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Navigating COVID-19: Government Subsidies for Canadian Restaurants

Restaurant Operations - April 17, 2020 Written By: Krista Dinsmore

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Across Canada, provincial governments have put in place new regulations that have forced the closure of non-essential business in a bid to flatten the curve of COVID-19.

These measures have restricted which businesses can remain open. As a result, restaurants that serve food through take-out, drive-through or a delivery service can stay open across Canada - providing an essential service to local communities - but all dine-in services are closed. To survive, restaurant owners are laying off their staff and reducing hours in a bid to save money and ride out the crisis. In fact, Restaurants Canada estimates that 800,000 foodservice jobs have already been lost across the country due to COVID-19.

In response, the government has launched a range of subsidies to provide financial relief to both restaurant businesses and workers.

“Restaurants have played an essential role during this crisis, but are also uniquely challenged by the impacts of COVID-19. We are encouraged by relief measures introduced so far that have shown the concerns of foodservice are being heard,” said David Lefebvre, Restaurants Canada Vice President, Federal and Quebec. “Without the steps already taken, the impacts on our industry would be even more devastating. In this time of crisis, it is reassuring to see governments, at all levels, come to the table with solutions.” (source: https://www.restaurantscanada.org/industry-news/covid-19-has-cost-the-foodservice-sector-800000-jobs-since-march-1/)

Let’s look at some of the most important Federal measures available to help your Canadian-based restaurant.

Support for Canadian Businesses

Business Credit Availability Program: Through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC), the Business Credit Availability Program will provide more than $65 billion of support. Largely targeting SMEs, the program will see the BDC and EDC corporate with private sector lenders to provide credit solutions to individual businesses. One component, the Canada Emergency Business Account (CEBA) “provides credit for small businesses to pay for immediate operating costs such as payroll, rent, utilities, insurance, property tax, or debt service. It is 100 per cent funded by the Government of Canada.”

  • It is available to Canadian employers with $50,000 to $1 million in total payroll in 2019, and operating as of March 1, 2020. This includes smaller (i.e., micro) businesses and other eligible employers such as not-for-profits.
  • Under CEBA, financial institutions will be able to provide interest-free credit facilities of up to $40,000 to eligible businesses.

This program is now available at various financial institutions and credit unions, and can be applied for online. Speak to your business banking representative for more information about how to apply.

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Corporate Tax deferrals: The federal government has announced that it will allow all businesses to defer the payment of income tax amounts that become owing on or after March 18 and before September 1, 2020 until after August 31, 2020. There will be no interest or penalties on these amounts during the period stated.

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GST/HST payment deferrals: To help support businesses, the federal government is introducing deferring Goods and Services Tax (GST) and Harmonized Sales Tax (HST) for a period of time. “The CRA will allow all businesses to defer, until the end of June 2020, any GST/HST payments or remittances that become owing on or after March 27, 2020, and before June 2020. This means that no interest will apply if your payments or remittances are made by the end of June 2020.” The government claims that this will provide up to $30 billion in cash flow or liquidity assistance for Canadian businesses and self-employed individuals over the next three months.

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The Work-Sharing Program Extension: The government has announced that it will extend the maximum duration of the work-sharing program from 38 weeks to 76 weeks. The measure provides income support to employees eligible for Employment Insurance benefits who have agreed to work a temporarily reduced work week while their employer recovers from development beyond their control.

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Canada Emergency Wage Subsidy (CEWS): All businesses, non-profit organizations and charities which experience a revenue decrease drop of at least 15% of their revenue in March 2020 and 30% for the following months due to COVID-19 will be eligible for Canada Emergency Wage subsidy. The measure provides a 75% wage subsidy to eligible employers for up to 12 weeks, retroactive to March 15, 2020.

Other benefits of CEWS include “a new 100% refund for certain employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan. This refund covers 100% of employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay and for which the employer is eligible to claim for the CEWS for those employees.”

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Support for Canadian workers

The federal government is helping businesses even further by introducing measures that ensure they don’t have to lay off their workers. Here are a few measures that the federal government has introduced to support workers during COVID-19:

Employment Insurance (EI): The Employment Insurance (EI) Program is designed to help both employed and self-employed individuals who are affected by COVID-10. Employees will receive up to 55 percent of their earnings up to a maximum of $573 per week. Due to COVID-19, the one week waiting period has been waived when accessing employment insurance funds. A doctor’s note is also no longer required.

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Canada Emergency Response Benefit (CERB): For workers who lose their job due to COVID-19 and do not apply for the Employment Insurance Program, the Canada Emergency Response Benefit (CERB) has been created. It is a taxable benefit that provides $2,000 a month for up to four months for workers who lose their income as a result of COVID-19.

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With scenarios rapidly changing, it’s more important than ever to be well connected within your business community and stay informed. We encourage you to subscribe to Sculpture Hospitality’s Blog for the latest bar and restaurant industry trends and helpful advice.

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