Ontario COVID-19 Business Support Grants: Ontario Tax Lawyer Guide

Introduction – Ontario’s COVID-19 Business Support Grants

Many Ontario small businesses have been financially impacted by the ongoing COVID-19 pandemic specifically by Ontario’s province wide shut down that has been in effect since 12:01 am on December 26, 2021. While some businesses are able to operate, but not at full capacity, others are forced to temporarily shut down due to public health orders. In response, the Province of Ontario introduced the COVID-19 Business Support Grants to help Ontario small businesses recover various costs including, but not limited to: protective equipment, property taxes and energy bills. The COVID-19 Business Support Grants allow small businesses to apply online for funding from one or more of the following financial relief programs:

• Ontario Small Business Support Grant
• Main Street Relief Grant for Personal Protective Equipment (PPE) Support
• Property Tax and Energy Cost Rebates

The above-mentioned initiatives were established to provide relief and financial support for small businesses across Ontario, particularly those that are operating but not at full capacity or are forced to temporarily shut down due to public health orders.

Ontario’s COVID-19 Business Support Grants – Application Process

The online application for Ontario’s COVID-19 Business Support Grants is now available. Small businesses are only required to complete a single application form to apply for any (or all) of the above-listed programs. However, before applying, small businesses will be promoted to complete a checklist to ensure their eligibility to Ontario’s COVID-19 Business Support Grants. If the checklist results show that such small business is indeed eligible for any or all of Ontario’s COVID-19 Business Support Grants, the applicant must (i) fulfill the eligibility criteria relating to the specific program under which they are seeking relief (as discussed in detail below), and (ii) submit their application, electronically. In this article our Ontario tax lawyers provide tax guidance related to Ontario’s COVID-19 Business Support Grants.

The Ontario Small Business Support Grant

The Ontario Small Business Support Grant was created to help small businesses across Ontario that are required to operate but not at full capacity or to temporarily shut down due to the Province wide shut down that has been in effect since 12:01 am on December 26, 2020.

The Ontario Small Business Support Grant – Funding Availability and Limits

The Ontario Small Business Support Grant is a is a one-time grant that is available to eligible small businesses across Ontario. In particular, small businesses may be eligible to receive the minimum of $10,000 and up to a maximum of $20,000.

Small businesses that receive the Ontario Small Business Support Grant are able to use the funds at their discretion. Some small businesses may decide to use grant to pay employee wages, while others may use it to maintain inventory.

The Ontario Small Business Support Grant – Application Process

Once the application is submitted, the small business should receive the funds within 10 business days. However, applicants may experience delay and will not receive funds in 10 business days if their application is (1) incomplete; (2) contains incorrect information; or (3) requires additional information.

The Ontario Small Business Support Grant – Eligibility Criteria

To receive the Ontario Small Business Support Grant, Ontario small businesses must:

• Be required to temporarily shut down or restrict their services due to the Province wide shut down order that has been in effect since 12:01 am on December 26, 2020;
• Have fewer than 100 employees at the enterprise level;
• Have experienced a minimum of 20% revenue decline when comparing their monthly revenue in April 2019 and April 2020; and,
• Have a business number (in order to become eligible for the program). A small business that does not have a business number will be prompted to apply for a business number before proceeding with the application.

Ontario small businesses that are ineligible for the Ontario Small Business Support Grant include small businesses that were already required to close prior to the modified stage 2 measures that were introduced on October 10, 2020 and essential businesses that are permitted to operate with capacity restrictions included, but not limited to, discount and big box stores selling groceries, supermarkets, grocery stores, convenience stores, pharmacies, and beer, wine and liquor stores. However, small businesses that did not operate in April 2019 or April 2020, including new businesses established since April 2019, will be able to select alternative months for comparing their revenue decline when completing their Ontario Small Business Support Grant online application.

Ontario’s Main Street Relief Grant Personal Protective Equipment (PPE) Support

Small businesses that are required to operate but not at full capacity or to temporarily shut down due to the ongoing Province wide shut down may be eligible for rebates to help with fixed costs including, but not limited to, property tax and energy bills.

In addition, small businesses struggling to pay their energy bills due to the ongoing Province wide shut down may also be eligible for the COVID-19 Energy Assistance Program for Small Business (CEAP-SB). Small businesses may apply to the CEAP-SB through their utility provider.

Ontario’s Main Street Relief Grant PPE Support – Funding Availability

Ontario’s Main Street Relief Grant PPE Support was established to help small businesses with unexpected costs. Eligible small businesses could receive one-time grants of up to $1000.

Ontario’s Main Street Relief Grant PPE Support – Eligibility Criteria

To become eligible, small businesses must have two to nine employee and be in one of the following sectors:

• Retail
• Accommodation and food services
• Repair and maintenance
• Personal and laundry services
• Gyms and yoga studio

Ontario’s Main Street Relief Grant PPE Support – Application Process

Small businesses applying to Ontario’s Main Street Relief Grant PPE Support will need the following information and documentations to apply:

• Business information. Applicants that do not have a business number will be prompted to apply for a business number before proceeding with the application
• Banking Information (e.g., banking instruction, account number and branch code)
• Receipts or proof of costs for PPE purchased since March 17, 2020
• PPE may include:
  • Gloves, gowns, face shields, eye protection, masks, sanitizer, sanitizing wipes
  • Thermometers, temperature monitors or cameras
  • Physical changes, including the installation of hand sanitizer stations and plexiglass dividers
  • Signs to guide or inform customers and employees

The Property Tax and Energy Cost Rebates

Small businesses across Ontario that are required to operate but not at full capacity or to temporarily shut down due to the ongoing Province wide shut down may be eligible to apply for rebates, in the form of grants, to help with certain fixed costs.

The Property Tax and Energy Cost Rebates – Eligibility Criteria

All small businesses that are eligible for the above-mentioned Ontario Small Business Support Grant are also eligible for the Property Tax and Energy Cost Rebates. In addition, small businesses may be eligible for the Property Tax and Energy Cost Rebates if they:

• Are, or were, required to close or reduce their operations as a result of being under “Control, Lockdown or Provincewide Shutdown in the COVID-19 response framework: keeping Ontario safe and open”
• Were required to close or reduce their operations as a result of being under the previously “modified Stage 2” restrictions

In addition, eligible small businesses in regions subject to control restriction or the previously modified Stage 2 restrictions include:

• Restaurants and bars
• Gyms, facilities for indoor sports and recreational fitness activities
• Performing arts and cinemas
• Bingo halls, gaming establishments, casinos, conference centres and convention centres
• Community centres, multi-purposes facilities, and museums
• Personal care services (with the exception of oxygen bars)
• Racing venues
• Meeting or event space
• In-person teaching and instruction

Further, eligible businesses in regions subject to “Lockdown measures in the previous COVID-19 response framework: keeping Ontario safe and open” include:

• Retail required to close for in-person shopping
• Shopping malls
• Personal services
• Driving instruction
• Tour and guide services
• Photography services
• Campgrounds
• Cannabis retail stores

Moreover, eligible businesses in regions subject to the Provincewide Shutdown measures include:

• hardware stores (including big box stores) required to close for in-person shopping
• drive-in cinemas
• garden centres
• outdoor sports and recreation facilities
• day camps for children
• pet/animal food and services
• ski hills
• outdoor markets (excluding grocery)
• safety, medical and assistive devices retail (excluding pharmacies)
• rental and leasing services
• domestic services
• vehicle and equipment repair services
• veterinary services
• cell phone and computer providers & repairs
• media industries including film and television production (excluding radio/television broadcasting)
• before- and after- school programs

However, small businesses are ineligible for Property Tax and Energy Cost Rebates if they are:

• within the areas subject to public health restrictions, but were not required to close or reduce operations and services
• owned by federal, provincial or municipal government or by a person holding federal or provincial office

Eligible small businesses could receive the Property Tax and Energy Cost Rebates for:

• municipal and education property taxes
• energy cost, including electricity and natural gas (or where natural gas is not available, propane and heating oil)

The Property Tax and Energy Cost Rebates – Application Process and Requirements

To apply, small businesses will have to submit proof of costs as follows:

• For property tax rebates, small businesses must submit their property tax bills or proof of costs associated with their property taxes:
• For energy cost rebates, small businesses will have to submit invoices including digital copies of their first energy bill (such as electricity, natural gas, propane bills) received on or after the day “modified Stage 2, Control, Lockdown or Provincewide Shutdown” were put in effect. Small businesses that are heated by propane or heating oil are permitted to submit energy bills relevant to their specific heating system.

In addition, small businesses applying to the Property Tax and Energy Cost Rebates will need to provide:

• Business information. Applicants that do not have a business number will be prompted to apply for a business number before proceeding with the application
• Banking Information (e.g., banking instruction, account number and branch code).

The Property Tax and Energy Cost Rebates will cover the entire time period during which the public health restrictions were in place. In addition, applicants that are eligible for the Property Tax and Energy Cost Rebates should receive the funds within a few weeks of submitting their application.

The Benefits & Concerns Associated with Ontario’s COVID-19 Business Support Grants

Ontario’s COVID-19 Business Support Grants reflect the Province of Ontario’s effort to provide financial support and relief to small businesses that have been impacted by the COVID-19 pandemic, specifically the ongoing Province wide shut down order. However, it is not clear how effective Ontario’s COVID-19 Business Support Grants will be or whether they will meet the financial needs of small businesses across Ontario. In addition, there are concerns regarding all three of the above-mentioned financial relief programs.

As previously mentioned, the online application for Ontario’s COVID-19 Business Support Grants is now available and small businesses are only required to complete a single application form to apply for any (or all) of the above-mentioned programs. However, before applying, small businesses will be promoted to complete a checklist to ensure their eligibility to any of the programs. If the checklist results show that such small business is indeed eligible for Ontario’s COVID-19 Business Support Grants, the applicant must (i) fill out the required information, and (ii) submit their application, electronically. The fact Ontario’s COVID-19 Business Support Grants are based on the one application and one checklist is problematic because it reflects how these programs treat all small businesses across Ontario as the same. It is clear that many small businesses have been impacted by the ongoing COVID-19 pandemic specifically by Ontario’s Province wide shut. However, the financial impact that the ongoing COVID-19 pandemic and related public health order have created  for small businesses are likely to vary depending on the business, the sector and the number of employees. As such, creating various relief programs that rely on one application and one checklist for eligibility determination demonstrates the need for carefully crafted and precisely designed relief programs that consider the specific circumstances of each applicant.

In addition, small businesses applying to Ontario’s Main Street Relief Grant for PPE Support are required to submit receipts or proof of costs for PPE purchased since March 17, 2020. Similarly, small businesses applying to the Property Tax and Energy Cost Rebates are required to submit proof of costs associated with their property tax and energy bills. This is problematic since some businesses may not have copies of their PPE receipts or of their property tax and energy bills. Even if applicants requested copies of their property tax and energy bills from their service providers such request will likely cause delay in submitting the application and receiving funds.

Further, Ontario’s COVID-19 Business Support Grants webpage does not provide any information to ineligible applicants about how they can dispute their ineligibility or if it is even possible to dispute an ineligibility decision. On the one hand, Ontario’s COVID-19 Business Support Grants webpage indicates that applicants may experience a delay in submitting their application and/or in receiving funds if their application is (1) incomplete; (2) contains incorrect information; or (3) requires additional information. On the other hand, the webpage does not address important issues such as (i) verification of eligibility (ii) potential overpayment and the return of overpayment (iii) the tax implications (if any) that grant recipient should consider as a result of any of the above-mentioned programs.

Moreover, Ontario’s COVID-19 Business Support Grants webpage does not discuss alternative relief options (if any) for ineligible businesses. And while Ontario’s COVID-19 Business Support Grants were established provide relief and financial support for small businesses across Ontario, it is unclear whether (or not) these grants are also available to non-profit organization and charities.

Pro Tax Tips – Tax Guidance and Ontario’s COVID-19 Business Support Grants

Eligibility for any of the above-mentioned Ontario COVID-19 Business Support Grants can become the determining factor of whether (or not) your business will survive or recover from the ongoing challenges created by the COVID-19 pandemic and Ontario’s province wide shut down order. If you have questions concerning Ontario’s COVID-19 Business Support Grants or if your application for any of the above-mentioned programs is rejected and you would like to dispute the Province of Ontario’s decision please contact our tax law office for tax guidance from one of our top Ontario tax lawyers.