October 24, 2020,

 

Dear Clients & Friends,

Wishing you and your family all the best as we approach the cold weather season!

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 the 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.

   

We have been working very hard in providing personal tips & accounting, tax and business content on social media.   If you get an opportunity, please also provide a google review available at the following link:

AR Jaffer Professional Corporation Chartered Professional Account Google Review

 

For Individuals:

Canada Emergency Response Benefit (CERB) & Transition to the Canada Recovery Benefit (CRB):

• Even though the CERB has ended, you can apply for a period retroactively. The CRA is continuing to accept and process retroactive applications for period 7 (August 30 to September 26, 2020) through the CRA’s My Account or automated toll-free phone line.
• The new Recovery Benefits known as the Canada Recovery Benefit (CRB) are available between September 27, 2020 and September 25, 2021.

CRB:

• The Canada Recovery Benefit will provide eligible workers with $500 per week (taxable, tax deducted at source) for up to 26 weeks for those who are not employed or self-employed due to COVID-19 and who are not eligible for EI, or had their employment/self-employment income reduced by at least 50% due to COVID-19.
• This benefit will be paid in two-week periods.
• If your situation continues past 2 weeks, you will need to apply again. You may apply up to a total of 13 eligibility periods (26 weeks) between September 27, 2020 and September 25, 2021.
• The Canada Recovery Sickness Benefit (CRSB) will provide $500 per week (taxable, tax deducted at source) for up to a maximum of two weeks, for workers who are unable to work for at least 50% of the week because they contracted COVID-19, self-isolated for reasons related to COVID-19, or have underlying conditions, are undergoing treatments or have contracted other sicknesses that, in the opinion of a medical practitioner, nurse practitioner, person in authority, government or public health authority, would make them more susceptible to COVID-19. This benefit will be paid in one-week periods.

CERB:

• The CERB period is 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

 

For Businesses:

1 – The Canada Emergency Business Account (CEBA) Update:

New CEBA:

• On October 9, the government announced the following changes to the CEBA loan
  • an addition of $20,000 to the original $40,000 CEBA loan.   Half of this additional amount would be forgivable if the loan is repaid by Dec 31, 2020.
  • The application deadline for CEBA has been extended to December 31, 2020
  • Further details on the enhancements are not yet available on the CRA website, but your bank will be informing you of the changes 

Original CEBA:

• The original $40,000 CEBA has been extended to December 31, 2020
• 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 $40,000to 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, 2022will 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) Update:

New CECRA:

• As announced on October 9, 2020, the new Canada Emergency Rent Subsidy, which would provide simple and easy-to-access rent and mortgage support until June 2021 for qualifying organizations affected by COVID-19
• The rent subsidy would be provided directly to tenants, while also providing support to property owners
• The new rent subsidy would support businesses, charities, and non-profits that have suffered a revenue drop, by subsidizing a percentage of their expenses, on a sliding scale, up to a maximum of 65 per cent of eligible expenses until December 19, 2020
• Organizations would be able to make claims retroactively for the period that began September 27 and ends October 24, 2020.
• Details to be provided by CRA in the coming weeks

Original 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, August and September 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, generate no more than $20 million in gross annual revenues, 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:

 

• The wage subsidy has been extended to June 2021
• The subsidy is still 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.
• On October 14, 2020, the government announced some modifications to the subsidy.   The details are provided here:  https://www.canada.ca/en/department-finance/news/2020/10/extending-the-canada-emergency-wage-subsidy.html
  • It is proposed that the base subsidy rate for September 27 to October 24, 2020 continue to apply from October 25 to December 19, 2020
  • As such, the maximum base subsidy rate would be set at 40 per cent for this period, and the maximum top-up subsidy rate would remain at 25 per cent.
    • 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

4 – COVID-10 Grant – Canada United Small Business Relief Fund (CUSBRF)

The CUSBRF will be managed by the Ontario Chamber of Commerce on behalf of the national Chamber network in support of other chambers and partners to help small Canadian businesses with their recovery efforts as a result of COVID-19.  Here

are the eligibility requirements:

• Successful applicants will receive a relief grant of up to $5,000.
• One application per ownership group. If more than one application is submitted, any subsequent submission after the first time-stamped application will automatically be rejected.
• Applicants do not need to be a member of the Ontario Chamber of Commerce (OCC) to qualify.
• Small to medium-sized (SME) companies from all sectors and all regions of Canada.
• For greater clarity, both For-Profit and Not-For-Profit organizations are eligible to apply but Government organizations, municipalities, charities and the chamber of commerce network are not eligible to apply.
• Be incorporated, or operating as a sole proprietor/partnership, in Canada as of March 1, 2020.
• No more than 75 employees.
• Have minimum annual sales of $150,000 and not more than $3,000,000.
• Have $1,000,000 of commercial general liability insurance (self reported). Not receiving any other contributions from public funds towards the specific activities contained in the funding application. Applicants that received funding from another government source must provide details including the exact amount, source of funds and how the funds contributed to the expenditures noted in the budget section of the application.
• Be in full compliance with all applicable government laws, rules, regulations, guidelines and other legally binding measures (self declaration).
• Be in operation after September 1, 2020 (grant recipients must sign a declaration included in the approval letter to confirm).
• Must attach all necessary receipts and invoices, accompanied with proof of payment, with the application. Failure to include sufficient expenditure details and accompanying documents will result in automatic disqualification.
• Must submit the company’s sales tax (GST/HST) registration document or a recent sales tax (GST/HST) filing and one of the following documents:
  • Proof of business registration
  • Business license
  • Articles of incorporation or letters patent
  • For partnerships: Articles of incorporation or letters patent for each corporate Partner
• Eligible expenses directly related to the above categories are permitted provided that purchases were made no earlier than March 15, 2020
• The maximum grant amount available per application is $5,000
• There are three categories of purchases that are eligible for reimbursement under the program
  • Purchase of Personal Protective Equipment (PPE)
  • Renovation of space to adhere to re-opening guidelines
  • Enhancement of website/ developing e-commerce capability

Please contact me for assistance to apply for the benefit.  Further details are provided here:   https://occ.ca/canada-united-small-business-relief-fund/

 

5 – 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. Business Financing which includes
   1. $100k BDC working capital loan application
   2. Bank loan proposals & applications
   3. Lines of credit applications
   4. Applications to various government loan programs in response to the COVID-19 pandemic
   5. 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/

Stay Safe!

Best regards,