{"id":182968,"date":"2020-04-10T16:26:41","date_gmt":"2020-04-10T20:26:41","guid":{"rendered":"https:\/\/dsma.com\/covid-19-most-beneficial-government-measures-for-canadian-dealers\/"},"modified":"2020-04-10T16:26:41","modified_gmt":"2020-04-10T20:26:41","slug":"covid-19-most-beneficial-government-measures-for-canadian-dealers","status":"publish","type":"post","link":"https:\/\/dsma.macroblu.com\/fr\/covid-19-most-beneficial-government-measures-for-canadian-dealers\/","title":{"rendered":"Covid-19: Most Beneficial Government Measures for Canadian Dealers*"},"content":{"rendered":"<p><em>*\u00a0 Updated on April 10th and subject to change and different interpretation<\/em><\/p>\n<p>We are all bombarded with information about the current crisis. Whether it includes prevention tips or statistics on the mortality rates of infection and hospitalization, the information is constantly transmitted through various media. The same goes for government stimulus measures that are offered to support the economy. In addition to being very different from past initiatives, the new measures are being clarified a little more each day by the different levels of government.<\/p>\n<p>The purpose of this article is to communicate as clearly and as simply as possible the current measures that can benefit Canadian dealers.<\/p>\n<p>It is important to note that we are only discussing principal measures available to automotive dealers operating a franchise in Canada. As these measures are subject to change without notice, we will do our best to keep the information up to date as it develops. Furthermore, additional province-specific measures may be available to you; we encourage you to verify your provincial government\u2019s website to obtain further information.<\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-171710\" src=\"https:\/\/dsma.macroblu.com\/wp-content\/uploads\/2020\/04\/Infographic-Eng-1536x768-1.jpg\" alt=\"COVID-19 Infographic\" width=\"1536\" height=\"768\" \/><\/p>\n<ol>\n<li><strong>Canada Emergency Wage Subsidy (75%)<\/strong><\/li>\n<\/ol>\n<p class=\"Sub-section\">Description<\/p>\n<p>This subsidy allows 75% of the gross salary paid to an employee to be reimbursed to the dealer up to a maximum of $847 per week per employee. Its purpose is to allow eligible Canadian employers to keep their employees on the job, thereby avoiding layoffs, as well as re-hiring previously dismissed employees due to Covid-19. This is, by far, the program that dealers will benefit the most. Indeed, according to the requirements set out, the vast majority of dealers will qualify.<\/p>\n<p>Eligibility requirements<\/p>\n<ul>\n<li>For dealers who have ceased their activities or who have suffered \/ will suffer a decrease in revenue (sales revenues) of at least 15% in March and 30% in the months of April and May 2020 versus the same periods in 2019.<\/li>\n<li>The company must demonstrate this decline of at least 15% of its revenues in March and 30% in April and May.<\/li>\n<li>More specifically, by generating total sales reports for the periods 2020 versus 2019, the entire network of Canadian dealers should qualify.<\/li>\n<\/ul>\n<p>Advantages<\/p>\n<ul>\n<li>Applicable to payroll processed between March 15 (retroactive) and until June 6, 2020 for a total of 12 weeks.<\/li>\n<li>The employer can pay 100% of the gross salary to employees, but only 75% of the gross salary will be considered as a subsidy for a maximum amount of $847 per employee per week (based on an annual salary of $58,700).<\/li>\n<li>The subsidy is 75% of the salary of the employee he earned before the crisis.<\/li>\n<li>Warning: you should not increase the salary an employee earned before the crisis to benefit from an improved subsidy. You must keep the payroll records for any audits.<\/li>\n<li>No maximum amount for the company other than the maximum per employee and no minimum or maximum number of employees.<\/li>\n<\/ul>\n<p>Disadvantages<\/p>\n<ul>\n<li>Significant cash flow: companies must be robust to benefit from the subsidy because they will first need to pay wages. Subsequently, they will be able to request a monthly reimbursement for which the amounts will arrive approximately 6 weeks later.<\/li>\n<li>It will be necessary to properly document the drop in revenues (15% in March and 30% in April and May). The consequences will be severe for people who try to use these funds for fraudulent purposes.<\/li>\n<\/ul>\n<p>How it works<\/p>\n<ul>\n<li>The employer must submit a request on the Canada Revenue Agency website through the\u00a0<em>My Business Account\u00a0<\/em>If your business is not registered with\u00a0<em>My Business Account<\/em>\u00a0on the CRA website, we advise you to do so now;\u00a0<a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/e-services\/e-services-businesses\/business-account.html\">https:\/\/www.canada.ca\/en\/revenue-agency\/services\/e-services\/e-services-businesses\/business-account.html<\/a><\/li>\n<li>The portal should be accessible by the end of April.<\/li>\n<li>After the application, payments will be made a few weeks later. The first payments are expected to be made in mid-May.<\/li>\n<li>You must complete the application again every month to confirm your eligibility and obtain the subsidy.<\/li>\n<\/ul>\n<p>Official Link<\/p>\n<p><a href=\"https:\/\/www.canada.ca\/en\/department-finance\/economic-response-plan\/wage-subsidy.html\">https:\/\/www.canada.ca\/en\/department-finance\/economic-response-plan\/wage-subsidy.html<\/a><\/p>\n<ol start=\"2\">\n<li><strong>Temporary Wage Subsidy for Employers (10%)<\/strong><\/li>\n<\/ol>\n<p>Description<\/p>\n<p>Employers who do not have a drop in revenues during the pandemic of at least 15% in March and 30% in April and May (who are therefore still in operation) do not qualify for the 75% subsidy explained above. This is when the 10% subsidy applies but, obviously, it is much less generous than the previous one.<\/p>\n<p>Eligibility requirements<\/p>\n<ul>\n<li>Dealers for whom revenues are not down by 15% in March and 30% in April and May and who are still in operation with payroll expenses.<\/li>\n<\/ul>\n<p>Advantages<\/p>\n<ul>\n<li>10% of the remuneration paid from March 18, 2020 to June 19, 2020<\/li>\n<li>Up to $1,375 for each eligible employee to a maximum of $25,000 total per employer<\/li>\n<\/ul>\n<p>Disadvantages<\/p>\n<ul>\n<li>The subsidy amounts have a maximum and are not substantial for the majority of dealers.<\/li>\n<\/ul>\n<p>How it works<\/p>\n<ul>\n<li>No application will be necessary to benefit from the subsidy. The amount of the subsidy can be calculated and reduced from the current payroll remittance of federal, provincial, or territorial income tax paid to the CRA.<\/li>\n<\/ul>\n<p>Official Link<\/p>\n<p><a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/campaigns\/covid-19-update\/frequently-asked-questions-wage-subsidy-small-businesses.html\">https:\/\/www.canada.ca\/en\/revenue-agency\/campaigns\/covid-19-update\/frequently-asked-questions-wage-subsidy-small-businesses.html<\/a><\/p>\n<ol start=\"3\">\n<li><strong>Canada Emergency Business Account<\/strong><\/li>\n<\/ol>\n<p>Description<\/p>\n<p>The Canada Emergency Business Account is in fact a $40,000 interest-free loan available to eligible businesses. A portion of this amount, which may reach $10,000, may be written-off if a reimbursement of $30,000 is made no later than December 31, 2022.<\/p>\n<p>Eligibility requirements<\/p>\n<ul>\n<li>You must own an operating company registered in Canada<\/li>\n<li>Demonstrate that the company pays an annual payroll of between $ 50,000 and $ 1,000,000<\/li>\n<\/ul>\n<p>Advantages<\/p>\n<ul>\n<li>$ 40,000 interest-free loan.<\/li>\n<li>It can help pay for operating expenses that cannot be deferred due to COVID-19.<\/li>\n<li>An amount of $10,000 (25%) is eligible for complete write-off if the loan balance ($ 30,000) is repaid in full by December 31, 2022.<\/li>\n<li>If the loan cannot be repaid before December 31, 2022, it can be converted into a three-year term loan with an interest rate of 5%.<\/li>\n<li>Unpaid principal must be fully repaid by December 31, 2025.<\/li>\n<\/ul>\n<p>Disadvantages<\/p>\n<ul>\n<li>The subsidy has a relatively low limit for the majority of the dealers.<\/li>\n<li>For some dealers, this solution may represent a lot of effort (paperwork) for a relatively negligible sum.<\/li>\n<\/ul>\n<p>How it works<\/p>\n<ul>\n<li>The loan request can simply be completed at the financial institution that holds your main business operations account.<\/li>\n<li>The program should be rolled out in mid-April. Contact your financial institution for more details.<\/li>\n<\/ul>\n<p>Official Link<\/p>\n<p><a href=\"https:\/\/www.canada.ca\/en\/department-finance\/economic-response-plan.html\">https:\/\/www.canada.ca\/en\/department-finance\/economic-response-plan.html<\/a><\/p>\n<ol start=\"4\">\n<li><strong>Deferred payment measures<\/strong><\/li>\n<\/ol>\n<p>Description<\/p>\n<p>The Federal government, as well as the various provinces and certain municipalities, offer businesses the possibility of deferring payments or installments.<\/p>\n<p>Eligibility requirements<\/p>\n<ul>\n<li>All Canadian companies qualify.<\/li>\n<\/ul>\n<p>Advantages<\/p>\n<ul>\n<li>These measures allow dealers to maintain cash during the crisis.<\/li>\n<\/ul>\n<p>How it works<\/p>\n<ul>\n<li><strong>Income tax<\/strong>: The income tax payments due as of March 18 and before September 2020 can be postponed to after August 31, 2020. This alleviation applies to income tax payable, as well as installment requirements, under Part I of the Income Tax Act.\n<ul>\n<li>No interest and no penalty will accrue on these amounts during this period.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Sales taxes<\/strong>: payments of the goods and services tax \/ harmonized sales tax (GST \/ HST), as well as any applicable provincial sales taxes (PST) can be deferred to later deadlines. New deadlines may vary by province, so be sure to check your provincial government\u2019s website to<\/li>\n<li><strong>Municipal taxes<\/strong>: Different programs are in place with municipalities allowing the deferral of municipal tax payments to later dates or over several monthly payments.<\/li>\n<\/ul>\n<p>Disadvantages<\/p>\n<ul>\n<li>At maturity, the amounts to be remitted could be substantial and, depending on the evolution of the crisis, it will be necessary to prepare for it.<\/li>\n<li>It is simply a matter of deferring taxes; it is not a subvention.<\/li>\n<\/ul>\n<p>Official Link<\/p>\n<p><a href=\"https:\/\/www.canada.ca\/en\/department-finance\/economic-response-plan.html\">https:\/\/www.canada.ca\/en\/department-finance\/economic-response-plan.html<\/a><\/p>\n<ol start=\"5\">\n<li><strong>Business Credit Availability Program (BCAP)<\/strong><\/li>\n<\/ol>\n<p>Description<\/p>\n<p>The Federal government established the Business Credit Availability Program to provide more than $ 40 billion in additional support through the Business Development Bank of Canada (BDC).<\/p>\n<p>Eligibility requirements<\/p>\n<ul>\n<li>Eligibility is determined on a case-by-case basis, companies must assess it with their financial institution or BDC.<\/li>\n<\/ul>\n<p>Advantages<\/p>\n<p><u>BDC $100K and less<\/u>: very simple application, especially personal credit (which is important). The variable rate of 2.8% is very interesting. Customers are directed to the BDC website and the application process is completed online.<\/p>\n<p><u>BDC $100K to $2M<\/u>: Based on expected negative cash flow, the business must be financially strong before the crisis. The level of effort (paperwork) involved increases with the amount requested. BDC will also require that the dealer\u2019s main financial institution be involved for larger loans.<\/p>\n<p>Disadvantages<\/p>\n<ul>\n<li>Rigorous process that requires more time, and funds will not be available immediately. It will be necessary to build a file and fill out required forms to qualify.<\/li>\n<\/ul>\n<p>How it works<\/p>\n<ul>\n<li>These programs will be rolled out in mid-April. Interested dealers are asked to contact their current financial institution and \/ or BDC.<\/li>\n<\/ul>\n<p>Official Link<\/p>\n<p><a href=\"https:\/\/www.canada.ca\/en\/department-finance\/programs\/financial-sector-policy\/business-credit-availability-program.html\">https:\/\/www.canada.ca\/en\/department-finance\/programs\/financial-sector-policy\/business-credit-availability-program.html<\/a><\/p>\n<ol start=\"6\">\n<li><strong>Bank of Canada Overnight Rate<\/strong><\/li>\n<\/ol>\n<p>Description<\/p>\n<p>The Bank of Canada has adopted a series of measures to support the economy and the financial system. It intervened by lowering interest rates and supporting the main financial markets, as well as the liquidity of financial institutions.<\/p>\n<p>Eligibility requirements<\/p>\n<ul>\n<li>All businesses with variable rate loans.<\/li>\n<\/ul>\n<p>Advantages<\/p>\n<ul>\n<li>These measures allow dealers to reduce the costs of variable rate financing.<\/li>\n<li>Most dealer loans such as \u201cfloorplan\u201d loans bare a variable rate.<\/li>\n<li>In late March, the Bank of Canada lowered the target overnight rate by 50 basis points to 0.25%.<\/li>\n<\/ul>\n<p>How it works<\/p>\n<ul>\n<li>Variable interest rates of different financial institutions are adjusted. As a result, interest calculations are automatically adjusted.<\/li>\n<\/ul>\n<p>Disadvantages<\/p>\n<ul>\n<li>None<\/li>\n<\/ul>\n<p>Official Link<\/p>\n<p><a href=\"https:\/\/www.bankofcanada.ca\/2020\/03\/press-release-2020-03-27\/?_ga=2.169909600.1719615212.1586457681-765343958.1584379394\">https:\/\/www.bankofcanada.ca\/2020\/03\/press-release-2020-03-27\/?_ga=2.169909600.1719615212.1586457681-765343958.1584379394<\/a><\/p>\n<p><strong>Conclusion<\/strong><\/p>\n<p>If you take the time to read and understand, it is not too difficult to grasp despite the half-dozen programs available. This type of business support is quite unheard of! The good news is that Ottawa seems to be doing the right thing to help businesses get through this crisis. However, you must be informed and knowledgeable to take advantage of all these programs.<\/p>\n<p>Financial institutions, as well as your accounting and legal , are your best resources to help you navigate through the various programs. However, it is essential to start by analyzing them and start benefiting from them as quickly as possible. The survival of several companies depends on it. Finally, stay in touch with the latest news every day because up-to-date information is certainly the key to survival in today\u2019s environment.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>*\u00a0 Updated on April 10th and subject to change and different interpretation We are all bombarded with information about the current crisis. Whether it includes prevention tips or statistics on the mortality rates of infection and hospitalization, the information is constantly transmitted through various media. The same goes for government stimulus measures that are offered [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":182260,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_eb_attr":"","footnotes":""},"categories":[760],"tags":[],"coauthors":[772],"class_list":["post-182968","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-news-fr"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Covid-19: Most Beneficial Government Measures for Canadian Dealers* | DSMA<\/title>\n<meta name=\"description\" content=\"We are all bombarded with information about the current crisis. Whether it includes prevention tips or statistics on the mortality rates of infection and hospitalization, the information is constantly transmitted through various media. 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He served as a Senior Audit Consultant at KPMG Enterprises, an accounting firm of international stature. There, he managed audit files, reviewed missions and due diligence in various industries from private Canadian companies to larger publicly traded entities. Subsequently, Maxime worked for a publicly traded consolidator in the transportation Industry. This company which oversaw more than 100 entities was the largest player in Canada and growing its US operations. During his employment, he was involved in multiple acquisitions and business divestures totaling over $1,5 billion in less than 3 years. Specializing in business valuations, valuation models and sales &amp; acquisitions, Maxime meets the highest standards in the industry. Maxime founded AutoCap, an M&amp;A firm located in Montreal which later merged with DSMA in 2016. Since then DSMA has grown to be a leading M&amp;A firm in North America. 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