I’m John Schmeiser, CEO for the Western Equipment Dealers Association. Welcome to this edition of Legislative Landscape.
On November 30, 2020, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, delivered the Federal Government’s Fall Economic Statement. In lieu of a federal budget, the statement was provided to address the ongoing effects and the Government response to the COVID-19 pandemic. The economic statement also summarized the federal support measures previously introduced and delivered several new income and sales tax measures.
The document reveals $13.4 billion in new spending, to add to the 68 existing support programs. The total estimated spending on direct support measures with respect to the COVID-19 Economic Response Plan has now reached $269.8 billion. The country’s projected deficit is now $382 billion for 2020-2021, and this will take Canada’s total debt to over $1 trillion.
Most notably for our equipment dealer members, the government has announced a number of emergency business supports.
Starting with the Canada Emergency Wage Subsidy Extension, the Government proposes to increase the maximum wage subsidy back to 75 percent (from the current 65 percent) for the 11th to 13th qualifying periods, which run from December 20, 2020 to March 13, 2021. The maximum base subsidy would remain at 40 percent and the maximum top-up wage subsidy rate would increase to 35 percent.
The wage subsidy for furloughed employees is aligned with the benefits provided through Employment Insurance (EI) through December 19, 2020. To ensure equitable treatment of such employees between both the EI and Wage Subsidy programs, the Government proposes the weekly wage subsidy for a furloughed employee be extended from December 20, 2020 to March 13, 2021.
For the purposes of the wage subsidy and the rent subsidy, an employer’s decline in revenues is generally determined by comparing the change in the employer’s monthly revenues, year-over-year. An employer may also elect to use an alternative approach, which compares the change in the employer’s monthly revenues relative to the average of its January 2020 and February 2020 revenues. A deeming rule provides that a decline in revenues for any particular qualifying period is the greater of its decline in revenues for the particular qualifying period and the immediately preceding qualifying period. These rules continue to apply in determining an eligible employer’s decline in revenues from December 20, 2020, to March 13, 2021.
All the other parameters of the program would remain unchanged. Details for periods between March 14 and June 30, 2021, will be proposed at a later date.
Like the wage subsidy, qualifying organizations that have experienced a decline in revenues are eligible for a rent subsidy on qualifying expenses. The Government proposes to extend the current rate structure for the base rent subsidy from December 19, 2020, until March 13, 2021.
To address cash flow concerns that tenants must pay rent to qualify for the subsidy, the Government confirmed its intention to proceed with the proposed change to the rent subsidy that would allow amounts to be considered paid when they become due, provided certain conditions are met.
Details for the rent subsidy for periods beyond March 13, 2021, are forthcoming.
Further support is available for applicants who qualify for the base rent subsidy in locations that must cease operations or significantly limit their activities under a public health order issued under the laws of Canada, a province or territory.
The Government proposes to extend the current 25 percent rate for Lockdown Support until March 13, 2021. Details for the Lockdown Support for periods beyond March 13, 2021, are forthcoming.
The Government confirmed employee stock options will be subject to greater restrictions, as first announced in Budget 2019. These limitations do not apply to options granted by a Canadian Controlled Private Corporation (CCPC). In recognition that some start-up and early-stage companies are not CCPCs, those with gross revenues up to $500 million will also be excluded. The proposed changes allow the benefit to continue on the first $200,000 of fair market value of annual employee stock option grants.
These new rules will apply to stock options granted on or after July 1, 2021.
In recognition of many employees who have been forced to work from home, the compliance burden on employers and the uncertainty for first-time claims has been clarified. Employees who work from home will be allowed to deduct up to $400, without the need to track detailed expenses or obtaining a form from their employer. Further details will be provided by the Canada Revenue Agency (CRA) in the weeks ahead,
The Government is also proposing a number of sales tax measures the address e-commerce, digital supplies, third party distribution, and fulfillment warehouses in Canada. We anticipate that most of these new tax measures will not impact our members, but we will continue to monitor these as we go forward.
One issue that has been important to WEDA members and our customers is rural broadband. The economic statement mentions the need to expand rural broadband but is short on specifics or dollar amounts committed. We hope that the federal government will move quickly in this area as it will help us offset some of the efforts of the Right to Repair movement.
Other issues addressed in the economic statement include home energy retrofits, zero-emission vehicle infrastructure, and youth training funds.
The government is also setting aside $100 billion in targeted stimulus to jumpstart the recovery.
The government pointed to data that suggested interest rates are rising more slowly than the economy is growing, so they believe they can keep expanding programs without having to pay for them. But eventually, Canadians will have to pay for these measures, and the only way to do that would be for our economy to strengthen both short and long term.
WEDA will continue its advocacy effort to ensure our dealer’s interests are heard. Should you have any questions on this topic or other government affairs issues, please do not hesitate to contact us.
Podcast By John Schmeiser
JOHN SCHMEISER is the CEO of the Western Equipment Dealers Association (WEDA). First established in Canada in 1927, WEDA represents over 2200 farm, construction, and outdoor power equipment dealers in both Canada and the U.S.
