Federal wage subsidy for businesses with 30 per cent drop in sales

March 31, 2020, 4:47 am

Businesses and non-profit organizations

Businesses and non-profit organizations seeing a drop of at least 30 per cent in revenue due to COVID-19 will qualify for the government's 75 per cent wage subsidy program.

The government has not been clear on whether the 30 per cent decline is compared to the previous month, the same period a year ago, or what the 30 per cent is compared to.

While the program was promoted as being for small businesses when it was announced last week, the prime minister said this morning that Charities and companies of all sizes will qualify.

For those companies experiencing a decrease in revenues of at least 30 per cent, the government will cover up to 75 per cent of a salary on the first $58,700, which could mean payments of up to $847 a week.

The wage subsidies will be retroactive to March 15, 2020.

The World-Spectator has sought more details and the federal government has said more details of the program will be unveiled later today.

In his media briefing this morning, Trudeau said that the program must operate on a basis of good faith and trust — but warned that there will be "serious consequences" for those who abuse it.

"We are trusting you to do the right thing," he said. "If you have the means to pay the remaining 25 per cent that is not covered by the subsidy, do it.

"And if you think this is a system you can game or take advantage of, don't."

The government also promised to guarantee loans of up to $40,000 for small businesses which will be interest-free for the first year, as a way to help businesses "bridge to better times."

Under certain conditions, up to $10,000 of the loans could be non-repayable.

GST payments will be deferred until June, which he said amounts to $30 billion in interest-free loans to businesses.

More than 1.6 million Canadians have applied for employment insurance (EI) in less than 10 days.

Canadians who don't qualify for EI will soon be able to apply for the the Canada Emergency Response Benefit (CERB), which offers income support for up to 16 weeks to those who lose their jobs, get sick, go into quarantine or have to stay home because of school closures.

The benefit amounts to about $2,000 a month. The government has said an application portal run by the Canada Revenue Agency will be set up by April 6 — and that payments should flow about 10 days later.

CFIB welcomes announcement

"While further details on the Canada Emergency Wage Subsidy are urgently needed, the Canadian Federation of Independent Business (CFIB) believes the information shared today by Prime Minister Trudeau will be a significant relief for tens of thousands of employers and hundreds of thousands of employees." Marilyn Braun-Pollon of the CFIB said Monday morning.

"The decisions to make the wage subsidy widely available to employers of all sizes and structures is the right approach given the unique nature of the COVID-19 pandemic. The wage subsidy is the single best measure to help Canada prepare for a quick recovery the minute the emergency phase of the pandemic is over."

"CFIB is also pleased that there does not appear to be a cap per employer over the duration of the program. While it is reasonable for government to require evidence of a financial impact on businesses in order to qualify for the program, CFIB has heard from several businesses with very small margins, where even a modest reduction in sales can require significant changes in their staffing levels. We’ve also heard from other businesses where the primary impact has been an increase in their costs, rather than a reduction in business income. CFIB is pleased government intends to keep the administrative requirements light to ensure the support can quickly flow to the businesses to need it. We stand ready to support government with any retroactive measures needed to address anyone found cheating the intent of this or other support programs."

"CFIB will be examining the details of the program once announced and will push for any changes that may be necessary to help the broadest number of small and medium-sized businesses keep their staff."