The federal government offers support to businesses and individuals through multiple programs comprising the Canada COVID-19 Economic Response Plan. Some of these supports may be available to lawyers, law firms and other businesses offering legal services and are summarized below.

For more detailed information, see Canada’s website Managing your Business during COVID-19. Also consider this guide, produced by Baker Tilly Canada, one of the country’s largest associations of chartered professional accounting firms, outlining financial relief measures available to businesses and individuals who are impacted economically by the COVID-19 outbreak. For applicable programs in each province and territory, see CBA Branch Resources.

Budget 2021

Budget 2021 extends the Canada Emergency Wage Subsidy (CEW) until September 2021. It also proposes to gradually decrease the subsidy rate, beginning July 4, 2021, in order to ensure an orderly phase-out of the program as vaccinations are completed and the economy reopens.

Budget 2021 also provides additional weeks of Recovery Benefits:

Up to 12 additional weeks of Canada Recovery Benefit (CRB) to a maximum of 50 weeks. The first four of these additional 12 weeks will be paid at $500 per week. As the economy reopens over the coming months, the remaining 8 weeks of this extension will be paid at a lower amount of $300 per week claimed.

It extends the Canada Recovery Caregiving Benefit (CRCB) an additional 4 weeks, to a maximum of 42 weeks, at $500 per week, in the event that caregiving options, particularly for those supporting children, are not sufficiently available in the interim as the economy begins to safely reopen.

For more details please consult the following: 2021 Budget Low Wage Workers.

Passage of Employment Insurance legislation and coming into effect of recovery benefit regulations

Bill C-24, received Royal Assent on March 17, 2021. Workers claiming EI regular benefits can now access up to a maximum of 50 weeks for claims established between September 27, 2020 to September 25, 2021. In addition, self-employed workers who have opted in to the EI program to access special benefits are now able to use a 2020 earnings threshold of $5,000, compared to the previous threshold of $7,555. This change is retroactive for claims established as of January 3, 2021 and applies until September 25, 2021.

In addition to Bill C-24, new regulations to increase the number of weeks available under the Canada Recovery Benefits have come into effect. This includes an increase in the number of weeks available under the Canada Recovery Benefit (CRB) and the Canada Recovery Caregiving Benefit (CRCB) by 12 weeks, extending the maximum duration of the benefits from 26 weeks to 38 weeks. It also includes an increase in the number of weeks available under the Canada Recovery Sickness Benefit (CRSB) from 2 weeks to 4 weeks. Individuals can access these additional weeks through the Canada Revenue Agency beginning on March 18, 2021.

Learn more about the legislative changes.

CANADA REVENUE AGENCY (CRA)

New process for submitting waivers and dispositions

With the outbreak of COVID-19, the Canada Revenue Agency is working hard to find ways to support taxpayers, adapt and simplify our processes, and make filing taxes less of a burden during these difficult times.

One of our new processes allows for the online submission of:

• international waiver applications
• notifications of non-resident dispositions (under section 116 using the T2062 series of forms)

This function is available through our secure portals: My Account, My Business Account, and Represent a Client. It’s secure and reliable, and it makes sending documents to the CRA easier and more efficient, particularly during a time when mail may be delayed.

Learn more about CRA Rendering Services in Canada and CRA Non-Residents Dispositions of Property and on how to submit documents electronically and the types of documents that can be submitted.

CANADA EMERGENCY WAGE SUBSIDY (CEWS)

To reduce job losses, CEWS provides a 75 per cent wage subsidy to eligible employers for up to 40 weeks, retroactive from March 15, 2020 to November 21, 2020. When introduced, a 30 per cent decline in revenues was required to be eligible. A subsequent expansion of the program eliminated this requirement, although the subsidy rate varies depending on the drop in revenue. An additional subsidy of up to 25 per cent is available to employers who have experienced a 50 per cent or greater drop in revenue. Eligible employers include:

• Taxable corporations and trusts
• Individuals
• Registered charities
• Non-profit organizations
• Partnerships, if at least 50 per cent owned by partners that would otherwise be eligible for the subsidy.

If you have employees, and your business is an eligible employer, consider applying for this subsidy to support the retention of your staff.

Learn more about CEWS eligibility criteria, and consider the perspectives of experts from the Joint Committee on Taxation of the CBA and CPA in CBA National. (Note this article was written before the CEWS program was expanded.)

Work-Sharing Program (WS)

The WS Program offers another option to reduce payroll costs and help law firms and other legal services businesses avoid job losses. The Program provides Employment Insurance benefits to eligible employees who agree to reduce work hours and share available work while their employer recovers. The WS Program was in place before the pandemic but the possible duration of a WS agreement has been extended to 76 weeks to meet the current need.

Learn more about WS Program eligibility criteria.

Temporary wage subsidy for employers

The Temporary Wage Subsidy reduces the amount of payroll deductions eligible employers must remit to the Canada Revenue Agency, equal to 10 per cent of remuneration paid from March 18 to June 19, 2020. The subsidy is capped at $1,375 per employee, up to a total of $25,000 per employer.

Eligible employers include:

• Individuals or sole proprietors (excludes trusts)
• Partnerships (partnership members consist only of individuals, excluding trusts, registered charities, other eligible partnerships, or eligible Canadian-controlled private corporations)
• Non-profit organizations
• Registered charities
• Canadian-controlled private corporations.

If you have employees, and your business is an eligible employer, you may qualify for both the CEWS and the Temporary Wage Subsidy. Learn more about the Temporary Wage Subsidy.

Canada emergency response benefit (CERB)

The Government has created three new temporary Recovery Benefits to support Canadians who are unable to work for reasons related to COVID-19 (CRB, CRSB and CRCB), as well as temporary changes to the Employment Insurance program (EI). These replace the Canada Emergency Response Benefit (CERB).

CANADA RECOVERY BENEFIT (CRB)

CRB is a taxable benefit of $500 per week for up to 26 weeks, to workers who are self-employed or are not eligible for Employment Insurance (EI) and who still require income support. This Benefit would support lawyers who have not returned to work due to COVID-19 or whose income has dropped by at least 50%. These workers must be available and looking for work, and must accept work where it is reasonable to do so.

More detailed eligibility criteria can be found on line: CRB

CANADA RECOVERY SICKNESS BENEFIT (CRSB)

CRSB is a taxable benefit of $500 per week for up to two weeks, for employed and self-employed individuals who are sick or must self-isolate for reasons related to COVID-19.

More detailed eligibility criteria can be found on line: CRSB

CANADA RECOVERY CAREGIVING BENEFIT (CRCB)

CRCB is a taxable benefit of $500 per week for up to 26 weeks per household, for eligible Canadians unable to work because they must care for a child under the age of 12 or family member because schools, day-cares or care facilities are closed due to COVID-19 or because the child or family member is sick and/or required to quarantine.

More detailed eligibility criteria can be found on line: CRCB

Canada emergency student benefit (CESB) and suspension of Canada Student loan payments

CESB is a taxable, income replacement benefit of $1,250 for each four-week period for up to 16 weeks, (or $2000 for a student with a disability or with dependents) from May to August 2020, available to post-secondary students and recent law graduates who are unable to find work due to COVID-19.

While the CESB ends at the end of August 2020, a moratorium until September 30, 2020 on accrual of interest and on payment of interest and principal on Canada Student Loans may also benefit recent graduates. Learn more about suspension of CSL payments.

Canada emergency business account (CEBA)

CEBA provides interest-free, partially forgivable loans up to $40,000 to small businesses that have experienced diminished revenues due to COVID-19 and who face ongoing non-deferrable costs such as payroll, rent, utilities, insurance, property tax and regularly scheduled debt service. Twenty-five per cent of the loan is forgivable if repaid by December 31, 2022.

When introduced, narrow eligibility criteria requiring a minimum payroll excluded many solo and small firms. A subsequent expansion of the program allowed businesses with a payroll less than $20,000 to access this support as long as other criteria are met, including having non-deferrable expenses in 2020 between $40,000 and $1.5 million. The scope of businesses eligible for CEBA was widened to include small owner-operated businesses that do not have a payroll, family-owned corporations that pay employees in dividends and sole proprietors. This change effectively opened up the benefit to more solo and small firms.

Learn more about eligibility for CEBA.

Regional Relief and recovery fund (RRRF)

The RRRF was established to address gaps where some businesses in need are ineligible for other federal emergency support measures. In particular, applicants who may be eligible for the expanded CEBA should first apply for that measure before applying to the RRRF.

The RRRF aims to:

• Mitigate the financial pressure experienced by businesses and organizations to allow them to continue their operations, including paying their employees
• Support projects by businesses, organizations and communities to prepare for a successful recovery

The RRRF is administered by the Regional Development Agencies. The eligibility criteria and specific support available will differ in each region:

• Atlantic Canada Opportunities Agency (ACOA)
• Canada Economic Development for Quebec Regions (CEDQ)
• Federal Economic Development Agency for Southern Ontario (FedDev)
• Federal Economic Development Initiative in Northern Ontario (FedNor)
• Western Economic Diversification Canada (WD)
• Canadian Northern Economic Development Agency (CanNor)

Learn more about RRRF.

CANADA EMERGENCY RENT SUBSIDY (CERS)

The new federal Canada Emergency Rent Subsidy (“CERS”) was ‎enacted into law by Bill C-9, An Act to amend the Income Tax Act (Canada Emergency Rent ‎Subsidy and Canada Emergency Wage Subsidy)  and received Royal Assent on November 19, 2020. The CERS takes ‎effect as of September 27, 2020 and continues to June 2021. Applications opened on ‎November 23, 2020. ‎

A few highlights about the CERS:‎

• It is not limited to rent, but can also subsidize the carrying costs of business ‎property: such as certain carrying costs (mortgage, insurance, property tax) paid by ‎owners of property used in connection with a business, other than property used primarily to ‎earn rental income (which will generally disqualify commercial landlords). ‎
• It is not an extension of the CECRA, which expired at the end of September 2020: The ‎CERS replaces the Canada Emergency Commercial Rent Assistance (“CECRA”). It essentially extends the Canada Emergency Wage Subsidy (“CEWS”) to commercial rent ‎and carrying costs on business property. ‎
• It offers both a base subsidy and top-up subsidy, up to 90% of eligible expenses: The ‎base subsidy (up to 65% of eligible expenses) and top-up subsidy (up to 25% of eligible ‎expenses) are based on the same four-week claim periods as the CEWS.
• The subsidies are taxable: The subsidies are administered by the Canada Revenue ‎Agency (“CRA”) and are taxed as government assistance payments.‎

Eligible entities

The CERS adopts essentially the same rules for determining eligibility as the CEWS:‎

• The applicant must be an “eligible entity” - this includes individuals, taxable corporations, ‎trusts, partnerships, charities, and non-profit organizations.‎
• The applicant must have had a CRA payroll number (or used a payroll service provider) as of March 15, 2020 or a CRA business number as of September 27, 2020.

Monthly revenue drop

The CERS adopts the same rules for calculating revenue and monthly revenue drop as the CEWS:

• Revenue is generally calculated as gross revenue earned in Canada from arm’s length ‎sources in the ordinary course, as determined under normal accounting practices, subject to ‎a variety of special rules and elections.
• Monthly revenue drop is calculated using one of two approaches: 

• the general approach is the default approach and compares revenue in the current or prior ‎month to revenue in the same month in the preceding year; and ‎
• the alternative approach must be elected into and compares revenue in the current or prior ‎month to average monthly revenue in January and February 2020‎. 

Eligible expenses

For tenants, eligible expenses include rent on non-residential property, including:

• gross rent;
• rent based on sales, profit, or a similar criterion; and
• amounts under a net lease for base ‎rent, regular instalments for operating expenses (e.g. insurance, utilities, and common area ‎maintenance expenses) and customary ancillary services, and property and similar taxes (e.g. ‎school and municipal taxes).‎

For owners of business property (other than property used primarily to earn rent), eligible expenses include:

• mortgage interest (subject to certain limits);
• property insurance; and
• property taxes, including school and municipal taxes.

To qualify as “eligible expenses,” the expenses must be paid to an arm’s length party under a written agreement entered into before October 9, 2020. Eligible expenses are also reduced by any revenue received from a sublease or lease of the property. Eligible expenses are capped at $75,000 per property (for the base subsidy and top-up subsidy) and $300,000 total per associated group (for the base subsidy only).

Top-up subsidy / Lockdown Support

Claimants that qualify for the base subsidy (in any amount) and are forced to close or significantly restrict operations by an “eligible public health restriction” qualify for a further subsidy of 25% of eligible expenses.

An eligible public health restriction means an order or decision that:

• is made under the laws of Canada or a province/territory (including orders made by a municipality or regional health authority) in response to COVID-19;
• is limited in scope, based on factors such as geographical boundaries, type of business or other activity, or risks associated with a particular location;
• provides for a monetary penalty or other sanction for non-compliance;
• is not the result of violating an order or decision that meets the conditions set out above; and
• restricts activities on the property by completely prohibiting a type of activity on the property, and not just the extent to which it can be performed. For example, for a restaurant, an order prohibiting indoor dining would qualify, while an order limiting patrons per table would not.

In addition, for a claimant to be entitled to the top-up subsidy, the prohibited activity must have generated at least 25% of the claimant’s monthly revenue in the relevant prior reference period.

Anti-avoidance rule and penalty

• The legislation contains an anti-avoidance rule that may apply where a claimant enters into a transaction to reduce calculated revenue or increase eligible expenses in order to increase the subsidy entitlement. Where this rule applies, the claimant must repay the subsidy, plus a 25% penalty.

Learn more about the CERS.

Small and Medium-sized enterprise loan and guarantee program (SME)

The SME program, supported by the Export Development Canada and Business Development Bank, offers guaranteed loans to small and medium-sized businesses that need help with operational cash flow. Lawyers that meet these criteria can apply through their bank:

• Your business was directly or indirectly impacted by, and was financially stable prior to, the pandemic.
• The financing will be used solely to support operational cashflow requirements.
• You meet your financial institution’s credit criteria.

Learn more about SME.

Essential services contingency reserve (ESCR)

ESCR provides eligible essential service businesses with personal protective equipment, non-medical masks and disinfection products to address urgent, short-term (45 days) needs, on a cost-recovery basis, when those supplies cannot be accessed another way. Lawyers and businesses providing legal services have been deemed essential services by many provinces and territories. Public Safety Canada lists the following as essential services:

• Professional and other services that support lawmakers and the court system to ensure individuals have access to justice where critical interests are at stake
• Those whose services are necessary to conduct hearings and ensure orders of an independent judiciary are enforced, including but not limited to: the administration of justice; criminal law; family law; and courts (e.g., prosecutors, legal aid and duty counsel, defence counsel or their representatives, sheriffs, court staff and victim support services)

Before requesting support from the ESCR, visit the PPE supply hub for information on buying personal protective equipment and explore all other sources of support, including existing support from within your sector and/or provincial or territorial governments.

When considering reopening your physical offices, please also refer to CBA resource Returning to the Office: Considerations for Law Firms.

Learn more about ESCR. See the list below for the status of legal services businesses in each jurisdiction.

Alberta: Legal, court and alternative dispute resolution services are essential.

British Columbia: Non-health essential services include legal services.

Manitoba: Professional services, including lawyers, are essential.

New Brunswick: Emergency declaration states that law firms are part of business operations that need not close.

Nova Scotia: Law firms can remain open if respect physical distancing requirements.

Newfoundland and Labrador: All non-retail businesses can stay open, as long as workers can maintain physical distancing.

Northwest Territories: The territory’s public health order does not exempt legal services. Employees who are not in self-isolation can continue to work as long as they practice two-meter physical distancing (including law firms).

Nunavut: Lawyers are not included in essential services but not prohibited from working if respect physical distancing.

Ontario: Professional and social services that support the legal and justice system are essential

Prince Edward Island: Professional services, including but not limited to lawyers, are essential.

Quebec: Lawyers, notaries, are part of essential legal services.

Saskatchewan: Legal services that support the legal and justice system are essential.

Yukon: Lawyers included in essential services (other services):  Professional and other services that support lawmakers and the court system to ensure people have access to justice where critical interests are at stake.

Extended tax filing and payment deadlines

CRA has extended the payment due date to September 30, 2020 for 2019 individual tax returns, 2019 or 2020 corporation or trust returns, and instalment payments. Late filing fees are waived for returns filed by September 30.

Learn more about tax relief measures.