The Covid crisis is unprecedented for all, including charities. To deal with the crisis both federal and provincial governments have implemented a number of different programs. Elsewhere in this newsletter, we discuss the steps the Office of the Public Guardian and Trustee has taken with respect to restricted funds. But there are a number of other programs that governments have unveiled to help various actors in the economy. This article is intended to bring them to the attention of charities. As these programs are still being developed, much of the text below is taken directly from the government announcements.
Work Sharing Program
The work sharing program is designed to help employers avoid layoffs where there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. The measure provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced work week while their employer recovers. Workers receive some EI benefits and the work that is available is ‘shared’ amongst the employees.
For a not-for-profit employer to be eligible, the shortage of work must be directly associated with a reduction in the organization’s normal level of business activity. A reduction in revenue levels alone (for example, grants, donations, memberships, etc.) would not meet the Work-Sharing eligibility criteria. Business activity is defined as the selling of goods or services with an objective to earning profit.
Wage Subsidy Program
Details of this program have been trickling out but late on April 1 the government released the relevant details. The government is offering a wage subsidy to organizations that experience a 30% drop in revenue from the same month last year. The government says that it is still working on a definition for charities which makes sense, but presumably charities like schools which are primarily revenue driven as opposed to those that are primarily donation or membership based could qualify under the current test.
The wave subsidy is available:
on eligible remuneration paid between March 15 and June 6, 2020 of an amount that is the greater of:
- 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
- the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 percent of the employee’s pre-crisis weekly remuneration, whichever is less.
In effect, employers may be eligible for a subsidy of up to 100 percent of the first 75 percent of pre-crisis wages or salaries of existing employees. These employers would be expected where possible to maintain existing employees’ pre-crisis employment earnings.
And contrary to the original announcements on this program there will be NO maximum amount that can be claimed.
There are other important details of the plan which employers will want to review. And while charities are not subject to most taxes, these subsidies are actually taxable to other types of corporations.
Some will remember that early in the crisis the Prime Minister announced a temporary 10 percent wage subsidy. For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10 percent wage subsidy for a period, any benefit from the 10 percent wage subsidy for remuneration paid in a specific period will generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period.
Care should therefore be exercised before applying and competent counsel consulted before proceeding.
More details are being made available here:
https://www.canada.ca/en/department-finance/news/2020/04/the-canada-emergency-wage-subsidy.html
CRA
The Charities Directorate of the CRA has effectively shut down. Neither audit nor registration activity is taking place. Moreover, the deadline for filing a T3010 for any charity which had to file between March 18 and December 31 are now due on December 31, 2020.
Payroll remittance deadline to the CRA have not changed.
It is important to note that, notwithstanding the CRA closure, it is only the administrative deadlines that have been delayed. Charities that need to file a Notice of Objection (usually former charities objecting to the Revocation Tax), or filing appeals to either the Tax Court or the Federal Court of Appeal must still do so within the timeline allocated for doing so.
New $2000 payment / month
Individuals who:
- must stop working due to COVID19 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.
- must stay home without pay to care for children that are sick or need additional care because of school and daycare closures.
- still have their employment but are not being paid because there is currently 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.
Are ostensibly eligible to receive $2000 monthly for four months. Applications will be taken starting in April and the amounts are taxable as income.
Canada Emergency Business Account
The new 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.
To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.
These programs will roll out in the three weeks after March 27, and interested businesses should work with their current financial institutions.
Provinces
Ontario has announced that it will provide funding to Municipalities, food banks, shelters and individuals. Aid can be applied for through here: https://www.mcss.gov.on.ca/en/mcss/programs/social/apply_online.aspx
Ontario has also provided specific guidance on accessing restricted funds and conducting meetings as discussed elsewhere in this newsletter.
A survey of announcements from the other provinces indicates that what aid is available is mostly provided at the Federal level.
By: Adam Aptowitzer
Adam Aptowitzer is the managing partner at Drache Aptowitzer PC. He practices in the area of Charity Law and Tax Litigation. He can be reached at aaptowitzer@drache.ca.