With the ever-changing COVID-19 situation and new relief programs being introduced, it has become difficult to understand what's available for farmers and how to qualify.
In response, BDO put together a task force of agricultural advisors from across Canada to identify the highest priority concerns from our clients. We want to help you through these changing times, so you can focus on ensuring quality Canadian food continues to be produced.
Canada Emergency Response Benefit (CERB)
Under certain circumstances, farmers who have lost their off-farm income may be able to collect the CERB despite still farming. BDO knows how significant off-farm income is for many farm families, often supplementing or paying the farming bills or fully covering living expenses. Click here to read more about the Canada Emergency Response Benefit program.
Depending on your particular circumstances, farmer's children may also be able to qualify for the CERB, or the Canada Emergency Student Benefit (CESB) program.
GST/HST remittances have been extended this year. It's recommended to still file your GST/HST on time. But if amounts are owing, the payment is deferred. The Canada Revenue Agency (CRA) will not impose penalties where the return is filed late if it is filed by June 30. Remember, if you generally get a refund of GST/HST, you should ensure your filing is done on time so your refunds arrive to help with cash flow.
Some municipalities are even delaying property tax deadlines, so it might be worthwhile for you to look into this to help with cash flow.
Agricultural-specific support programs
Early on in the COVID-19 crisis in Canada, the Prime Minister identified the importance of maintaining food supply chains and announced new federal support administered through Farm Credit Canada. FCC received an enhancement to its capital base that allowed for an additional $5 billion in lending capacity.
These programs include a deferral of principal and interest, and access to an additional credit line, secured by general security agreements. The deferrals are for current clients of FCC while the additional line of credit is for all farmers needing help due to this crisis.
Your accountant can help you gather up all the information to expedite this funding request, including cash flow projections, net worth, and financial statements.
Current and future supply chain disruptions
BDO knows Canadian agriculture is resilient, innovative, and generally optimistic. Although farms are self-sufficient, we still rely on the entire food supply chain to move our products—from processors to airplanes. How prepared are you if one of your farm's supply chains becomes unavailable? Do you have a backup plan?
The right information can help you feel prepared for the unknown. It would also be helpful to run cash flow projections, including some cost savings like today's lower interest rates, fuel prices, and electricity rates. With your financial statements and cash flow in mind, have a discussion with your accountant and banker on your vulnerability points and what you can change to reduce risk.
It's important to remember this is a relatively short-term situation and farms are long-term family-run enterprises. Let's focus on really understanding the business pain points and think about what we can do to mitigate this risk.
Federal government programs
The Canada Emergency Wage Subsidy (CEWS) program is available to businesses and not-for-profit organizations. Moreover, there are other wage subsidies available under certain conditions, including small business limits. As these conditions can get complicated, it's best to ask your BDO advisor for further guidance. Click here for more information about the Canada Emergency Wage Subsidy.
Canadian banks and credit unions have begun enrolment for the Canada Emergency Business Account (CEBA), providing interest-free and forgivable loans to small businesses and not-for-profits, to help cover operating costs during COVID-19.
Many farm businesses may now qualify under the new rules under this program as payroll is no longer a requirement. Your BDO advisor can help determine if you qualify.
Deferring income tax
The federal government is allowing businesses and individuals to defer income tax payments, including instalments, as part of its fiscal stimulus package to respond to COVID-19. This deferral applies to corporate and personal income tax. This means that you do not need to submit tax balances or tax instalments owing to the CRA until September 1.
However, BDO highly recommends having your year-end and taxes prepared at the normal time. Government programs such as the HST credit, Canada Child Benefit (CCB), and Guaranteed Income Supplement (GIS) are all calculated based on your 2019 tax filing. In order to prevent a delay in receiving these benefits, it is recommended to file as soon as possible.
As well, if your farm will be applying for the AgriStability or AgriInvest programs, your tax filings will need to be prepared in order to submit those. Many banking agreements also require you to submit those documents within a specified time period, which may not have been extended.
Temporary foreign workers
The government is allowing foreign workers in and they are slowly arriving. There is a specified amount of worker payment funds available to employers who bring in foreign workers to subsidize the cost of the work while in the mandatory 2-week quarantine. This can also go towards renting accommodations, changing their accommodations, etc. At this time, it appears the employer is responsible for paying their foreign workers for the 2-week quarantine period.
For a more detailed discussion, you can contact our agriculture team for more information on what's most relevant to you and your farm.