Fenestration Canada Brings Companies up to Speed on Relief ProgramsApril 13th, 2020 by Drew Vass, Executive Editor
Fenestration Canada hosted a webinar last week, aiming to assist members in navigating economic relief measures amid the effects of the coronavirus. Bonny Koabel, of AKR Consulting, provided a detailed overview for what door and window companies should expect from programs implemented by the municipal government, including how they can be used to reduce economic impacts.
A 75% Wage Subsidy program is available to all businesses across the country, Koabel said, regardless of their size. The $71 billion program is designed to encourage businesses to keep employees on payroll, allowing those with at least a 30% year-over-year drop in sales for March, April or May 2020, to claim subsidies. The program is retroactive through March 15, 2020, and covers through June 6, 2020, offering up to 75% of gross T4 wages (those reported on T4 tax forms, otherwise known as a Statement of Remuneration Paid). The program’s maximum payout is $847 per week, per employee, which is based on a $1,128.84 per week income.
The Canadian government is asking businesses to do what they can to pay the remaining 25% deficit left behind by its 75% Wage Subsidy program, Koabel said, however, it is worth noting that this isn’t a stipulation of the program. A portal is designed to issue funding within about three to six weeks. In the meantime, companies will require cash-flow to keep them going, she said. Wage subsidies will need to be logged as income in the year in which they’re received, she explained, and are taxable.
Through numerous scenarios, Koabel illustrated the amount of subsidy expected at various salary levels, ranging from $1,000 to $3,000 per week, forewarning companies that for employees earning more than $1,128.84 per week, subsidies would equal less than 75%. For instance, subsidies for a $3,000-per-week salary equate to $847, or 28% of usual paychecks.
Companies that fail to qualify for the 75% program may still qualify for a 10% Wage Subsidy open to businesses with T4 employees that haven’t experienced a 30% (or more) year-over-year decrease in March, April or May. For example, under the 10% Wage Subsidy program, a company that halted half of its projects at the close of March would qualify for a 10% subsidy in wages for that month. In the months that follow (April and May), after operating at 50% capacity, the same company would then be eligible to participate in the 75% Wage Subsidy program.
The 10% Wage Subsidy program caps off at $1,375 per employee and a maximum deduction of $25,000 per employer, Koabel said, covering a total of 13 weeks. The program is also retroactive, applying to a period ranging from March 18, 2020, to June 19, 2020. Under the program’s current guidelines, a company with 50 employees earning $640 per week would equate to $8,320 per employee over the 13-week period, she said. At that rate, the same company’s payroll taxes would amount to $41,600, which is beyond the maximum $25,000 deduction.
An Employee Insurance (EI) Work Sharing Program is also available as an option for providing EI benefits to workers that reduce their hours. The cause for such reductions must stem from developments that go beyond the control of their employers (including COVID-19), Koabel said. Under the EI program, employees agree to work fewer hours per week, but can then be compensated, with benefits now extended to a maximum of 76 weeks. Amid the COVID-19 crisis, the application process has been streamlined, she said, and eligibility requirements loosened.
It’s up to individuals and companies to seek out combinations of programs that suit their specific needs, Koabel explained. For instance, they could combine wage subsidies with EI Work Sharing in order to piece together programs. In the meantime, immediate relief for businesses includes deferment of Goods and Services Tax (GST) and Harmonized Sales Tax (HST) payments until June 30, 2020. For monthly filers, those deferments apply to remittances for the months of February, March and April 2020, she said. For quarterly and annual filers, deferment applies to the period of January 1, 2020, through March 31, 2020.
Corporate tax filings also have been deferred until June 1, 2020, as well as GST and custom duties on imports, which have been deferred until June 30, 2020. Property taxes have also been cut off across all cities, she said. On the other hand, it’s important for businesses to note that payroll taxes have not been deferred, as those funds will partly be used to fuel relief programs, she explained. Further, “Remember, this is just a deferral,” she urged. “Payment obligations aren’t going away.” For this reason, “My advice is, if your company hasn’t experienced a significant drop in sales and you have funds in the bank to pay these taxes early, go ahead and pay them,” she said.
Similar to appropriations by the Small Business Administration in the U.S., a new Canada Emergency Business Account will be used to divvy out interest-free loans of up to $40,000 to small businesses. To qualify, companies need to have paid between $50,000 and $1 million in total T4 payroll for 2019. Loans should be sought through financial institutions and, in the event that companies fail to qualify, “With the banks, why not give them a call and try if you’re looking for funding,” she said. “It never hurts to ask.”
Going forward, employers are also urged to monitor programs for change, as, “There are already new changes coming out,” no sooner than they’ve been implemented, she said.
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