Why today could be devastating for many small Canadian firms

Deferred GST/HST payments and rent payments could be the tipping point for struggling independent firms

Why today could be devastating for many small Canadian firms
Steve Randall

As the pandemic escalated, thousands of Canada’s small businesses were given an element of relief from government programs, but the spectre of financial failure was always in the distance.

For businesses forced to shut their doors, lay off staff, and hope that the lockdown would be short-lived, even the re-opening of economies may not be enough.

This week brings significant challenges to firms that are yet to determine whether they have a future.

Today (June 30) is the date that deferred payments of GST/HST are due and tomorrow, rent must be paid.

The Canadian Federation of Independent Business says that, without help, many businesses are worried about interest and penalties on late payments.

“We need to understand that although half of Canadian businesses are now fully open, things are still very far from normal in terms of revenues for the vast majority of businesses. Programs that have been extended like the wage subsidy are helping businesses bridge back to normal. We need to do that with other big costs like GST/HST and rent. Canada’s economic recovery depends on it”, said CFIB president Dan Kelly.

Rent relief
The government says that it is reviewing the programs launched to tackle the impact of the pandemic, especially with the potential for a second wave.

But while Ottawa decides what to do next, it may be too late for some business owners; CFIB survey data shows that 30% of small businesses cannot afford their July rent without help.

“I don’t have strong enough words in my vocabulary to convey how important it is for rent relief to be fixed. In good conscience how do we shut down people’s livelihoods for months for the public good and then stick them with the whole bill? Established businesses are going down over rent and it affects the owners, their families, their employees and more broadly our neighbourhoods and Canada’s ability to recover,” said Laura Jones, CFIB executive vice-president.

The CFIB has five recommendations:

  1. Allow deferred GST/HST payments to be repayable without penalty between now and the end of the year (this is supported by three quarters of small businesses in a recent survey). Small firms also need flexibility in cases where they are expected to remit GST/HST on payments they have not yet received from clients who aren’t able to pay their bills. 
  2. Extend the Canada Emergency Commercial Rent Assistance (CECRA) program to September and significantly lower the revenue reduction requirement.
  3. Allow tenants to access CECRA funds directly if their landlords do not apply.
  4. Expand the CEBA loan to $60,000 and increase the forgivable portion to 50 per cent, while providing promised access to new firms and those without business bank accounts.
  5. Release the revised eligibility rules for the Canada Emergency Wage Subsidy for July and August. Provide access to more firms through a lower and graduated revenue reduction test.