On Friday April 24thPrime Minister Trudeau stood outside his house in Ottawa and announced another new program, as he has done many days since the COVID-19 pandemic began. Someday the tide of money leaving Ottawa will be reversed as taxpayers will need to send money to Ottawa to pay for all these programs. But no one wants to think about that now.
Friday’s recipients were landlords and tenants. CECRA will lower rent by 75% for eligible small businesses who are affected by COVID-19. The mechanism is that eligible landlords will receive forgivable loans for 50% of three monthly rent payments. The three months are April, May and June 2020. The loans will be forgiven if the landlords reduce small businesses rent by at least 75% for the same three months.
To be eligible, the business must be paying less than $50,000 per month in rent and have either ceased operations or had a 70% drop in revenue. The math indicates that the tenant pays 25%, the landlord covers 25% and the provincial and federal governments share the remaining 50%.
The program will be administered by CMHC and will be available by mid-May. So, if you are a tenant paying less than $50,000 a month in rent and your revenue is down by 70% or more, this is a program that will help you. Be sure to watch for further details.
The support available for business owners has been changing each day. The latest change is very welcome, as it allows business owners who pay themselves dividends rather than salary to get access to the CERB.
About the CERB - The Canada Emergency Response Benefit (CERB) will provide $2,000 per month to pretty much anyone who cannot work due to Covid-19 even if they do not qualify to get EI.
The fine print: in order to be eligible for CERB, you have to have earned $5,000 or more of employment income or self-employment income in 2019.
The self-employment income can include dividends provided they are not eligible. An “ineligible” dividend is one that is paid out of income that was taxed at the small business rate. So, most self-employed people (if they are taking dividends from their corporations) will be paying themselves ineligible dividends, check your 2019 T5.
The T5 will refer to a dividend that is “other than eligible,” the dividends you want to see if you wish to qualify for CERB, are in box 10.
If you are receiving any income from employment or self-employment then you are not eligible for CERB.
The application takes place through your CRA My Account or by calling 1-800-959-2019. For more information visit: https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra.html