COVID-19 Update for Individuals & Business Owners

July 18, 2020,
Dear Clients & Friends,

I wanted to take this opportunity to provide you with the most up to date changes to the CRA benefits related to COVID-19. Note that all my COVID-19 updates are updated on our website at www.arjcpa.ca

Please connect and follow the links to my social media at your convenience (Facebook, Twitter, LinkedIn, Instagram) to stay fully updated on COVID-19 and tax planning tips for individuals & businesses.

 

For Individuals

1. 1. Canada Emergency Response Benefit (CERB) Update:
      • The CERB has been extended and is now available from March 15, 2020 to October 3, 2020. Here are the eligibility requirements.
      • Residing in Canada, who are at least 15 years old.
      • To receive the CERB, you may not earn more than $1,000 for a period of at least 14 consecutive days within the initial four week period of your claim or $1,000 in total for each subsequent claim.
      • Extend the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.
      • Extend the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.
      • Who have not quit their job voluntarily.
      • If individuals receive non-eligible dividends from the business, you could be eligible for the CERB as long as you meet the requirements of having earned a minimum of $5K income in 2019. Non-eligible dividends also count toward the $1000 income threshold for a benefit period.

If you require assistance with the application process, please contact our office.

Full details are available on the CRA Website at: https://www.canada.ca/en/department-finance/economic-response-plan.html#individuals

1. 1. Canada Emergency Student Benefit (CESB):
      • Eligible students include postsecondary students currently in school, those planning to start postsecondary school in September or those who graduated in December 2019.
      • Working students earning less than $1,000 per month are also eligible.
      • The eligibility period covers May 1st to Aug 29th.
      • The benefit amount is $1,250 per month.
      • If you are supporting another person or if the student has a disability, the benefit is up to $2,000 per month.

Full details are available on the CRA Website at: https://www.canada.ca/en/revenue-agency/services/benefits/emergency-student-benefit.html

1. 1. Tax Deadlines

Personal Tax: Please ensure you have made your tax payment prior to September 1st to avoid penalties and interest. As per CRA “You will not be charged late-filing penalties or interest if your 2019 individual (T1) income tax returns are filed and payments are made prior to September 1, 2020″.
Further details are available in the following link: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-filing-payment-dates.html
If you have not filed your personal tax return, there is still some time. You may send the documents digitally (either via dropbox, google drive, box or secured email).

For Businesses

1. 1. The Canada Emergency Business Account (CEBA) Update:
      • The qualification requirements are as follows:
        • The Borrower is a Canadian operating a business as of March 1, 2020.
        • The Borrower has a CRA business number and has filed a 2018 or 2019 tax return.
        • Demonstrate that your organization has paid between $20,000 to $1.5 million in total payroll in 2019.
        • Applicants without at least $20,000 in payroll in 2019 will have to demonstrate having eligible non-deferrable expenses between $40,000 and $1,500,000 in 2020. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. Expenses will be subject to verification and audit by the Government of Canada.
        • 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.
      • The government will then provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced.
      • Repaying the balance of the loan on or before December 31, 2022 will result in a loan forgiveness of 25 percent (up to $10,000).
      • Business owners can apply for support from the Canada Emergency Business Account through their banks and credit unions.
      • Further information is available at: https://ceba-cuec.ca/
   2. Canada Emergency Commercial Rent Assistance (CECRA):
      • The program will provide financial assistance to eligible small businesses by reducing their rent by 75% for the months of April, May, June & July 2020.
      • This will be achieved by providing forgivable loans to qualifying commercial property owners.
      • The CECRA forgivable loans will cover 50% of the monthly rent, with the property owner absorbing 25%, and the tenant responsible for paying the remaining 25%.
      • The loans will only be forgiven if the property owner reduces the tenant’s rent by at least 75% for all three months and also agrees to not evict the tenant.
      • In order to be eligible, a small business must pay less than $50,000 per month in rent and have either ceased operations, or, had their revenues reduced by a minimum of 70% compared to their pre-COVID-19 revenues.
      • Please contact our office if you require assistance in applying for the CECRA
      • Further information is available at: https://www.cmhc-schl.gc.ca/en/finance-and-investing/covid19-cecra-small-business.
   3. Canada Emergency Wage Subsidy (CEWS) Update:
      • Yesterday, on July 17th, 2020, the government announced proposed changes to the CEWS. Here are the key points that are still “proposed”.
        • Allow the extension of the CEWS until December 19, 2020, including redesigned program details until November 21, 2020.
        • Make the subsidy accessible to a broader range of employers by including employers with a revenue decline of less than 30 per cent and providing a gradually decreasing base subsidy to all qualifying employers. This would help many struggling employers with less than a 30-per-cent revenue loss get support to keep and bring back workers, while also ensuring those who have previously benefited could still qualify, even if their revenues recover and no longer meet the 30 per cent revenue decline threshold.
        • Introduce a top-up subsidy of up to an additional 25 per cent for employers that have been most adversely affected by the pandemic. This would be particularly helpful to employers in industries that are recovering more slowly.
        • Provide certainty to employers that have already made business decisions for July and August by ensuring they would not receive a subsidy rate lower than they would have had under the previous rules.
      • For further details, please see the link: https://www.canada.ca/en/department-finance/news/2020/07/supporting-canadian-workers-and-businesses-with-a-redesigned-canada-emergency-wage-subsidy.html
      • Prior to this new update yesterday, as a Canadian employer whose business has been affected by COVID-19, you may be eligible for a subsidy of 75% of employee retroactive from March 15, 2020, to August 29, 2020. This will allow employers to re-hire workers previously laid off as a result of COVID-19.
      • Applications for period 4 (June 7 to July 4) are currently open.
      • The program will be available through My Business Account or through the Represent a Client service for Accountants
      • There will be an automatic audit for all employers to ensure compliance with the program.
      • Please contact our office for assistance and we will prepare the calculations and applications for you.

Full details on the calculator and process are available at: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html

1. 1. Tax Deadlines:

Corporate Tax: Filing deadlines for corporations that would otherwise have a filing deadline on May 31, June 30, July 31st, or August 31st 2020 has been extended to September 1st, 2020. Tax balance and installments that would normally be due on or after March 18 and before September 1st, 2020 has been extended to September 1st, 2020.
Further details are available in the following link:
https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-filing-payment-dates.html

1. 1. Advisory, Tax Planning and Cash Flow Planning

Whether you are an individual tax payer, sole proprietor or corporate business owner, many of us have experienced a challenging few months. As part of our commitment and service delivery to our clients, with the recent pandemic, we have been working with our clients on the following:

1. 1. 1. Business Financing which includes
         • Bank loan proposals & applications
         • Lines of credit applications
         • Applications to various government loan programs in response to the COVID-19 pandemic
         • Preparation of business plans and cash flow projections
      2. Cash Flow Planning & Budgeting
      3. Tax Planning and Corporate Restructuring
      4. Net Worth Analysis and Planning
      5. Strategies to achieve your short term and long term goals

Please see our website for further details at https://www.arjcpa.ca/business-advisory-services/
Wishing you and your families a safe and enjoyable remainder of the summer!
Stay Safe!