There have been many government programs that we have kept you abreast of during this year that have application deadlines approaching, have had recent announcements of program extension, or application portals opened. The following update will assist you in assessing these changes and ensuring that you have considered these program subsidies which your business may be entitled to receive as well as remind you of the upcoming deadlines and announced extensions.
Some time ago, the Government of Newfoundland and Labrador announced the following programs, the deadline for which are fast approaching:
Small Business Assistance Program:
APPLICATIONS WILL BE PROCESSED ON A FIRST COME, FIRST SERVED BASIS UNTIL DECEMBER 15, 2020 (OR EARLIER DATE IF FUNDS ARE EXHAUSTED).
Small Businesses:
Eligible small businesses can apply for a one-time non-repayable contribution of $5,000, $7,500 or $10,000 to provide relief for the impacts felt as a result of the COVID-19 pandemic, such as revenue losses and business adaptations required including physical space, online sales innovation and increased costs of health and safety protocols.
Community organizations:
Eligible non-profit community organizations can apply for a one-time non-repayable contribution of $5,000 or $10,000 to provide relief for the impacts felt as a result of the COVID-19 pandemic, such as revenue losses and adaptations required including physical space, online sales innovation and increased costs of health and safety protocols.
Additional information and the application process can be access here:
https://www.gov.nl.ca/iet/small-business-assistance-program/
Tourism and Hospitality Support Program:
There is no apparent deadline for applications on the Government of Newfoundland and Labrador website, however, we encourage eligible applicants to complete their application as soon as possible.
Eligible tourism operators may apply for a one-time, non-repayable contribution of either $5,000 or $10,000, dependent on gross sales. In the event of applicants with less than $10K in annual sales in 2019, the contribution rate will be calculated at 50% of total sales or 50% of expenditures for new start-ups.
Additional information and the application process can be access here:
https://www.gov.nl.ca/tcar/feature/thsp/
The government had previously announced that the CEWS would be extended to June 2021 and that the maximum subsidy rate, which was scheduled to decline to 45% in period 9 (October 25 – November 21), will remain at 65% from September 27, 2020 until December 19, 2020 (periods 8, 9, and 10).
Most recent changes to CEWS:
The following outlines the calculation of the CEWS for periods 8 to 10:
The government has announced that the maximum CEWS rates for periods after period 10 (i.e. period 11 commencing December 20, 2020) and until period 13 ending in March 2021 will be up to 75%, however the formula to calculate the subsidy has not yet been announced.
The following table is a summary of the CEWS calculation, subject to a maximum weekly benefit of $734 per employee (including the base and top-up subsidies):
The application deadlines for each CEWS claim are as follows:
As announced some time ago, the CEBA program has been expanded to allow eligible businesses and not for profit organizations (NPO) access to an additional $20,000 interest free loan.
Here is a summary of the changes:
As with the original CEBA, the CEBA Expansion will also be administered through your financial institution.
Also, as with the original CEBA, the application process follows one of two streams, subject to the criteria outlined below:
Every applicant under both streams must meet the following criteria:
If you fall into the Payroll Stream, once you have completed the application with your financial institution, the Government of Canada will assess the application and inform your financial institution of the approval or decline of the loan. If approved, your financial institution will provide the funds into your business chequing / operating account.
If you fall into the Non-Deferrable Expenses Stream you must also meet the following criteria:
The new CERS will reimburse eligible businesses up to 65% of their rent and related expenses, depending on their revenue decline. Similar to the current CEWS calculations, there is no minimum revenue drop required to qualify for the subsidy. The rate your revenue has dropped is only used to calculate how much subsidy you receive for these periods. A business forced to close by a public health order could also qualify for an additional top-up, bringing their subsidy to 90%.
The eligible periods run from September 27, 2020, until June 2021.
The claiming periods are the same 4-week time frames as those for the CEWS. For example:
Eligible entities
Types of businesses, charities, or non-profits (entities) that are eligible for CERS
Qualifying property
Properties that do qualify include any real or immovable property (buildings or land) in Canada that your business or organization:
Properties that do not qualify, include:
Eligibility expenses
For each claim period, you can claim eligible expenses up to a maximum of:
For each claim period, you can claim eligible expenses up to a maximum of:
If you have not paid the amounts due for your eligible expenses, you must attest (confirm) that these amounts will be paid within 60 days of receiving your CERS payment.
You cannot claim expenses that were paid or payable:
If you rent the qualifying property, your eligible expenses are:
A. the lowest total principal amount secured by one or more mortgages on the property at any time after it was acquired; and
B. the cost amount of the property.
If you earned any revenue from sub-leasing space on the property to arms-length parties, you must subtract that revenue from your eligible expense.
Non-arms length rentals
It is common practice for the real property used by an operating business to be owned by a separate, related entity. Since qualifying rent expenses do not include expenses paid to a non-arms length person, the operating company in such situations would not have qualifying rent expense.
However, an eligible entity that owns qualifying property that is used primarily to earn rental income from a person or partnership with which the eligible entity does not deal at arms length may be able to claim the CERS.
The entity that owns the property may qualify in respect of its qualifying rent expenses (i.e., mortgage interest, property taxes, insurance) as a consequence of the overall revenue decline of the two corporations or the revenue decline of the non-arms length tenant. In such cases, the eligible entity (i.e., the property owner) will likely have to rely on one of the special rules for computing qualifying revenue, similar to in the case of the CEWS, such as:
At this time, we have not determined the eligibility, and formula to be applied, where the landlord rents to both arms length and non-arms length parties and/or where there are multiple non-arms length tenants. If your company is in this situation, please contact us and we will provide additional information as it becomes available.
Revenue decline
Revenues for the CERS are calculated in the same way they are for the CEWS. To calculate your revenue drop, you can choose one of the following two baseline revenue options:
As with the CEWS claims, when calculating your revenue loss, use your revenues from the calendar month and not the claim period. You can use the higher revenue reduction of the two calendar months that fall within the claim period to maximize your subsidy.
The following outlines the calculation of the CERS
Note: businesses required to shut down due to a public health order are eligible for a maximum 90% subsidy.
You can use the CRA calculator to determine your businesses CERS amount.
The following table is a summary of the CERS calculation:
For further information please refer to the Government of Canadas website:
https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy.html
Please note that due to the rate at which the current COVID-19 situation is changing, and the response by government to feedback on its initiatives, the information contained in this update is accurate as of the release date indicated above.