Muhammad Farrukh Saleem

COVID-19: Impact on Canadian Businesses Prepared by: Muhammad Farrukh Saleem Obox Solution, Canada 1 COVID-19: Impact on Canadian Businesses GOVERNMENT OF CANADA SUPPORT TO RESIDENT BUSINESSES Canada Emergency Wage Subsidy (CEWS) As a Canadian employer whose business has been affected by COVID-19, you may be eligible for a subsidy of 75% of employee wages for up to 12 weeks, retroactive from March 15, 2020, to June 6, 2020. This wage subsidy will enable you to re-hire workers previously laid off as a result of COVID-19, help prevent further job losses, and better position you to resume normal operations following the crisis. Canada Emergency Business Account (CEBA) The Canada Emergency Business Account (CEBA) 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 $20,000 to $1.5 million in total payroll in 2019. Business owners can apply for support from the Canada Emergency Business Account through their banks and credit unions. Canada Emergency Response Benefit (CERB) The CERB supports Canadians by providing financial support to employed and self-employed Canadians who are directly affected by COVID-19. It provides a payment of $2,000 for a 4-week period (the same as $500 a week) for up to 16 weeks. After you apply, you should get your payment in 3 business days if you signed up for direct deposit. If you haven’t, you should get it in about 10 business days. Young entrepreneurs Government is providing $20.1 million in support for Futurpreneur Canada to continue supporting young entrepreneurs across Canada who are facing challenges due to COVID-19. The funding will allow Futurpreneur Canada to provide payment relief for its clients for up to 12 months. 2 COVID-19: Impact on Canadian Businesses SOCIAL IMPACT : WORKING REMOTELY/LABOR MARKET Consistent with global efforts to mitigate the spread of this virus, many organizations have directed employees to work from home. While moving to a fully remote scenario is new to some, great work can happen anywhere. Remote working tools like Zoom are being used widely. Some organizations considering this working model in the long run. 3 COVID-19: Impact on Canadian Businesses IMMEDIATE PAYMENT RELIEF : TAXES AND OTHER MEASURES Canada’s federal and provincial governments are taking action to help individuals and businesses that are facing hardship as a result of the COVID-19 outbreak. A new set of economic measures were announced to help stabilize the economy during this challenging period. Canada's COVID-19 economic response plan Important changes to tax-filing and payment deadlines Canada Revenue Agency (CRA) tax filing The CRA announced that the filing due date for 2019 tax returns will be deferred. See updated filing schedule below:       Individuals - June 1, 2020 Trusts having a taxation year ending on December 31, 2019 - May 1, 2020 Trusts with a filing due date in April 2020 or May 2020 - June 1, 2020 Corporations with a filing due date after March 18, 2020 and before June 1, 2020 - June 1, 2020 Partnership returns - May 1, 2020 Charities with a return due between March 18, 2020 and December 31, 2020 - December 31, 2020 CRA payment extensions All taxpayers (including corporations, trusts and self-employed individuals) will be allowed to defer the payment of any income tax amounts due on or after March 18, 2020 and before September 1, 2020 to the new deadline of September 1, 2020. This relief will apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. In addition, Goods and Services Tax/Harmonized Sales Tax (GST/HST) remittances and customs duty payments are deferred to June 30, 2020. No interest or penalties will accumulate on these amounts during this period. Economic plans The Government of Canada has introduced a stimulus package to provide support to workers and businesses. Some of the initiatives are temporary income support for certain groups, increase in the Goods and Services Tax credit and annual Canada Child Benefit payments, longer-term income support for workers, wage subsidies for businesses and ensuring businesses have access to credit. 4 COVID-19: Impact on Canadian Businesses FINANCIAL REPORTING GUIDELINES UNDER COVID-19 (WITH REFERENCES) The recent and rapid spread of COVID-19 has affected the business activity of many entities. The AcSB has developed resources to provide support in the preparation of applications of various IFRS standards in light of COVID-19. In addition, the following resources can help preparers of financial statements manage the accounting implications of the COVID-19 outbreak. Updated: Accounting considerations related to coronavirus Deloitte, April 20, 2020 IFRS in Focus provides an up to date analysis of key IFRS accounting considerations in preparing financial statements during the COVID 19 pandemic. ASPE Alert - Subsequent events and other considerations related to COVID-19 CPA Canada, March 2020 An alert has been issued discussing whether companies applying Accounting Standards for Private Enterprises (ASPE) in Part II of the CPA Canada Handbook – Accounting, should adjust annual financial statements issued in 2020 for the effects of COVID-19. The Alert mainly focuses on:     When to disclose the effects of COVID-19 in the financial statements When to adjust the financial statements for the effects of COVID-19 Going concerns matters Auditor considerations Accounting considerations of the coronavirus outbreak EY, March 2020 An overview of the existing IFRS requirements that should be considered when addressing the financial effects of the COVID-19 outbreak in the preparation of IFRS financial statements for the annual or interim reporting periods ending in 2020. Refer to "Applying IFRS, accounting considerations of the coronavirus outbreak, February 2020" for guidance on preparing 2019 IFRS financial statements. COVID-19 Financial reporting resource centre KPMG, March 2020 KPMG has developed a library of resources that contain information about the financial reporting impacts for COVID-19. This resource centre will be regularly updated with information on the rapidly changing situation, and will focus on the financial reporting impacts periods ending in 2020. 5 COVID-19: Impact on Canadian Businesses AUDIT AND REGULATORY GUIDELINED UNDER COVID-19 (WITH REFERENCES) The current outbreak of COVID-19 has an impact on the completion of the audits and compliance with regulatory requirements. The following list includes Canadian and international resources that provide guidance with respect to the audit and regulatory implications of the COVID-19 outbreak. CPAB COVID-19 audit implications Canadian Public Accountability Board, March 30, 2020 The Canadian Public Accountability Board provides high level guidance around the implications of COVID-19 when conducting Canadian public company audits. Important areas for consideration when designing audit approaches include: completion of year-end financial statements and the audit, inventory counts, subsequent events, going concern and implications of performing an audit remotely. Bank of Canada announces rate cut and two new programs The Bank of Canada, March 27, 2020 The Bank of Canada (the Bank) has lowered its interest rate by 50 basis points to ¼ percent to provide support to the Canadian financial system and the economy during the COVID-19 pandemic. The Bank also announced two new programs to alleviate and address strains in short-term funding markets and the Government of Canada debt market. CSA provides guidance on conducting Annual General Meetings The Canadian Securities Administrators, March 20, 2020 The Canadian Securities Administrators provides guidance to reporting issuers planning to conduct virtual or hybrid Annual General Meetings (AGM) and who would like to change the date, time and location of an in-person AGM during the COVID-19 outbreak. 6 COVID-19: Impact on Canadian Businesses CORPORATE GOVERNANCE GUIDELINES UNDER COVID-19 (WITH REFERENCES) The current outbreak of COVID-19 has had an impact on organizations, directors, investors and other stakeholders. Some relevant points are referenced below: COVID-19 impact on internal control environment and processes KPMG, April 2020 KPMG outlines specific internal control focus areas organizations should consider as a result of COVID19, due to possible opportunities for internal controls to be shortcut or circumvented. How audit committees can respond to COVID-19 KPMG, April 7, 2020 There are key areas for audit committees to consider during the COVID-19 outbreak. Areas addressed include financial reporting, oversight of external audit, internal control over financial reporting, information technology including cyber risk, oversight of internal audit and oversight of taxation matters. Governance advice during COVID-19 for charities and not-for-profit organizations Borden Ladner Gervais, April 14, 2020 Advice on what the boards of charities and not-for-profit organizations should be considering with respect to board objectives, board and committee meetings, board stability and continuity, director due diligence and stakeholder relations. Time extension for annual meetings of Ontario corporations Government of Ontario, March 30, 2020 The Government of Ontario has provided time extensions for annual meetings, shareholders’ meetings, and provisions for meetings held by electronic means. Contract performance in a coronavirus world Norton Rose Fulbright, March 18, 2020 Businesses have been forced to navigate the challenges brought on by the rapid spread of COVID-19, including interruptions to supply chains and challenges in meeting contractual obligations. This article discusses whether businesses can or should rely on force majeure clauses, the common law doctrine of frustration or material adverse change constructs as legal options to mitigate the impact of COVID19 on their business.