Never Retire Profile of the Week
Margaret Atwood
Poet. Novelist. Essayist. Writer for television, radio and theatre. There isn’t much in the literary world that Margaret Atwood hasn’t done. Born in 1939 in Ottawa, Atwood grew up in northern Ontario, Quebec and Toronto. She attended the University of Toronto and Radcliffe College before launching an illustrious career as a woman of letters. From her earliest published work as a poet in the 1960s, to her ground-breaking 1970 novel The Edible Woman, to the TV phenomenon that The Handmaid’s Tale became, all the way through to 2019’s The Testaments, which won the Booker Prize, it’s an understatement to call Atwood prolific. At 80 years old, she is going strong and has no plans to retire.
As the weeks pass and we all continue to do our part to reduce the transmission of the coronavirus and ease the pressures on our healthcare system, I continue to hold you all in mind and hope you are keeping safe and well.
Though we cannot conduct our business as usual at the Dri Financial Group, we are still fully operational and here for anything you need. While maintaining social distancing, our team continues to work hard to serve you, taking turns in the office and working from home. We are conducting all of our meetings by phone and videoconference, and we hope that you will continue to reach out to us for anything you need – or even just to talk through what’s on your mind.
Despite the challenges of these trying times, our work ethic and outstanding service continue. Know that we are always here for all your financial planning and investment management needs.
With that said, I thought it would be useful to provide an overview of the Canada Emergency Wage Subsidy (CEWS). Visit the Government of Canada website for full details. And, of course, call me if you have any questions.
Here are some details I have pulled out for you.
Wage Subsidy
The objective is help employers keep employees on their payroll and/or return workers to their payroll. If eligible, the subsidy is equal to 75% of the first $58,700 normally earned by employee, for a benefit of up to $847 per week.
As one example: If an employee’s income is $65,000, the benefit is $65,000*.75= $48,750 or $937.50 per week. Since that figure is greater than $847, the subsidy would be capped at $847 per week.
A second example: If an employee’s income is $50,000, the benefit is $50,000*.75=$37,500 or $721.15 per week. Since that figure is below the cap, the subsidy is $721.15 per week.
This applies for employers of all sizes and across all sectors who have suffered a drop in gross revenues of at least 15% in March and 30% in April and May when compared to the same months in 2019. Or, as an alternative approach, the comparison can be March, April and May revenue to average revenue earned in January and February 2020.
The program will be in place for a 12-week period, from March 15 to June 6, 2020, and is divided into three periods:
- Period 1: March 15th to April 11th
- Period 2: April 12th to May 9th
- Period 3: May 10th to June 6th
Once the employer is found eligible for a specific period, the employer will automatically qualify for the next period. However, employers must attest that they are doing everything they can to pay the remaining 25%.
A special rule applies to employees that do not deal at arm’s length with the employer: the subsidy is only available if employed prior to March 15, 2020.
Eligible employees
An eligible employee is an individual who is employed in Canada.
Eligibility for the CEWS of an employee’s remuneration is available to all employees except those who have been without remuneration for 14 or more consecutive days in the eligibility period, i.e., from March 15 to April 11, from April 12 to May 9, or from May 10 to June 6.
EI, CPP, QPP and QPIP refund
If the employer has placed an employee on paid leave (because the business is unable to open due to COVID-19) and the employer collects the CEWS for this employee, then the employer may be eligible for 100% refund of the employer portion of the EI, CPP, QPP and QPIP.
In general, an employee is considered to be on leave with pay throughout a week if that employee is remunerated by the employer for that week but does not perform any work for the employer in that week. This refund is not available for eligible employees who are on leave with pay for only a portion of a week.
It’s worth noting that there are heavy fines, penalties or even imprisonment if the subsidy program is abused.
Given the complexity of the revenue calculations and the requirement for employers to attest that their application is complete and accurate, it is recommended that you consult with your professional advisors for assistance.
Canadian Emergency Business Account (CEBA)
To ensure that small businesses have access to the capital they need to see them through the current challenges, the Government of Canada has launched the new Canada Emergency Business Account, which has been implemented by eligible financial institutions in cooperation with Export Development Canada (EDC).
This $25 billion program provides 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.
This will better position them to quickly return to providing services to their communities and creating employment.
Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25% (up to $10,000).
Who is eligible:
- The Borrower is a Canadian operating business in operation as of March 1, 2020.
- The Borrower has a federal tax registration.
- The Borrower’s total employment income paid in the 2019 calendar year was between $50,000 CAD and $1,000,000 CAD.
- The Borrower has an active business chequing/operating account with the Lender, which is its primary financial institution. This account was opened on or prior to March 1, 2020 and was not in arrears on existing borrowing facilities, if applicable, with the Lender by 90 days or more as at March 1, 2020.
- The Borrower has not previously used the Program and will not apply for support under the Program at any other financial institution.
- The Borrower acknowledges its intention to continue to operate its business or to resume operations.
- The Borrower agrees to participate in post-funding surveys conducted by the Government of Canada or any of its agents.
The funds from this loan can only be used by the Borrower to pay non-deferrable operating expenses of the Borrower including, without limitation, payroll, rent, utilities, insurance, property tax and regularly scheduled debt service. Those funds may not be used for any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.
So that’s a brief overview of two Federal Government programs aimed at helping businesses during the pandemic. As mentioned, visit the Government of Canada website for full details. And give us a call or send an email if you have any questions we can answer. We’re here to help you and support your business in any way we can.
<em>Did this article resonate with you? What did I miss? Send me a note and let’s start the conversation.</em>
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Dri Financial Group 