged on imports, until June 2020.

Lastly, the Prime Minister announced two new programs to facilitate access to credit for small and medium sized businesses. First, the new Canada Emergency Business Account will provide up to $25 Billion to financial institutions to fund interest free loans to eligible SMEs. Eligible businesses will be able to apply for up to $40,000 in financing, $10,000 of which will be forgivable, subject to certain requirements. Second, the Small and Medium Sized Enterprise and Loan Guarantee System will make up to $40 Billion in lending available to small and medium sized businesses which have been impacted by COVID-19.

While guidelines regarding eligibility and the application processes for the newly announced benefits and programs are not yet available, the Federal Government intends to make those details available early next week.

We will continue to keep you up to date on developments regarding the new wage subsidy and any other additional programs which are announced in response to the COVID-19 pandemic. Staying informed regarding these, and other relief programs, will ensure that you can manage your business and workforce efficiently and economically in these uncertain times.