October 26, 2021 – COVID-19 BULLETIN

EXTENSION OF ASSISTANCE TO BUSINESS TO MAY 07, 2022

The CEWS (wage subsidy) and CERS (rent subsidy) programs officially ended on October 23^rd. However, the government has announced continued assistance to business until May 7, 2022 as follows:

TOURISM AND HOSPITALITY RECOVERY PROGRAM

Eligibility:          

• Must be in Tourism/Hospitality sector
• Must have suffered an average decline of 40% or more over the first 13 CEWS periods (March 15, 2020 to March 13, 2021).
• Must suffer a decline of 40% in the current month.

Subsidy:

• Wages and rents (as for CEWS and CERB)
• Maximum subsidy equal to revenue decline – minimum 40% maximum 75%.
• From March 13th 2022, subsidy rate will be 50% of the above rates until May 7, 2022
• 0-39% decline, no subsidy.

HARDEST-HIT BUSINESS RECOVERY PROGRAM

Eligibility:

• All businesses except Tourism and Hospitality
• Must have suffered an average decline of 50% or more over the first 13 CEWS periods (March 15, 2020 to March 13, 2021).
• Must suffer a decline of 50% in the current month.

Subsidy:

• Wages and rents (as for CEWS and CERB)
• Minimum subsidy 10% at a 50% decline then 1.6 times the difference between 50% and the actual decline over 50%. For example at a 60% decline the subsidy will be (10% + (60%-50%)X1.6)= 26%
• After March 13th 2022, subsidy rate will be 50% of the above rates until May 7, 2022
• 0-49% decline, no subsidy.

LOCKDOWN SUBSIDY

In the event of a lockdown of at least seven days, all businesses will be eligible for the subsidies under the terms offered to the Tourism and Hospitality sector.

Only a current month decline will need to be demonstrated. An annual decline will not require to be demonstrated.

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January 27, 2021 – COVID-19 BULLETIN

Eligible but don’t need the subsidy? YOU CAN BE A HERO!

I was contacted by a client yesterday who told me that, even though he is eligible to claim the government wage and rent subsidies, he actually didn’t need the money and asked us not to file any more claims. Very noble indeed and I am sure the government of Canada would approve of his altruism. However, they aren’t going to know about it and, even if they did, it is not their practice to hand out medals to citizens who choose not to claim monies to which they are entitled.

So, I made an alternative suggestion. Claim the money and donate what you don’t need to a registered charity of your choice. It’s perfectly legal, tax neutral in that your charitable contribution will offset the tax you need to pay on the subsidy and at a time like this, charities are working harder than ever while their donation base shrinks. You can do something significant to help them.

Put on your cape and become a Superdonor!

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December 15, 2020 – COVID-19 BULLETIN

Canada Emergency Business Assistance (CEBA) – Read this before you claim the additional $20,000

If you are considering applying for the additional $20,000 CEBA loan, be aware that it can change the requirements for the original $40,000 loan.  If your attestation for the $40,000 said you could use the funds for “without limitation, payroll” etc., that will be changed to use for only Eligible Non-Deferrable Expenses, which includes only non-arm’s length payroll (i.e., not owners’ wages). See here for more details in an excellent article by Aaron Schechter of Crowe Soberman.

 Since the forgivable portion of the $20,000 will be taxable in the year the loan is received, it might make sense to wait until January to apply.

Canada Emergency Response Benefit (CERB) – Gross or net income?

Taxpayers who were self-employed during 2019 and earned in excess of $5,000 were eligible to claim CERB but the question arises whether the $5,000 relates to gross revenue (sales) or net income (sales less expenses). Canada Revenue Agency makes it clear that the taxpayer must have earned $5,000 of net income to qualify. As a result, a number of CERB recipients have been asked to return amounts they received for which they were apparently not eligible. Before accepting that the CERB you received must be repaid, bear in mind that it might be a better idea to revise your previous year’s tax return to reduce the expenses claimed thereby increasing your net income to meet the minimum threshold. You may have to pay a little extra tax but it will very probably be less than the CERB amounts you will otherwise be obliged to repay.

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December 08, 2020 – COVID-19 BULLETIN

HOW COVID-19 ASSISTANCE WILL BE TAXED

Canada Emergency Business Assistance (CEBA) | Beware, non-intuitive!

CEBA loans of $40,000 (now increased to $60,000) include a provision to forgive a portion of the loan if it is repaid before December 31, 2022. Understandably, the forgiven amount of the loan will be taxable to the recipient. What may be a little more difficult to grasp is that the forgiven portion is taxable in the year the loan is received – not the year it is repaid. If the amount is not forgiven for whatever reason – for example, if the loan remains unpaid after December 31, 2022 – a deduction of the amount already taxed will be available in the year of repayment.

Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS)

In the normal course of events, a wage subsidy is received several weeks after the period covered by the subsidy. So, for example, if you apply for a subsidy for salaries paid for the month of September, the application cannot be made until the month is complete so, at best, the amount will not be received until sometime in October at the earliest. As you are of course aware, CEWS amounts received are taxable. However, they are taxable on an accrual basis meaning that they must be included in income in the month the related expenses were incurred. So, in my example, the amounts received in October will be included as taxable income in the month of September. The same accrual protocol will apply to CERS amounts received.

Canada Emergency Response Benefit (CERB)

Early next year Canada Revenue Agency will issue T4A slips indicating the amount of CERB received which will be included in line 13000 of the individual tax return. If the amount agrees with what has been actually received, you should have no issue when it comes to filing your return. If you have been overpaid CERB and return the overpayment before December 31, 2020, this will be reflected in a lower taxable amount on your T4A. However, if you return the overpayment on January 1, 2021, you will be taxed on the full amount of CERB received in 2020 and will have to wait until you file your 2021 return to receive credit for the repayment.

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December 01, 2020 – COVID-19 BULLETIN

CANADA EMERGENCY WAGE SUBSIDY EXTENSION AND INCREASE

CANADA EMERGENCY RENT SUBSIDY EXTENSION

HOME WORKING DEDUCTION FOR EMPLOYEES

Finance Minister Chrystia Freeland made some announcements during her Fall Economic Statement on November 30 that we believe will be of interest.

Canada Emergency Wage Subsidy (CEWS) rate increased

The CEWS will be extended from December 20 2020 to March 13 2021 (periods 11 to 13) and the maximum rate available increased from 65% to 75% which restores it to the level it was up to period 7.

Canada Emergency Rent Subsidy (CERS)

The only news here is the extension of the program until March 31 2021. The maximum rate claimable remains at 65% but a supplement of 25% can be claimed by businesses that closed due to a government ordered lockdown.

Home Working Deduction for Employees

As I wrote in an earlier bulletin, employees working from home can deduct certain expenses but will need to complete a form T2200 signed by their employer to qualify for the deduction. In yesterday’s update Minister Freeland announced that a flat amount of $400 will be deductible by home workers without the need to complete a form T2200. I would inject a note of caution here however. The $400 is not incredibly generous and amounts to less than $45 per month since March 2020. It is likely that most claimants would qualify for a greater deduction by completing the T2200 form.

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November 24, 2020 – COVID-19 BULLETIN

CANADA EMERGENCY RENT SUBSIDY AND LOCKDOWN SUPPORT OPEN FOR APPLICATIONS

CERS applications can now be done through the application portal. Apply to create your CERS account number through My Business Account or Represent a Client, where you’ll also file your application, after calculating your subsidy through the CERS Portal.

Application portal here.

Full details CERS here.

Full details Lockdown Support here.

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November 10, 2020 – COVID-19 BULLETIN

CANADA EMERGENCY RENT SUBSIDY AND LOCKDOWN SUPPORT

Canada Emergency Rent Subsidy (CERS)

As previously announced, the federal government has now released more details related to the CERS program:

• The effective starting date will be September 27, 2020 and the scheme will be available until June 2021.
• The subsidy available will be on a sliding scale based on the reduction in revenues for a particular month.
• The maximum subsidy will be 65% at a 70% or higher revenue drop.
• The calculation of the revenue drop must be consistent with that used to claim the Canada Emergency Wage Subsidy meaning you can’t claim using one methodology for a wage subsidy and a different one for rent.
• The subsidy will cover:
  • Rent
  • Property taxes
  • Property insurance
  • Mortgage interest
• Rent paid to a non arm’s length entity is excluded.
• Expenses related to residential properties are excluded.
• Maximum claim will be $75,000 per location and $300,000 overall for each qualifying period.
• Applicants must have a payroll account as of March 15, 2020 and a business number as of September 27, 2020.
• Unlike the previous rent subsidy, claims will be made directly through CRA and the landlord will not be involved.

N.B. At the date of writing, CRA is not yet accepting claims. We will issue a bulletin when they do. Claims will be available retroactively to September 27, 2020.

Lockdown Support

In the event of a mandated lockdown by any level of government, the subsidy available will be increased by 25% meaning that a business experiencing a 70% or greater decline in revenue will be able to avail of a 90% rent subsidy.

Full details CERS here.

Full details Lockdown Support here.

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October 13, 2020 – COVID-19 BULLETIN

CHANGES TO AND EXTENSION OF ASSISTANCE PROGRAMS

Canada Emergency Wage Subsidy (CEWS)

The CEWS subsidy is being extended until June 2021 with a maximum available subsidy to those worst affected of 65% of eligible salaries. This will take effect on the expiration of the existing program which ends December 19, 2020.

Canada Emergency Rent Subsidy (CERS)

This is in fact a new program replacing the Canada Emergency Commercial Rent Assistance which ended on September 30. Beginning October 1, the new CERS program will offer a direct subsidy of 65% to those affected with up to 90% available for businesses subject to mandatory lockdowns.

Canada Emergency Business Account (CEBA)

The $40,000 available under the existing program is being increased by $20,000 of which further $10,000 will be forgiven if repaid by December 31, 2022 adding to the $10,000 forgiveness already available under the existing program.

Businesses applying for the loans will be required to prove they have faced income losses specifically caused by COVID-19.

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September 24, 2020 – COVID-19 BULLETIN 

A REMINDER – THIS PARTY’S OVER!

The filing and payment extensions granted by Canada Revenue Agency (CRA) and Revenu Quebec (RQ) end on September 30, 2020. To avoid penalties and interest, the following must be filed and/or paid by then:

• 2019 individual tax returns
• Individual 2020 instalments due after March 18
• Corporate tax returns covering year ends between September 18, 2019 and March 31, 2020
• Interest on existing debt was waived between April 1 and September 30. From October 1, it will continue to accrue. N.B. CRA only. RQ has not waived interest on existing debt.
  

….. BUT THIS ONE CONTINUES

Prime Minister Trudeau announced yesterday that the Canada Emergency Wage Subsidy (CEWS) will be extended until “next summer”. Details are not yet available.

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August 27, 2020 – COVID-19 BULLETIN 

CLARIFICATION ON PAYMENT EXTENSION TO SEPTEMBER 30 FOR CORPORATIONS: QUEBEC IS CONTINUING TO CHARGE INTEREST

Corporations with December 31 year-ends must pay the balance of tax due within two months of the year-end, that is, by February 28. A filing penalty will not be levied if the tax return is filed within six months of the year-end. CRA and Revenu Quebec (RQ) however will not levy filing penalties if the return is filed before September 30 2020.

JPDO has learned that CRA and RQ are not treating the interest on the balance of tax due two months after year-end, in the same way.

CRA are waiving interest on any existing balances unpaid as of April 1 2020 until September 30 2020. This implies that amounts due February 28 will be subject to interest for only one month until April 1 and will thereafter be interest-free until September 30.

RQ unfortunately are not waiving interest on existing balances unpaid so amounts due on February 28 will continue to accumulate interest from that date until paid.

We therefore advise you to pay any balance of 2019 corporate tax due to Revenu Quebec as soon as possible to avoid further accumulation of interest.

We are continuing to verify this unusual situation and if information to the contrary is brought to our attention, we will let you know.

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August 17, 2020 – COVID-19 BULLETIN 

MOST DEADLINES EFFECTIVELY EXTENDED TO SEPTEMBER 30

The payment due date for current year individual, corporate, and trust income tax returns, including instalment payments has been extended to September 30, 2020. Penalties and interest will not be charged if payments are made by this date.

You will notice that although the deadline to produce a 2019 personal tax return remains as June, 1 2020, the fact that no penalties or interest will be charged on balances due if a return is filed before September 30, makes September 30 the effective filing deadline.

The penalty-free extension granted for sales tax returns (GST and PST) to June 30 has expired and returns due after that date will be subject to penalty and interest if filed late.

As always, do not delay filing of returns if you are expecting a refund or if filing a personal tax return is required to avail of certain assistance payments.

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July 21, 2020 – COVID-19 BULLETIN 

IMPORTANT CHANGES TO CANADA EMERGENCY WAGE SUBSIDY PROGRAM (CEWS)

On July 17, Finance Minister Morneau announced an extension of the CEWS until December 19, 2020.

Conditions for periods one to four (up to July 5) remain unchanged i.e. revenue reduction minimum of 30%, maximum subsidy of 75%, maximum eligible salary $1,129 per week.

For periods five to nine (until November 21, 2020), there will be changes to all aspects of the program. Here are some of the highlights:

• The subsidy will be split between “base” and “top-up” components
• A subsidy will be available to businesses that have experienced less than 30% in revenue decline
• Businesses who have experienced a decline of 70% or more can qualify for a 100% subsidy of eligible salaries.
• In periods 5 and 6, businesses which would have been better off under the system in place for periods 1 to 4 will receive the higher subsidy.
• There will be a gradual decline in the amount of eligible salaries over the periods concerned.

For full details of the changes, please see here

Claims will be much more complicated than before. Please contact summer@jpdo.ca if you need our assistance.

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July 14, 2020 – COVID-19 BULLETIN 

ANNOUNCED CHANGES TO CEWS, CEBA AND CERB ASSISTANCE PROGRAMS

CANADA EMERGENCY WAGE SUBSIDY (CEWS) EXTENSION

Recap: The CEWS program pays a subsidy of 75% of wages up to $847 per week.

The federal government had already announced that the CEWS wage subsidy will be extended until the end of August. Yesterday the Prime Minister announced a further extension until December. Applications for period 4 of the program are open and conditions are identical to periods 1 to 3. Eligibility conditions- particularly revenue reduction and the percentage of subsidy – are under review and may change for future periods.

CANADA EMERGENCY BUSINESS ACCOUNT (CEBA) EXPANSION

Recap: The CEBA program provides loans of $40,000 interest-free for one year to businesses of which $10,000 will be forgiven if repaid before December 31, 2022.

The program was previously available only to employers whose 2019 payrolls were between $20,000 and $1,500,000. As of June 26, 2020, businesses eligible for CEBA now include owner-operated small businesses that do not have a payroll, sole proprietors receiving business income directly, as well as family-owned corporations remunerating in the form of dividends rather than payroll. Applicants will have to demonstrate having eligible non-deferrable expenses between Cdn.$40,000 and Cdn.$1,500,000 in 2020.

CANADA EMERGENCY RESPONSE BENEFIT (CERB) EXTENSION

Recap: CERB pays $2,000 per four-week period to eligible applicants. Applicants may earn up to an additional $1,000 per period without affecting the basic $2,000 entitlement.

The maximum period of claim is being extended from 16 weeks to 24 weeks and is available for periods between March 15 and October 3 2020. Total claims need not be made consecutively but cannot exceed 24 weeks in total.

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May 28, 2020 – COVID-19 BULLETIN

IMPORTANT EXTENSIONS RELATING TO INDIVIDUAL AND CORPORATE TAXES CRA AND RQ

Individuals

Although the tax deadline remains June 1, no late-filing penalty will be levied for 2019 tax returns filed before September 1, 2020. We are encouraging our clients to file by the June 1 deadline but if that is not possible, there will be no negative consequence as long as returns are filed before September 1.

Corporations

Corporations whose filing deadline falls in June, July or August will now also have a filing extension until September 1, 2020. Significantly, this will cover all corporations with December 31, 2019 and January 31, 2020 year ends. 

CANADA EMERGENCY WAGE SUBSIDY EXTENSION

The federal government announced that the CEWS wage subsidy will be extended a further 12 weeks until the end of August but details have yet to be released. It is not yet clear whether the 30% revenue decline will be maintained as a qualifying criterion or whether the wage subsidy will continue at the 75% level.

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April 24, 2020 – COVID-19 BULLETIN 

CANADA EMERGENCY COMMERCIAL RENT ASSISTANCE

The Prime Minister announced today that rental assistance will be made available for small businesses

• Assistance will cover commercial rent for the months of April, May and June.
• Assistance will be in the form of a loan by the federal government to landlords of 50% of the rent of eligible tenants.
• The loan will be forgivable if the landlord reduces the tenant’s rent by 75%
• Eligible businesses will be those who have temporarily ceased operations or whose revenues have fallen by at least 70% for the months covered.
• The scheme will apply to businesses paying rent of less than $50,000 per month
• Further details will follow and the scheme is expected to be ready by mid-May.

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April 22, 2020 – COVID-19 BULLETIN 

CEWS APPLICATIONS OPEN APRIL 27

Finance Minister Morneau announced two initiatives today:

• Canada Emergency Wage Subsidy (75%) will accept applications on Monday April 27.
• You can apply through your CRA “My Business Account” or, if you do not have one, your accountant can apply through his or her “Represent a Client” account.
• You can only set up direct deposit through “My Business Account”
• Calculate the amount you will receive using the tool provided by CRA for this purpose here: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-calculate-subsidy-amount.html
• Full details of the subsidy here: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html

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April 16, 2020 – COVID-19 BULLETIN 

CHANGE TO CEBA/RENT RELIEF

Finance Minister Morneau announced two initiatives today:

1. A change to the eligibility criteria for the Canadian Emergency Business Account. This provides a $40,000 interest-free loan to small businesses: 

    Businesses with a 2019 payroll between $20,000 and $1,500,000 are now eligible.

2. Rent relief for small businesses covering April, May and June. Details have yet to be worked out. We will update you as they are announced.

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April 10, 2020 – COVID-19 BULLETIN 

UPDATED SUMMARY OF FEDERAL ASSISTANCE TO BUSINESS

While some assistance is not available immediately, whether and when you claim assistance may be affected by decisions you make today. I have set out below a brief outline of the following initiatives:

• 75% wage subsidy
• 10% wage subsidy
• $40,000 business credit
• Deferral of sales and income tax payments

As always, we are here to help. Contact me at paul@jpdo.ca with your questions

Full details on all COVID-19 assistance here

Canada Emergency Wage Subsidy

• Available to most companies large and small.
• Applicants must demonstrate a decline in revenues for March April or May 2020 compared with the same months in 2019 or compared with average revenues for January and February 2020.
• Separate applications will need to be made for each of the months of March, April and May this year.
• Revenues can be calculated using either the cash or accrual methods but not both
• Decline in revenues must be equal to or greater than 15% in March and 30% in each of April and May
• If you are not eligible for the 75% subsidy, you can still avail of the 10% Temporary Wage Subsidy for Employers (see below)
• The subsidy will be backdated to March 15 and will apply to employees on payroll between March 15 and April 11.
• If you have laid off employees, you will need to rehire them to avail of the subsidy..
• You will be expected, where possible, to maintain your employees’ earnings at the pre-March 15 level.
• The applications need to be made through Canada Revenue Agency through a website that is expected to be operational between end April and mid-May.
• If you have not already done so, you should apply for an online business account with Canada Revenue Agency. You can do this here

Temporary Wage Subsidy for Employers

• If you are not eligible to claim the 75% wage subsidy, you will nevertheless be able to avail of the lower 10% wage subsidy.
• This is compensated by permitting you to reduce the amount of income tax (but not EI contributions) deducted at source.
• It applies to all employees on payroll as of March 18 2020.
• You do not have to apply. The subsidy will be available to reduce payroll income tax to be remitted on the first remittance date after Mar 18.
• Payroll deduction remittances are not being deferred so to claim, you must file and pay deductions at source on the due dates.
• The deduction will be 10% of the employee salary up to a maximum of $1,375 per employee over the three months from March 18 2020 to June 19 2020.
• The maximum claim per employer will be $25,000 over the three months.
• For employers remitting on April 15, the subsidy will cover employees’ salaries for the period March 18 to March 31.

Canada Emergency Business Credit

• Up to $40,000 available interest free for one year. $10,000 will be forgiven if the loan is repaid before December 31, 2022.
• To be eligible you must have had a payroll between $50,000 and $1m in 2019.
• You apply online through your bank. Most are accepting applications now.

Payment Deferrals

• Payments of GST/QST for March 31, April 30 and May 31 due dates can be deferred until June 30 but you should still file the reports on time.
• Any income tax amounts coming due after March 18 2020 may be deferred until August 31 2020. This includes instalment payments as well as balances due. No interest or penalties will be charged.
• Refunds will be processed as usual so do not defer filing if you are expecting one.

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April 08 2020 – COVID-19 BULLETIN #2

IMPORTANT CHANGES TO WAGE SUBSIDY

Finance Minister Morneau today announced important changes to the wage subsidy program, specifically:

• The drop in revenues can now be based on either a comparison of the months of March, April and May with the same months last year or with average sales for January and February of this year.
• For the month of March only, the reduction in revenues is reduced to 15%. It remains at 30% for April and May.
• Businesses can use either the accrual or cash method of accounting to calculate revenues but not both. This might benefit businesses that may not have suffered a reduction in billed revenues but whose cash collections have significantly declined.
• Minister Morneau warned that companies that are ineligible will need to repay the subsidy and those who have been judged to have deliberately abused the system can be subject additionally to fines of up to 225% of the amount or prison terms of five years. “Artificial transactions” which are used to avail of the subsidy will result in a 25% penalty in addition to repayment of the subsidy.
• Businesses can also apply for a 100% refund of the employer portion CPP/QPP/EI and QPIP for employees who are still on payroll under the wage subsidy scheme but who are on leave not performing any tasks for the employer.

Minister Morneau also announced that the Canada Emergency Business Account would be available for applications tomorrow (April 9). Applications should be online or by phone through your bank.

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April 08, 2020 – COVID-19 BULLETIN #1

QUEBEC TRAINING ASSISTANCE (PACME)

Quebec announced a training subsidy for businesses in order to assist them with the training and development of employees to equip them with new or improved skills when the COVID crisis ends. The program will pay up to 100% of training costs to $100,000 and 50% between $100,000 and $500,000. The program is open until September 30, 2020.

Full details here: https://www.quebec.ca/entreprises-et-travailleurs-autonomes/programme-actions-concertees-pour-le-maintien-en-emploi-pacme-covid-19/

Types of Training Covered

• Basic training for employees
• Francisation
• Digital skills
• Training related to the business activities whether or not related to the function of the employee
• Training courses provided by professional orders or institutes
• Training related to the relaunch of the business post-COVID
• Training related to an adjustment or modification of activities in the context of COVID-19 uncertainty permitting the enterprise to maintain or diversify its activities (sanitation, teleworking etc.)
• Training to requalify employees for new tasks

Given the current situation, it is highly recommended that the training courses be provided online or remotely.

Admissible Expenses

• Employee wages up to $25 per hour
• Consultant/trainer expenses up to $150 per hour
• Out of pocket expenses for trainers
• Out of pocket expenses for trainees
• All ancillary costs of providing courses
• Certain administrative costs

Please note that if you are availing of the 10% or 75% federal subsidies, the training assistance will be limited to the non-subsidized portion i.e. either 90% or 25% of employee compensation up to the 25% limit.

Please contact me at paul@jpdo.ca if you need further information.

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April 03, 2020 – COVID-19 BULLETIN 

GET READY TO AVAIL OF ASSISTANCE

While some assistance is not available immediately, whether and when you claim assistance may be affected by decisions you make today. I have set out below a brief outline of the following initiatives:

Canada Emergency Wage Subsidy

• Compare March 2020 gross revenues with March 2019. If the decline is equal to or greater than 30%, you may be eligible for the 75% wage subsidy.

• If you are not eligible for the 75% subsidy, you can still avail of the 10% Temporary Wage Subsidy for Employers (see below)

• The subsidy will be backdated to March 15 and will apply to employees on payroll between March 15 and April 11.

• If you believe you are eligible for the subsidy, you may wish to consider re-hiring employees you have already laid off.

•   You will be expected, where possible, to maintain your employees’ earnings at the pre-March 15 level.

•  Make these decisions now because it will take up to six weeks before the Canada Revenue Agency is ready to accept applications for the 75% subsidy. 

Temporary Wage Subsidy for Employers

• If you are not eligible to claim the 75% wage subsidy, you will nevertheless be able to avail of the lower 10% wage subsidy.

• This is compensated by permitting you to reduce the amount of income tax (but not EI contributions) deducted at source.

• It applies to all employees on payroll as of March 18 2020.

•  You do not have to apply. The subsidy will be available to reduce payroll income tax to be remitted on the first remittance date after Mar 18.

•  Payroll deduction remittances are not being deferred so to claim, you must file and pay deductions at source on the due dates.

•  The deduction will be 10% of the employee salary up to a maximum of $1,375 per employee over the three months from March 18 2020 to June 19 2020.

•  The maximum claim per employer will be $25,000 over the three months.

• For employers remitting on April 15, the subsidy will cover employees’ salaries for the period March 18 to March 31.

Canada Emergency Business Credit

• Up to $40,000 available interest free for one year. $10,000 will be forgiven if the loan is repaid before December 31, 2022.

• To be eligible you must have had a payroll between $50,000 and $1m in 2019.

• The scheme will be administered by chartered banks and applications will be made online.

• Banks will be ready to accept applications within three weeks of March 27^th.

Payment Deferrals

•  Payments of GST/QST for March 31, April 30 and May 31 due dates can be deferred until June 30

• Any income tax amounts coming due after March 18 2020 may be deferred until August 31 2020. This includes instalment payments as well as balances due. No interest or penalties will be charged.

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April 02, 2020 – COVID-19 BULLETIN

CANADA EMERGENCY WAGE SUBSIDY (CEWS)

More details are now available on the mechanics of the subsidy. I will deal here only with elements that I did not cover in yesterday’s bulletin. For full details of the information provided by the federal government on this topic, please go:

https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html 

Remember that we will be pleased to assist you with your applications for all government subsidies. Contact me here. 

NEW INFORMATION

•  If your revenues have not declined by 30%, you will still be eligible for the previously announced 10% wage subsidy.
• Subsidies will be available for “employees that do not deal at arm’s length from the employer”. This will cover business owners and their families.
• If businesses were established after February 2019, evidence of revenue drop will be determined using “reasonable benchmarks”.
• If employees were previously laid off and subsequently rehired, they will not be eligible for the 75% wage subsidy for any period they collected the CERB benefit ($2,000 per month).
• Employees must be paid first and the subsidy collected later. This could cause cash flow problems for some businesses generating little or no revenue.
• New anti-abuse regulations will be introduced to ensure employers do not “game” the system. Details have yet to be released.
• The website where applications will be made will only be available in three to six weeks. Applicants are encouraged to supply direct deposit details to avail of faster payment.
• Parliament must return to pass the necessary legislation to support the 75% wage subsidy. While it is likely to pass, the current government does not enjoy a parliamentary majority so amendments are possible.

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April 01, 2020 – COVID-19 BULLETIN

CANADA EMERGENCY WAGE SUBSIDY (CEWS)

DETAILS ANNOUNCED BY FINANCE MINISTER MORNEAU

The details announced today by Finance Minister Morneau do not represent the complete details of the CEWS plan so we will have more to tell you when the detailed element have been published by the government.

Eligibility

• Applications will need to be made each month
• Will apply to all businesses that do not receive government financing including bars, restaurants, not-for-profits and charities
• Applicants must attest that they will do everything they can to pay the additional 25% of the employee cost
• Applicants must show they have paid employees in a particular month and will be reimbursed after the fact
• The application will be made through a special Canada Revenue Agency web portal which will be up within the next three to six weeks
• Funds will be available within 6 weeks

What we already knew

• Maximum salary to which a subsidy will apply will be $58,700 per annum (maximum subsidy will therefore be $44,025)
• Only current employees will qualify so laid-off employees will need to be rehired to qualify.

Questions yet to be answered

• Will businesses whose revenues have declined by 29% be ineligible?
• Do businesses need to wait until their revenues for each month have been determined before they can apply?
• What will be the delay between paying employees for a particular month?
• What about businesses that did not have any revenues in 2019 because they only started in the last 12 months?
• Will business owners and their family members qualify for the subsidy?
• If employers owe other amounts to Canada Revenue Agency will the CEWS subsidy be paid or offset against the other amounts owed?

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March 30, 2020 – COVID-19 BULLETIN

LATEST UPDATE ON CANADIAN EMERGENCY WAGE SUBSIDY

Prime Minister Trudeau during his daily COVID briefing today provided the following very limited clarifications:

1. No limit on the number of employees per company. (Not sure if that means the subsidy          goes beyond those defined as SMEs to include large public companies)
2. Applicants will have to prove a decline in revenues of 30%. According to CBC, this will be a post-facto determination so it will not be required to make an application.
3. The maximum subsidized salary will be $58,700, 75% of which amounts to $847 per week. The $58,700 is the maximum for CPP/QPP purposes.

More to come as news is released.

Full details of all federal government COVID-19 economic initiatives are here:

https://www.canada.ca/en/department-finance/economic-response-plan.html

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March 28, 2020 – COVID-19 BULLETIN

The Federal Government announced three new important measures yesterday (March 27^th) which will affect both small businesses and their employees:

1. Increase of small business employee subsidy from 10% to 75%

This is a welcome move but details of how the subsidy will work in practice have yet to be announced. The 10% subsidy was maxed at $55,000 per annum per employee and a total annual payroll of $1,000,000 per company. These limits may remain but we don’t know. The method of payment of the 10% was by way of reducing the payroll income tax remittances to CRA but this will obviously not work for the higher subsidy because the subsidies are likely to exceed tax remittances for most companies. It therefore remains to be seen how the federal government will deal with this issue.

Importantly, the subsidized employees would have to have been retained on payroll since March 15^th but the more than one million who have been laid off since then will not qualify. The government is suggesting that small businesses re-hire employees already laid off to avail of the subsidy. Again, no details yet on what small businesses will need to do and how and when the subsidy will be paid.

2. Delay in payment of sales tax collected (GST/HST/QST)

This will be a welcome respite for small businesses facing remittances of sales tax at the end of March and the following two months. Québec has confirmed that this initiative will also apply to Québec registrants. Late payment penalties which can be as high as 15% in Québec will be waived on payments which can be delayed until June 30. It goes without saying that companies that normally receive sales tax refunds should continue to file as early as they can.

TIP: For companies who have the resources, I would advise remitting GST/QST on a cash received basis. In other words, remit sales tax piecemeal as your clients pay you rather than waiting until June 30 to pay what might be a very large sum and which at that point will be subject to very high penalties if paid late.

3. $40,000 loan to qualifying small businesses

I have very little detail on this yet. The program will be administered by banks who will lend up to $40,000 guaranteed by the federal government. It seems these loans will be interest-free for the first twelve months and up to $10,000 will be forgiven if they are repaid before December 31, 2022. As soon as I have new information, I will share it with you.

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OCTOBER 16 2019

WORLD AND NATIONAL EVENTS

United States:

Impeachment hearings focussed on Presidents Trump’s shenanigans are dominate North American headlines. The economy is still robust and US unemployment at 3.5% is the lowest in decades but there are threats bearing down from all sides: Trump’s instability, trade wars with China and Europe and the soaring US national debt. So the near future is, to say the least, uncertain.

Brexit:

The difference between the dominant stories out of the US and the UK is that Brexit has no term limit. The Brexit genie is out of the bottle and even a second referendum won’t push him back in. Don’t forget  that what the UK has been engaged in for three years is just an agreement to leave on good terms. Imagine if you resign from your job but you still want to work for your ex-employer as an independent contractor. Your employer states that of course you can go but he won’t negotiate to work with you in the future unless you agree to certain conditions before you leave. A “no-deal” Brexit is like saying I don’t agree with your conditions so I’ll leave on my terms and there are lots of others that will work with me even if you don’t. Maybe there’ll be a deal by Halloween but it seems unlikely. What you can bet on as a dead-cert however is an election before Christmas.

Canada: 

I’m voting Green this time in the certain knowledge that, because of Justin’s cynically broken promise on election system reform, my chosen candidate has no chance of being elected to parliament. So my vote is to protest the above and other broken promises and the hypocrisy of the current government without directly putting their main opponents in power. If things go the way I would like them to go, the next government will not enjoy a majority and the Green party will pick up a lot more votes and perhaps a few seats as they struggle for electoral fairness in a system designed to protect the hegemony of the two major parties.

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TAX NEWS

I will include in the blog selected items I think may be of interest to my clients with references to more detail if you need to dig deeper. Let me acknowledge the main source of these blurbs taxtips.ca which I recommend as a great resource of up-to-date tax information.

Flipping properties:

Yes, if you sell a principal residence your gain is exempt and otherwise the profit will be 50% taxable as a capital gain. But beware, if you are a serial property “flipper”, you could be 100% taxed on your capital gains if you live off the gains as a major source of income.

Real Estate Sales – Are They Taxable? What about my Principal Residence?

Employee Parking:

As a general proposition, if an employer pays for his employee’s parking at his place of work, this becomes an employment benefit and is included on the employee’s T4. However, there are some interesting exceptions that you should bear in mind.

Employee Parking Provided by Employer

Shareholder Loans:

As a general rule, better to pay yourself a salary or dividend than to remove money from your corporation without paying tax. If you don’t repay the borrowing within 12 months of the fiscal year you borrowed it, you are required to declare the amount on your personal tax return as income. And if you don’t so declare, you could be subject to 50% penalties for gross negligence.

Shareholder Loans and their Tax Implications

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BUSINESS ADVICE AND ACCOUNTING SOFTWARE

Make your accounting life easier with these 5 tech tools:

This CPA article contains links to software applications to make life easier for you. Check out creating an Excel spreadsheet from a picture using your phone or a business management tool for budgeting, forecasting, KPI reporting.

https://www.cpacanada.ca/en/news/accounting/the-profession/2019-09-30-accounting-tech-tools

How do I hire a remote worker?

Do you have occasional or ongoing tasks in your business that can be performed remotely? This site will put you in contact with hundreds of thousands of freelance accountants, designers, IT specialists in fact every profession under the sun (except maybe hairdressers and dentists 😊) often at a fraction of the cost of what you might pay for the same service in Canada.

https://www.upwork.com/

https://www.business.com/articles/growth-through-outsourcing/