Wading through relief programs for businesses

ELORA – Normally, this would be a busy time of year for accountants to file business and personal tax returns.

But with COVID-19, it’s madness, says Bud Arnold, an accountant and partner with Baker Tilly Canada.

“The rules have been changing quickly,” said Arnold in a phone interview on April 6. “With each announcement, we are getting more understanding over time.”

Two initiatives have been launched to help businesses and their employees receive some compensation as businesses are forced to alter production or close and staff are instructed to stay home.

You’ll have to get your acronyms straight. There’s the Business Wage Subsidy (BWS) and the Canada Emergency Wage Subsidy (CEWS) for businesses.

And for employees there’s the Canada Emergency Response Benefit (CERB).

The BWS is available to employers who are individuals, partners, non-profits, registered charities and Canadian-controlled private corporations.

Eligible employers must employ one or more eligible employees (employed in Canada); have an existing business number and payroll account with the Canada Revenue Agency on March 18, 2020; and pay salary, wages, bonuses or other remuneration to an eligible employee.

Through this program, up to 10 per cent of an employee’s wage is covered for a period of three months to a maximum of $1,375 per employee and $25,000 per employer.

The second option, CEWS, is for employers who suffer a drop in gross revenues of at least 30 per cent in March, April or May 2020 compared to the same month in 2019.

Eligible employers would include individuals, taxable corporations, and partnerships consisting of eligible employers as well as non-profit organizations and registered charities.

Municipalities and local governments, crown corporations, public universities, colleges, schools and hospitals are not eligible for this program.

An employer would not be eligible to claim the CEWS for remuneration paid to an employee receiving CERB.

“The first option is narrower in scope and only for small businesses,” Arnold said, adding these subsidies only help cover wages and not other business expenses.

Those business owners who pay themselves a dividend rather than a wage, are not eligible for these programs, Arnold said.

There are some “enhanced lending” programs and an extension on filing and paying taxes, he said.

Arnold said the best program to take is the one that helps with cash flow.

“Businesses will incur significant loss. If they can keep the cash coming in, they can pay their employees longer,” he explained.

This week the government also started taking applications for the CERB, where eligible employees can receive $2,000 a month ($500 a week)  for four months rather than going on employment insurance.

The income relief programs are complicated, Arnold acknowledged, but his key takeaways are:

– there are several programs that will help with cash flow. “They do change rapidly so you have to keep informed,” Arnold said;

– when we come out the other side and start to rebuild, the government will have a big deficit, so it’s important to focus on the longer term, he said. “Business will be getting back into the game”;

– there is a lot of agriculture in Wellington County, “and this is an area that will be able to carry on with stable volumes,” Arnold said.

Arnold said his Elora office is accepting new clients. Packages dropped at the door will sit in quarantine for four days before being opened.