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Prime Minister Justin Trudeau announced that the Canadian government will increase its wage subsidy for eligible small businesses to 75% from 10% announced earlier as part of the COVID-19 Economic Response Plan. During the press conference, he also announced that the Government of Canada is launching a new Canada Emergency Business Account through which banks will offer $40,000 loans which will be interest-free for the first year. Department of Finance Canada has announced th...e details of the loan program through a news release. It stated that Canada Emergency Business Account will be implemented by eligible financial institutions in cooperation with Export Development Canada (EDC) to help small businesses have access to the capital they need to see them through the current challenges. This is a $25 billion program and small businesses and not-for-profits should contact their financial institution to apply for these loans. Canada Emergency Business Account will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus. 25 percent (up to $10,000) loan forgiveness : Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).

Canada Emergency Response Benefit. The government has proposed legislation to establish the Canada Emergency Response Benefit (CERB). This taxable benefit would provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic. The CERB would be a simpler and more accessible combination of the previously announced Emergency Care Benefit and Emergency Support Benefit. The CERB would cover Canadians who have lost their job, are ...sick, quarantined, or taking care of someone who is sick with COVID-19, as well as working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures. The CERB would apply to wage earners, as well as contract workers and self-employed individuals who would not otherwise be eligible for Employment Insurance (EI). Additionally, workers who are still employed, but are not receiving income because of disruptions to their work situation due to COVID-19, would also qualify for the CERB. This would help businesses keep their employees as they navigate these difficult times, while ensuring they preserve the ability to quickly resume operations as soon as it becomes possible. Canadians who are already receiving EI regular and sickness benefits as of today would continue to receive their benefits and should not apply to the CERB. If their EI benefits end before October 3, 2020, they could apply for the CERB once their EI benefits cease, if they are unable to return to work due to COVID-19. Canadians who have already applied for EI and whose application has not yet been processed would not need to reapply. Canadians who are eligible for EI regular and sickness benefits would still be able to access their normal EI benefits, if still unemployed, after the 16-week period covered by the CERB.

Shareholder Loans: Income Tax Act s. 15(1.2), s. 15(2), s. 80.4(2), s. 110(1)(j) A loan by a corporation to one of its shareholders, or to a person or partnership who does not deal at arm's length with the shareholder, may result in a deemed taxable benefit to the shareholder....Continue reading