On April 14, 2020, the Ontario legislature passed a bill during an emergency sitting to extend the state of emergency to May 12, 2020.
The state of emergency in Ontario was initially declared on March 17, 2020, and subsequently extended to April 14, 2020. Under the Emergency Management and Civil Protection Act, any further extensions must be passed by the legislature, and can only be extended for additional periods of no more than 28 days. On May 12, 2020, the state of emergency was extended to June 2, 2020 (Updated: May 12, 2020).
Although the extension of the state of emergency does not automatically apply to individual orders such as the closure of non-essential businesses, it is expected the mandatory closure of non-essential businesses will be extended as well to combat the COVID-19 pandemic. In addition, many small businesses (deemed essential) have voluntarily closed due to safety concerns for their employees and the public, or they have been forced to close or reduce hours due to decreased demand for their goods and services. The Order requiring the closure of non-essential businesses is currently in effect until May 29, 2020 (Updated: May 19, 2020).
Small businesses have been struggling to deal with the harsh commercial realities of the COVID-19 pandemic, and many small businesses may not survive as a result of the lack of revenue in the face of mounting operating expenses as the pandemic continues. In response, the Federal government, Ontario government and City of Toronto (and other municipalities) have announced various forms of relief for small businesses.
We provide the following overview and resources for the relief available:
Federal Relief for Small Businesses
Canada Emergency Business Account (CEBA)
What is the purpose of CEBA? To provide small businesses with loans to pay immediate operating expenses.
Who is eligible? Small businesses and not-for-profit organizations with $20,000 to $1.5 million in total payroll in 2019. (Updated: April 16, 2020)
What are the loan terms? Maximum of $40,000 interest-free loan up to December 31, 2022 to pay non-deferrable operating expenses such as payroll, rent, utilities, property tax, etc. If the loan is paid back before December 31, 2022, then 25% of the loan (up to $10,000) is forgiven. There are no principal payment requirements during this period. If the loan is not repaid by that date, then the loan is converted to a 3-year term loan bearing an interest rate of 5% per year. There are no principal payment requirements until December 31, 2025.
How to apply? Businesses may apply for CEBA at their primary financial institution where they have an existing business chequing/operating account. Learn more here.
Canada Emergency Wage Subsidy (CEWS)
What is the purpose of CEWS? To encourage employers to re-hire workers that were previously laid-off in order to better transition to normal operations after the crisis.
Who is eligible? Eligible employers include individuals, taxable corporations and partnerships consisting of eligible employers, non-profit organizations and registered charities. The employer must have suffered a loss of at least 15% in revenue in March 2020 and 30% in April and May 2020.
What is the amount of the benefit? The CEWS amount for each employee on eligible remuneration paid between March 15 and June 6, 2020, is the greater of: (a) 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week – for arm’s length employees; and (b) the amount of remuneration paid, up to a maximum benefit of $847 per week or 75% of the employee’s pre-crisis weekly remuneration, whichever is less – for non-arm’s length employees. Employers will also receive a 100% refund for any employer-paid contributions to EI and CPP for employees on leave with pay.
How to apply? Eligible employers may apply for CEWS through their CRA My Business Account portal. Learn more here.
Temporary 10% Wage Subsidy (TWS)
What is the purpose of TWS? To allow eligible employers to reduce its payroll deduction remittances for three months.
Who is eligible? Eligible employers include individuals, partnerships, non-profit organizations, registered charities and private corporations eligible for the small business deduction. The employer must pay salary, wages, bonuses or other remuneration to eligible employees.
How much is the subsidy? The subsidy is 10% of the remuneration paid between March 18, 2020 and June 19, 2020, up to $1,375 for each eligible employee and to a maximum of $25,000 in total for each employer.
How to apply? There is no application for the subsidy. The employer calculates the subsidy and reduces the current payroll remittance of income tax by the amount of the subsidy. Any benefit from TWS will generally reduce the amount available under CEWS in the same period. Learn more here.
Ontario-Canada Emergency Commercial Rent Assistance (OCECRA) – Updated May 7, 2020
What is the purpose of OCECRA? To provide relief to landlords and small business tenants affected by COVID-19 by providing forgivable loans to landlords to cover 50% of the gross monthly rent for April, May and June 2020.
Who is eligible? The Landlord must: (a) be the registered owner of a commercial property that has small business tenants affected by COVID-19; (b) declared rental income on their tax return (personal or corporate) in 2018 and/or 2019; (c) enter into a rent forgiveness agreement to reduce the tenant’s monthly rent by at least 75 percent of the gross monthly rent payable under the lease agreement for three months, and agree to not evict the tenant for three months; and (d) have a mortgage loan secured by the commercial property, although there will be alternatives available to apply the relief.
The small business tenant must: (a) have a gross monthly rent of less than $50,000 (as defined by a valid and enforceable lease agreement); (b) generate less than $20 million in gross annual revenue; (c) have temporarily closed, or experienced a decrease in revenue of at least 70 percent (compared to the same month in April, May or June 2019, or compared to average revenues in January and February 2020); and (d) not fall under some limited exclusions.
Not-for-profit and charitable organizations may also be eligible.
What is the amount of the forgiveable loan? OCECRA is a cost-sharing program between landlords, small business tenants and the federal and provincial governments. The landlord and small business tenant each agree to pay 25 percent of the gross monthly rent for three months. The federal and provincial governments will provide a forgiveable loan for the remaining 50 percent of the gross monthly rent for three months.
How to apply? The Canada Mortgage and Housing Corporation (CMHC) will administer the program. Further details are found here but the program is still being finalized. The landlord may apply for OCECRA but it is not mandatory. If the landlord does not have a mortgage secured by a commercial property, then the loan funds may be applied against other debt facilities or fixed cost payment obligations.
Access to Guaranteed Loans
The Federal government announced two programs for small and medium-sized businesses that require further loan assistance to pay their operating expenses:
- Export Development Canada – Loan Guarantee for Small and Medium-Sized Enterprises; and
- Business Development Bank of Canada – Co-Lending Program for Small and Medium-Sized Enterprises.
These programs will be administered by the primary financial institution of the business. Learn more here.
Deferral of Income Taxes
Small businesses are permitted to defer payment of any income tax amounts that become owing between March 18, 2020 and August 31, 2020. Learn more here.
Deferral of GST/HST Remittance and Customs Duty Payments
Small businesses are permitted to defer GST/HST remittances and customs duty and sales tax from importers until June 30, 2020. Learn more here.
Ontario Relief for Small Businesses
Deferral of Provincial Taxes
Small businesses are permitted to defer payment of provincially administered taxes such as Employer Health Tax, Tobacco Tax and Gas Tax until August 31, 2020. Learn more here.
Deferral of Education Property Taxes
The Ontario government has deferred property tax payments that municipalities make to school boards by 90 days, thereby allowing municipalities to defer property taxes to small businesses.
Deferral of Workplace Safety Expenses
The Workplace Safety and Insurance Board (WSIB) will allow employers to defer premium reporting and payments until August 31, 2020. Learn more here.
Ontario Electricity Relief
The Ontario government has suspended time-of-use electricity rates, and businesses will be charged the off-peak rate of 10.1 cents per kilowatt hour (around 50 percent less than on-peak rates). The discount will be applied automatically starting March 24, 2020 for 45 days or until the order expires or is revoked.
Employer Health Tax Relief
The Employer Health Tax exemption for 2020 has been increased from $490,000 to $1 million, providing relief of up to $9,945. Learn more here.
Municipal Relief for Small Businesses
City of Toronto – Deferral of Property Taxes and Utility Bills
The City of Toronto has deferred payments of property taxes and utility bills (water and solid waste) for 60 days, retroactive to March 16, 2020. Learn more here.
York Region – Deferral of Property Taxes and More
Markham has deferred property tax payments until January 1, 2021, deferred the 2020 stormwater fee, eliminated the April 1, 2020 water rate increase of 7.8% and suspended the Municipal Accommodation Tax until January 1, 2021. Learn more here.
Richmond Hill has moved the May 1, 2020 property tax installment due date to June 1, 2020 and deferred payments of property taxes until January 1, 2021. Learn more here.
Newmarket has deferred the March 26 and April 28, 2020 property tax installment payment deadlines until further notice. Learn more here.
Vaughan has deferred property tax payments until June 1, 2020. Learn more here.
Aurora has deferred payments of property taxes and water bills until June 30, 2020. Learn more here.
Peel Region – Deferral of Property Taxes and More
Brampton has deferred property tax payments until August 19, 2020. Learn more here.
Mississauga has deferred the April, May and June 2020 interim property tax due dates for 90 days, deferred stormwater charges for three months, and deferred rent payments for businesses that lease city-owned facilities for three months. Learn more here.
Caledon has deferred the May 7, July 2 and September 3, 2020 property tax installment payment deadlines for approximately two months. Learn more here.
Peel Region has deferred water bill payments until June 30, 2020, and deferred the water and wastewater rate increase scheduled for April 1, 2020 to July 1, 2020. Learn more here.
Durham Region – Deferral of Property Taxes and More
Oshawa has deferred the April 27, 2020 property tax installment payment until June 30, 2020 and the first installment of the Final Billing for Commercial properties will be delayed to July 27, 2020. Learn more here.
Whitby has deferred the April 24, 2020 property tax installment payment for 60 days. Learn more here.
Ajax has deferred the April 24, 2020 property tax installment payment for 60 days. Learn more here.
Clarington has deferred the April 23, 2020 property tax installment payment for 60 days. Learn more here.
Pickering has deferred the April 28, 2020 property tax installment payment for 60 days. Learn more here.
Durham Region has suspended water and sewer bill payments until further notice. Learn more here.
Halton Region – Deferral of Property Taxes
Burlington has deferred the April 21, 2020 property tax installment payment until June 30, 2020. Learn more here.
Oakville has deferred the April 24, 2020 property tax installment payment until June 30, 2020. Learn more here.
Milton has deferred property tax payments until June 30, 2020. Learn more here.
Halton Hills has deferred property tax payments until June 30, 2020. Learn more here.
Are You a Small Business and Need Legal Advice?
If you require legal advice or legal representation in respect to small business issues such as contract disputes, frustration and force majeure clauses, event cancellation, commercial tenancy issues including rent deferral, franchise disclosure obligations, enforcement matters, please contact us for an initial consultation. Our lawyers have expertise and experience in small business litigation matters and can assist you in resolving your legal issues and finding a practical solution in these difficult times.