Should companies that paid out executive bonuses and dividends while receiving COVID-19 financial supports from the government have to pay any of it back?
Prime Minister Justin Trudeau won’t say.
The federal government will look at whether companies who received supports, such as the Canada Emergency Wage Subsidy, “perhaps profited in ways that (are) not right,” Trudeau told a news conference in Ottawa on Friday.
But he stopped short of saying whether they would have to make any repayments.
The subsidy, announced in late March, initially covered 75 per cent of a worker’s wages, up to $847 a week. The program was meant to help companies avoid layoffs and keep employees on the payroll.
It did not explicitly prohibit companies paying dividends and executive bonuses, unlike another federal government program that was designed to provide loans for large employers.
Torstar, the parent company of the Toronto Star, is among the recipients of the federal wage subsidy.
Trudeau defended his government’s decision in the spring to get COVID-19 supports out quickly as the pandemic began ravaging the country and millions were put out of work due to lockdowns and other restrictions.
“That choice to get help out quickly to everyone meant that we understood that after the fact, we would have to look at things and see if it was done fairly, if people took advantage of this in improper ways,” he said.
A recent CBC investigation found 30 companies that paid out a combined total of $2 billion to shareholders between April and September while receiving the wage subsidy.
The Star reported in August that Extendicare, the largest operator of private nursing homes in Canada, had paid nearly $10.5 million in dividends since April, while its home-care subsidiary was receiving millions of dollars from the wage subsidy.
A simple solution would be to add restrictions to the subsidy, said David Macdonald, senior economist at the Canadian Centre for Policy Alternatives.
“One of the stipulations should be going forward that you cannot pay out dividends or bonuses to your executives while the federal government is paying your payroll,” he said.
Trudeau also repeated an assurance made earlier this week that Canadians who may have mistakenly received the $2,000-a-month Canada Emergency Response Benefit (CERB) earlier this year — especially those who were self-employed — shouldn’t have to worry about being punished.
“Be reassured that any good-faith mistakes will not be penalized, will not be pursued,” he said. “We’re going to work with people over the coming weeks and months to ensure that people get the support they need.”
He did not go as far as to say that they won’t have to pay any of it back.
The Canada Revenue Agency recently sent to letters to thousands of CERB recipients for whom the agency couldn’t confirm eligibility for the benefit. The letters say that self-employed recipients needed $5,000 in net employment income — income after expenses — to qualify, either in 2019 or in the 12 months leading up to the date of their application.
As the Star has reported, that requirement was not initially clear on the CRA’s website.
“I think the government does need to show greater leniency and in may respects forgive those bills if this happened in those early days” of the pandemic, said Dan Kelly, president and CEO of the Canadian Federation of Independent Business.
The government “did create, I think, a lack of clarity as to who would qualify and in those early days people rushed to apply,” Kelly said. “I do believe there are likely thousands and thousands of self-employed Canadians that followed the rules as they were explained at the beginning of the pandemic.
“Just delaying the repayment is likely still going to create long-term hardship for many, many self-employed workers.”
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