Good morning, everybody, and thank you for joining this morning's webinar on Canadian government's response. Our speakers today are Rob LaPorte, Kyle Larkin, and Hugh Williams, President of Impact Government Affairs. Before I turn this over to Brian McGuire, President and CEO of AAD, I'd like to let those of you know that this will be taped and you may watch this at a later time. Submit questions during the webinar via the chat box on the lower left side of your screen. The slide deck from today will also be available in a PDF in the handout form. This webinar, again, will be recorded, as I just said. At this time, I'd like to turn it over to our President and CEO, Brian McGuire. Thank you, Michael. I would like to welcome everybody to the call and the webinar here today. This is part of AAD's continuing effort to give you the most up-to-date information on the support programs that are coming out in order to support business in dealing with the pandemic. We know that information is coming fast and furious, and it's our hope that this clarifies some of the points that are coming out for you and allows you to determine what programs are best suited for you to take advantage of for your business. Without further ado, I'm going to turn this over to Hugh and his team, who truly are the AED team on the ground in Ottawa and have been tracking all of the programs across the provinces as well as what the national government is up to. So, Hugh? Great. Thank you, Brian and Mike Dexter and, of course, our team and the AED team for setting this up. I'm going to try to cover a lot of ground in the next 27 minutes, but I thought I'd begin by really giving you a sense of how AED has approached this issue in Canada. The government was slow out of the gate in recognizing the vast, deep challenges for businesses and for business survival, and AED recognized that we needed to push government in three real areas, and I'll call them buckets, three buckets. The first bucket was to increase liquidity to AED members and the whole supply chain that AED depends on, and make sure there was cash flow to businesses and support for financing to keep our businesses alive where they were under the most pressure. The second business was employment supports. When revenues were dropping off or there were challenges, that there was a scaled approach to help support AED continuing to employ folks through the dealership network. And the third bucket, which we're deeply into now, is the whole recovery element, how we can prompt the government in the most targeted way possible to drive recovery through to the Canadian marketplace and, of course, benefit AED members most directly so that your customers can purchase, your suppliers have liquidity to lend those purchasers and to lend your businesses for things such as floor plan or others. So think of liquidity, employment, and recovery as the keys that we push for. And today we're going to take you through the government support elements that have been put in place, many of which respond directly to the very aggressive campaign we've had here in Ottawa, and again, congratulations to the AED leadership for recognizing that not only did we have to engage directly with the political offices, the Prime Minister's office, the Minister of Finance's office, the key officials that were designing these programs, but we also had to launch a very aggressive grassroots program, which many of you participated in to deliver the message that small business wasn't just the smallest of business but was really backbone businesses like AED's dealership networks. So the first area I'm going to hit very quickly is those supports for business. And I'm going to turn first of all to the federal wage subsidy. And this is a great example of when the Feds first came out with a program on this, they looked at it in a very narrow margin and really thought about a 10 percent wage subsidy would hit the right number. And they only wanted to target the smallest of businesses. We worked very hard to get them to expand and roll out this program. They had a war room set up at finance, which was dealing with this issue. We lobbied the Minister of Finance very hard to make sure that they understood that this wage subsidy had to include broader parameters, broader definitions, definitions such as level of capital or level of inventory could not be used to limit who could take advantage of these federal wage subsidies. So they put in place a 75 percent wage subsidy for businesses of any size, regardless of employees, which was a huge shift from where they started from. And all you have to be able to show is a decline in revenue of 30 percent for April or May and 15 percent logically for the month of March because the crisis really hit mid-March. It's equivalent to a 30 percent reduction, but just calculated based on March, it is 15 percent. The program, of course, is retroactive to March 15th, and the funding is available until June 6th. And the amount of the subsidy is a 75 percent remuneration to a maximum of $847 per week per employee. And the interesting thing about this, without going into all the details, is that while the government is encouraging employers to top up the other 25 percent where possible, it is by no means an obligation, and businesses just need to look at it on a case-by-case basis. Can they afford it? Does it make sense from a business point of view? Is it something that contributes to business survivability? And there's no penalties for not topping up that 25 percent. We're expecting those funds to roll through through a CRA online portal that will be delivered shortly. One of the interesting things about that is the legislation passed in record time, was designed in record time, was passed in a special session of Parliament over the weekend in which all in one day the House did all of the steps that they needed to do and the Senate to roll this program out. So it is the law of the land, and you can count on that. The application, as I say, will be through a CRA portal. We'll be providing the link out once it's built through AED, and as you come to this, please feel free to ask AED for assistance if you need help and guidance in finding that particular portal. The next slide, I think I may have jumped ahead a little too far here. There we go. So that covers the application process right there. The next one is the question of what if I laid off employees. You can still claim the subsidy for remunerations paid after the 15th, and the government is actually recommending that you rehire those employees as you go forward. So you can have some confidence that that's going to be the place. And, again, as I say, you do not have to pay the remaining 25 percent. It's just best efforts, and, again, it's a case-by-case basis, so maximum flexibility for AED members. We provide here some of the subsidies in terms of the eligibility periods because the government has really split this into periods that make sense from a payment period, with the first period being March 15th to April 11th, and the second and third periods respectively are laid out on the slide there as April 12th to May 9th, and then May 10th to June 6th. So really you have the application for 75 percent of your employee salaries being paid all the way through to June 6th, which is going to mean business survivability for a lot of small to medium-sized businesses, and, of course, AED members can take full advantage of that, and we highly encourage them to do so. One of the things about this that I'll just mention that has caused some I was on the phone with the Director General of Finance Tax Policy yesterday. We have to be a little bit careful that you can't bring somebody in for less than 14 days during any one of those periods and then be eligible for the subsidy. So you can lay somebody off later on. You can bring them in for the first period and the second period and then lay them off in the third period without any kind of penalty, but during any one of those given periods, the employee must be working for at least 14 days. So that's just one thing to be careful of, that as you're measuring your business conduct and the payback, that 14-day eligibility period is something that you'll just want to watch in the case that you have to let an employee go during that period. The government will also be reimbursing 100 percent of certain employer-employee contributions. So as employers and you look at these remittances for payroll contributions, those can really add up. In some cases, it would be up to 20 percent of what the government would be paying employees, but what they've decided to do is cover 100 percent of those employer-paid contributions for the eligible employees when they're on leave and not working. If those employees are actively engaged in the business, then those remittances will be handled in a different way. But if you're just keeping employees on the payroll and they're not actually providing work, I think that's the element of being able to carefully calibrate that you're not being penalized by paying those employer contributions on top of what the government is providing them for. So we've put a couple of simple examples in here, and I don't know, Rob, whether you want to run the group through the examples. I think it's interesting to look at those, not necessarily in great detail, but we wanted to make sure that we at least walked you through one of those. Rob, do we have you there? Yep. Sorry, I was just on mute. So if an employer is one of the things I want to add to that, Hugh, that we made sure to clarify with small business, is that if an employer either brings somebody back or has them working and cannot top up, there absolutely will be no penalty. There will be no reason why they can't receive the 75% top up. The goal is to keep people attached as much as possible to employment. So if somebody was making $1,000 per week prior to this crisis and now they have dropped their level of weekly pay down to $800, they will still receive a subsidy of $750. If an employee had pre-crisis pay of $1,000 and they now have weekly pay of $500, you receive a subsidy of $500. So it's the lesser of the amounts, and the subsidy really is meant to cover what the employee is or would otherwise be making. New staff certainly qualify. That was one of the big questions early on in the process, was if you're bringing somebody on to your staff, do these new staff qualify? Absolutely. They want to have the highest possible level of employment. They want to get as many people connected to work as possible so that once the crisis is resolved and they start lifting restrictions, everyone can return back to work, go back to the same place they were working before, and start their job up right away. Yeah, thank you, Rob. And again, the detailed calculations are available here, but also we'd be happy to walk individual members through those that could be following this presentation either now or at a later date. Some of those guidelines for calculations are worth mentioning. Again, employers are allowed to calculate their revenues under either a cruel accounting method or cash accounting method. That was a major change, again, to provide more flexibility. But you can't use a combination of both. Once you select the accounting method, you need to stick with that. And I think the other element, just to remind folks, is you're comparing the calculations from the same time periods year over year, March or April of 2019 compared to this year when you're figuring out your returns. Interestingly enough, if you're not able to year over year approach, the government did make an accommodation for new businesses to fit in there. One of the other elements that I think is really worth highlighting is the temporary wage subsidy for employees that's called the TWS, which is really the government's first stab at trying to solve this problem where they provide a 10% wage subsidy for employers. So this may, depending on which part of the country member dealers are in and how business has dropped off, may be an option for those members that haven't seen a period of revenue decline of the 30% we just discussed. This is for a period of three months. It really goes from March 18th to June 19th, 2020. It covers 10% of the remuneration paid through that period of time, up to a maximum of $1,375 for each eligible employee and $25,000 total per employer. So again, this is not a huge game-changing amount, but if you've maintained a business above a 30% drop, this is a way to get $25,000 into your cash flow to make sure that you're able to keep liquidity in your business. And again, this is a subsidy, not a loan, and the funds become available immediately as part of your payroll deductions through CRA. So the next thing always is how these two programs work together. I won't go through the example on this, but what's important is that the 10% and the 30% can't be used in combination, which just makes sense, and we cover this on the next slide, is that for employers that are eligible for the emergency wage subsidy and the 10% wage subsidy, they reduce that amount so they can't double dip going through the program. So you really just need to figure out whether you're in that 30% loss of business or a more modest loss of business. The next element we want to cover is work-sharing programs. This has been used a lot through the construction world where work-sharing programs become a three-way agreement between the employer, Service Canada, and the employee to provide EI benefits to workers who agree to reduce their normal working hours, so that if you have a group of employees who are similarly linked, what you can do because of the COVID-related changes in business is that you can agree to a work-sharing program where EI makes up the benefit for the loss of business. Again, the details of this are relatively straightforward, but it does require your accounting and financial team just to take a good look through this to make sure you've got the employee buy-in and that you have the reduction in work to be able to launch this program. But the government has, in a unique way, dropped the cooling-off period to launch into these programs because they recognize that this is a sudden onset of a financial crisis and they've extended the maximum duration of a work-sharing program to go to 76 weeks, really doubled it to accommodate folks. Again, people with questions about this, member dealers with questions about this, we'd be happy to answer those on here or going forward. Another program the government's brought up is the Canadian Emergency Business Account, called CIBA. This has got a lot of attention. This is interest-free loans of up to $40,000 for small businesses that help cover the cost of revenues because of the challenges that you're under. The original qualification was set at $50,000 to $1 million in payroll. That was changed just yesterday from the Minister of Finance, late yesterday afternoon, in which they expanded that to be over to 1.5 million. It was one of the things that AED had asked for as an expansion of that program. We had some number of dealers who were bumping up about being just over the million dollars and wondered why they were being kind of arbitrarily cut off. Again, is a million five at the cutoff for your payroll the right level going forward? You know, that's going to be a challenge for those that are above 1.5 million. But again, this program is designed at helping the smallest of businesses with the smallest of payroll. So to have this, basically you have to have an active business account. You're available for 0% interest on the loan until December 31st, 2022. So it's really, you know, interest-free money all the way through the end of next year with no minimum monthly payments, no principal payments required. And the important thing is 10% or $10,000 of that, which is 25% of the $40,000, is fully forgivable if you pay the full balance off before the end of 2022. So again, this is a $40,000 program. If your payroll is under 1.5 million, that change just taking place yesterday, be cognizant that you can apply through this. Again, you apply through this through your banking institution. So all of the banks, you go through your primary business account bank. If your banking was more than one bank, you go to your primary business account and they'll set up a program for you to access that. The next one is the business, yeah, please, yeah. Just get it on the record very quickly. You know, I assume this isn't relevant for many AAD members, but the minimum threshold for the SEBA was also lowered. So just to put it on the record, its payroll in 2019 of $20,000 to 1.5 million. Just want to put that out there. And Kyle, I think that's, you know, I'll just explain why I skipped that is that I assume any member who has a payroll of less than $20,000 couldn't afford the AAD membership this year. So the- Yeah, get it on the record. Yeah, yeah, appreciate it Kyle. The next program is the business credit availability emergency program. This is a loan guarantee program. This is again, under the liquidity bucket that we've been fighting for. This is to make sure that the business development bank, which has been provided billions of dollars to make this happen, can provide loans of up to 6.25 million. These loans are gonna be at commercial rates, 10% repayable periods. And again, you go through your primary financial institution. You ask them to have access to the BCAP program or the business credibility emergency program. And the extra liquidity that the government has provided in this area is now being made available to businesses. And again, this is financing that can help offset floor plan. It can help offset mortgages. This is really liquidity at its core root. Again, under the liquidity bucket is the federal government's GST and HST remittance deferrals. This is something that we really pushed for in talking to government was that businesses are actually sitting on HST and GST, allow those businesses to keep it until June 30th to allow you to help with your cash flow over this period of time. Any GST, HST payments that we're owing for March 27th then get deferred all the way until the end of June. And no interest, no penalties until the end of June. The other thing that I wanted to really highlight here is that for a lot of AED members who would have ordered heavy inventory in January and February anticipating spring sales would actually be in a position to need a GST refund. On behalf of AED we had a meeting with the head of GST for all of Canada at CRA to press them to make sure that those refunds are still being processed to those dealers that are owed them. And we learned that the GST refunds office and the GST processing offices have been declared essential services. They are running full time in terms of pushing money back and have put $2.9 billion back in terms of GST refunds at the moment. And they're on track and in our sector there's no problems and we'll be looking for feedback from dealers if they're having problems getting their GST and HST refunds, money that they are owed from the government. Those should be processed promptly as we go forward. It's a very, very important part of the element. Also under the liquidity bucket, the corporate tax filings and deferral payments, filing has been extended till June 1st. And the payment due date most importantly is extended to September 1st for balances and installments that are part of the Income Tax Act. So this is again a way of leaving more cash in businesses, leaving more cash in the hands of our members going forward. Again, the support bucket for employees, part of that is the wage subsidy that we talked about. That's the core part that we've been able to access, both the 30% and the 10% program. But there are some other programs that are out there. There's the Canada Emergency Response Benefit. So for those employees that you haven't been able to keep on there's a benefit that they can apply for directly. And that's a $2,000 a month program for up to four months through direct deposit. And again, it relates to COVID closures and it just provides another element of support for the members. I'm gonna wrap up with a couple of things here that are breaking news. We have the border between Canada and the US has been closed for a significant amount of time. The government just announced today, April 17th, the Prime Minister was up speaking at 11 o'clock talking about the fact that they've come to a joint agreement to keep the border closed for another 30 days. Of course, that can be reviewed. One of the things we've lobbied for is that while the border is closed to tourist traffic and personal non-essential travel that the equipment parts, all of those business supplies that are key to our members are still rolling through the border and keeping the supply chain open so that construction can function on both sides of the border. So that's huge. And then the second thing, which has been a great deal of our focus in terms of the recovery period of time, are two factors. Number one, the Prime Minister just announced that for the oil and gas sector, there's gonna be a $1.7 billion program aimed at the cleanup of oil and gas wells left destitute in Alberta, which is going to drive a significant amount of economic activity for our members in the West. Of course, that's oil and gas wells anywhere throughout the country, but those will be primarily in the West. And we are in discussions with finance about a program called the Canadian Secured Credit Facility, which is a credit facility which would allow the leasing companies to access market rates from the government for equipment leasing to be able to make sure your customers can be financed. This was a program that we worked very hard on in 2009 to make available to leasing companies. It was a $13 billion program at that time to respond to the federal government's needs. What we did in that particular case is the $13 billion program rolled out. Only $4 billion of the program was used, but it unfroze the credit markets and drove a lot of economic recovery. And the government actually made a small profit and made back every penny that they invested. So this, we believe, is a market mechanism that can be used to drive liquidity into the marketplace and into the recovery phase as well. We're looking at other recovery measures, including potential GST holidays and potential scrappage programs that would provide incentives for purchasing of new equipment. All of these things are in discussion with government. AAD will be working very hard on making sure these things happen. For the next couple of minutes here, I'd like to take some questions. Kyle or Rob, anything you felt I missed? Oh, you're here. Perfect. You've done such a great job. There's no questions right now unless somebody has something. Yeah, and I would just encourage members generally, members who are either on now or catching this later, don't be afraid to reach out. I mean, we're working full-time around the clock, making sure that these programs get rolled out and that there are other programs available for AAD members. We're happy to return phone calls, deal with individual cases, and make sure that we're contributing to the success of the dealer network. We're contributing to the success of the dealer network and making sure that the entire sector bounces back in a very proactive, strong, healthy way. Hugh, I have two questions. Are commissions paid eligible for subsidy? Any subsidy, sorry, anything that would ordinarily be subject to payroll deductions can be part of the wage subsidy. So commissions would ordinarily be subject to payroll deductions. When you pay it out, you have to do deductions on commission earned income for employees. So yeah, what's not covered is there's a couple of modest exceptions for elements such as receiving dividends, because there's not an arm's length kind of relationship there. And the second one would be for vehicle use. So if somebody has a vehicle use and it's seen as a taxable benefit, then that would not be included in the amount. But generally speaking, any income, including commission, that is part of the taxable benefit that an employee would get are covered by the program. All right, another, we have a couple more here. If an employee is terminated during the subsidy, can vacation payout and payment in lieu of notice eligibility for subsidy? I've read severances is not eligible, but required payments are. You know, I'd encourage that member. I'll give the, maybe we can pass their email on to me because I think there's a few things to unpack there that will be difficult to do in an oral question. I think number one, I would just refer back to the fact that number one, if you lay somebody off during that period of time, the number one thing you need to be worried about is that 14-day eligibility period. So if you're assuming that you're using the subsidy and you let somebody go during one of those eligibility periods that we outlined and they don't hit the 14-day minimum, then you lose all of the subsidy for that period of time. And so I'd have to know exactly how they intended to apply vacation pay in other programs, but I'm confident I can get you that answer. But I just want to make sure that I get it correct for you. Perfect. Are subsidy payments received taxable to the corporation? Yeah, yes, that's our understanding. Okay. Lastly, could you recap your point about employees having to work 14 days in order to be eligible for waived subsidy period? Does that mean that part-time employees who work less than 14 days a month aren't eligible? Yeah, that's the first time I've heard the question about part-time employees in terms of the eligibility, so I'll have to get back to you on that one. But the general principle is that if somebody's engaged for that period of time, you can't have them on for, say, seven days during that period, then let them go and collect the subsidy for the time that they worked. You'd lose the subsidy for the whole period of time. And that's kind of the government wants you to either pick, I can keep this person working for more than 14 days, which is a relatively small threshold, and go from there. But I think for part-time workers, I'm going to double-check that. But as long as the part-time workers are employed during that period of time, they should be eligible for the rebate. But I just need to check the details on that. That's a good question. All right, perfect, thank you. I believe there's a $15 million capital limit for CEBA acceptance. The capital limit was moved on the wage subsidy, and we don't have confirmation as to whether it's moved on the liquidity issue yet. So that's an ongoing discussion. So there's no cap with respect to the wage subsidy, but it's still for the equipment, that I'm just trying to flash to that slide now, for the liquidity portion of it. We still haven't won that battle yet. Okay, is there any thoughts on the government's part to staggering out the GST and HST payments that will be all due at once for those months that have been deferred for March, April, and May? I haven't heard that request yet. I mean, obviously you have the option to stagger that out yourself in advance of those programs, if you like. But at the moment, that's a hard deadline. But I will say this, that in discussions with finance officials and political officials, there's an openness to calibrate these programs to get them right. And I think that's really where we're focused. If that was something that AED membership felt was important and it seems to intuitively make sense to me, we'd be happy to roll out some advocacy on that as a point. Because again, that allows you to keep cash in your business longer, and would provide some flexibility. So it's an innovative idea. It's the first time I've heard that idea. It's a good idea. Awesome, thanks. Last question. If an employee's not earning income but still employed, can they apply for the CERB? And do we have to issue an ROE? You have to issue an ROE for them to receive the benefit. And I don't think there's any exceptions to that. The government's position is you really wanna put somebody either on the payroll so that they can maintain their benefits and have that payroll paid by the government up to the 75%, or move them off there and formally be able to, through a record of employment, have them move to the emergency benefit or the EI. Great, thank you. That's the last question. Hugh, you guys do a great job. Thank you. And to everybody on the call, if you have any questions, please, you all know my email address. Please send them to me. I would be more than happy to get that taken care of. With that, thank you everybody. Stay safe, have a great weekend, and looking forward to speaking to all. Thanks, look forward to those emails. Don't be afraid to send them in and we'll respond to them in detail. Thank you, cheers.

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