Financial FAQs (Frequently Asked Questions)
Posted On April 2, 2020
We will gather together all the frequently asked questions from the sector and compile the answers here…
GOVERNMENT FINANCIAL RESOURCES
I Am An Organization That Cannot Afford To Keep My Employees On Payroll, What Options Are Available To Me At This Time?
To support businesses that are facing revenue losses, including non-profit organizations and charities, small businesses may be eligible to receive a Temporary Wage Subsidy. The Temporary Wage Subsidy for Employers is a three-month measure (April – June, inclusive) that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency (CRA).
How is the subsidy calculated?
You must calculate the subsidy manually. The CRA will not automatically calculate the allowable subsidy. You do not apply for the subsidy. You will continue deducting income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from salary, wages, bonuses, or other remuneration paid to your employees, as you currently do. The subsidy is calculated when you remit these amounts to the CRA. Once you have calculated your subsidy, you can reduce your current payroll remittance of federal, provincial, or territorial income tax that you send to the CRA by the amount of the subsidy. More information on how to calculate the subsidy manually (with examples) and more detailed guidelines, please visit the CRA website here.
My organization is a charity and/or not-for-profit, am I eligible?
Yes, your organization is eligible. However, organizations will need to apply monthly and demonstrate revenue losses of 15% in March and 30% in April and May.
How do I calculate the revenue losses?
- Revenues can be compared to the same month in 2019, or to the average of January & February 2020 – whichever best captures your losses
- Revenues can be calculated using cash accounting or accrual accounting – whichever best captures your losses.
- Charities and nonprofits can choose whether to include or exclude government funding in their revenue calculations – whichever best captures your losses.
- Employers must calculate the revenues the same way for each month.
How many times do I have to apply for the Temporary Wage Subsidy for Employers?
Organizations will have to apply each month.
How long will it take me to receive the subsidy and how will I receive it?
It will take approximately 6 weeks for organizations to receive the funds. It will be via direct deposit, so anyone who is not set up on direct deposit with the Canadian Revenue Agency should set up direct deposit as soon as possible.
Is there a maximum of funds my organization can receive?
Yes, there is a maximum on individual wages of $58,700 ($847 per employee per week).
Additional Information about the Wage Subsidy:
- Employers are expected to do their best to top up the subsidy so that employees receive their full pay but this is not mandatory.
- The wage subsidy applies to new hires as well as existing staff.
- If staff that are subject to the wage subsidy are furloughed because of a lack of work, the organization can receive a full refund of CPP/EI/QPP and other contributions as long as the employee remains on the payroll.
- The wage subsidy is retroactive to March 15.
- For now (as of April 9, 2020) the wage subsidy program will cover March, April and May wages. The government has indicated that if the crisis persists, it will revisit the duration of the program.
Can my employees apply for Employment Insurance (EI)?
Yes. Employment Insurance is available to eligible claimants, who are unable to work because of illness, injury or quarantine. Canadians quarantined can apply for Employment Insurance (EI) sickness benefits. It is encouraged that individuals do apply and let the Service Canada agents determine the correct course of action. Service Canada is supporting Canadians affected by COVID-19 and placed in quarantine by:
- waiving the one-week waiting period for EI sickness benefits for new claimants who are quarantined so they can be paid for the first week of their claim;
- establishing a new dedicated toll-free phone number to support enquiries related to waiving the EI sickness benefits waiting period;
- allowing people claiming EI sickness benefits due to quarantine will not have to provide a medical certificate;
- allowing people who cannot complete their claim for EI sickness benefits due to quarantine to apply later and have their EI claim backdated to cover the period of delay.
More about Employment Insurance can be found on the Canada Service website here.
What support is available my employee is an artist or cultural worker who is not eligible for Employment Insurance (EI)?
The Canada Emergency Response Benefit will provide support to self-employed individuals, including contract workers, who are not eligible for EI. It will provide a taxable benefit of $2000 a month for up to 4 months. This is eligible to workers who:
- had to stop working due to COVID-19 and do not have access to paid leave or other income support;
- are sick, quarantined, or taking care of someone who is sick with COVID-19;
- are working parents who must stay home without pay to care for children that are sick or in need of additional care because of school or daycare closures;
- still have their employment but are not being paid because there is current not sufficient work and their employer has asked them not to come to work;
- are wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.
The Canada Emergency Response Benefit will be accessible through a secure web portal starting in early April. Applicants will have the option of using an automated telephone line or toll-free number to apply.
What other financial measures are there that can benefit my employees that I should make sure they are aware of?
There are other measures you can take to help support your employees during this unpredictable and challenging time. Let them know of the following measures the Federal Government has put in place:
- A one-time special GST credit payment in early May 2020 will provide close to $400 for single individuals and $600 for couples eligible to benefit from this measure;
- For those with children, the Canada Child Benefit (CCB) payment amount will increase for the 2019-20 benefit year by $300 per child as part of the May payment;
- The tax deadline for 2019 has been moved to June 1, 2020. Canadians who have filed their taxes already, and owe money, will not have to pay until September 1, 2020
- The six largest financial institutions will work with customers to provide flexible solutions on mortgage and credit payments on case by case basis. Encourage your employees to talk with their financial institutions.
What is the Canada Emergency Wage Subsidy (CEWS)?
The Canada Emergency Wage Subsidy (CEWS) will reimburse eligible employers 75% of employee’s wages or salaries, based on a maximum annual salary of $58,700 – representing a benefit of up to $857 per week, per employee. The program will be in place for a 12-week period, from March 15 to June 6, 2020.
How am I as an employer eligible for CEWS?
Employers are eligible if they are private sector (commercial or nonprofit) that have experienced a 15% reduction in revenue in March, and a 30% reduction in revenue for the remaining months of the program.
Eligibility for this wage subsidy is based on the salary or wages actually paid to employees. The application will be processed on a retroactive basis. All employers are expected to make best efforts to bring employees’ wages to their pre-crisis level – i.e. pay the remaining 25%
How can I apply for CEWS?
An application portal for the subsidy is in the works and is expected to be available within the next 3-6 weeks. *Check back for a link once it is provided*
How do I calculate revenue loss for CEWS?
Employers must decide on what basis they will calculate their eligible. There are two basic options:
1. Either compare their revenue in March, April and May 2020 to that of the same month of 2019; or
2. Compare their revenue in March, April and May 2020 to the average of their revenue in January and February 2020 to show the required reduction. (That is: the Jan-Feb average serves as the benchmark for each of the following three months). Once the method is chosen it must be used throughout the program.
- For March, the government reduced this 30% benchmark to 15% in recognition of the fact that many businesses were not affected by COVID-19 until halfway through the month.
- Employers are allowed to measure revenues either on the basis of accrual accounting (as they are earned) or cash accounting (as they are received). Once chosen, the same accounting method must be used by the employer throughout the program period.
- NEW : To provide certainty for employers, the government has included wording that states once an employer is found eligible for a specific period, they will automatically qualify for the next period of the program. For example, an employer with a revenue drop of more than 15% in March would qualify for the first and second periods of the program, covering remuneration paid between March 15 and May 9. Similarly, an employer with a revenue drop of 30% in April would qualify for the second and third periods of the program, covering remuneration paid between May 10 to June 6.
Charities and nonprofits have options available when it comes to calculating the 30% loss of revenue required to qualify for the program
● To recognize the challenges in measuring revenues of non-profit organizations and registered charities the legislation gives the option to choose whether or not to include amounts received from government sources in revenues for the purpose of applying the revenue decline test. This would include operating and project grants. Once chosen, the same approach must be maintained by the organization throughout the program period. It is to your advantage to consider future months before making your first filing.
Note, however, if you receive funds for which you are not eligible, you will be required to pay them back. If any fraudulent activity is found individuals could face fines and/or imprisonment.
How does CEWS affect the Temporary Wage Subsidy?
The 75% CEWS does not replace the 10% Temporary Wage Subsidy. Both programs exist. Employers may qualify for both.
Young Associates recommends to claim the 10% subsidy now, as you can claim this as a reduction to source deductions payable, there by helping your cashflow right away.
Note: that the amount you claim via the 10% Temporary Wage Subsidy must be deducted from your 75% claim to CEWS. You cannot exceed the 75% subsidy amount.
I) Canada Council for the Arts
Will the Canada Council continue to issue grant payments?
Yes, the Canada Council is progressing grant payments as usual. If you experience any issues receiving your payment, please contact the relevant program via the Canada Council website.
How is the Canada Council supporting core funded organizations?
The Canada Council is supporting core funded organizations in the following ways:
- If your organization has had to cancel or alter programming due to COVID-19, your organization will not be required to have replacement programming. Include an explanation of how COVID-19 has impacted your programming and activities, and how you managed this in your annual update report for the Canada Council;
- Beginning this spring, the Canada Council will be advancing funds equivalent to 35%of the annual grants held by all core funded organizations. These advances will be issued May 4, 2020. If you have not received your 2020-2021 results, your instalment will be based on their 2019-2020 amount.
II) Ontario Arts Council
Will the Ontario Arts Council (OAC) still accept the application and pay awarded grants?
Yes, the OAC is committed to continuing to intake applications. The OAC is available to provide support and is planning to proceed as scheduled with deadlines, assessment of the application, notification of results, and repayment of grants. However, OAC staff are working from home which may limit the availability of some services.
If our organization has received a project grant from OAC, will we be required to repay the grant due to COVID-19? I.e. OAC-funded travel or postponed, changed, or cancelled events?
A grant repayment would not be required for any expenses already incurred before activities were cancelled, or for additional eligible expenses incurred as a result of the unexpected cancellation (i.e. artist fee commitments, cancellation fees, etc). Email the Program Officer for the granting program through which you received the grant from to inform OAC about your project’s changes or cancellation. Program Officers may approve extensions to your project timeline and/or modifications to your project plans.
Operating grant recipients will not be expected to return funds to OAC if their plans cannot proceed. The OAC encourages all grant recipients to consider public safety first and to adapt based on the most up-to-date information from public health authorities. Please be in touch with your Program Officer to keep them updated of any major changes to your programming.
The OAC has developed an in-depth FAQ page, with more details about how they are operating during this COVID-19 crisis, it can be found here.
III) ADDITIONAL FINANCIAL RESOURCES
Have additional financial questions that you do not see on our FAQ? Fill out the form below and we will do our best to find a solution for you.