Here is my April 4th update….. as things change or as my understanding changes, I will post more….
TEMPORARY EMERGENCY WAGE SUBSIDY
This program STILL EXISTS, it did not morph to a new program. This program allows employers to keep tax payments equal to 10% of a worker’s wage from March 18 to June 19. Under this program, you figure out what your payroll was for the qualified period each month, for each employee to calculate what 10% of wages is for you. Then, you calculate your source deductions payment for that month, and can reduce the income tax portion (NOT the CPP or EI amounts) of your source deduction payment as income to your business (you must record it as income). These “credits” can be carried forward until they are used up. There is a maximum of $1,375 per employee and $25,000 per employer for the period (which is March 18 to June 19). This program is available immediately, and is self assessed. Keep your calculation documents, as you are responsible to report on this in order to prove your due diligence.
CANADA EMERGENCY WAGE SUBSIDY
This program is a 75% wage subsidy for qualifying businesses for up to 3 months. There is no draft legislation ready yet, but you must be able to demonstrate a decline of revenue of 30% or more, year over year of the same time period. It must be applied for separately each month (through your My Business Account with the CRA), and the subsidy will cover up to 75% of the first $58,700 of remuneration per employee. (This could represent a benefit of up to $847 per employee per week of this three month program). Owner salaries are eligible, provided you do not increase your salary during the material time in an effort to take advantage of this program. A pre-crisis salary test will be performed. I do not believe that dividends are not applicable at this time. This subsidy will pay out to you about 6 weeks after your application is received in the form of a cheque or direct deposit. The period of coverage is March 15-June 06, 2020. The claim periods are;
March 15 – April 11, 2020
(using the reference period for eligibility of March 2020 over March 2019);
April 12 – May 09, 2020
(using April 2020 over April 2019);
May 10 – June 06, 2020
(using May 2020 over May 2019).
Any wage subsidy money received (which we know is income) is not used in the income calculations for this program. Any businesses established after February 2019 may measure against a reasonable benchmark, as determined by the CRA and more on this will roll out soon. This application is expected to be available in your My Business Account in two weeks.
YOU CAN AND ARE EXPECTED TO CLAIM BOTH OF THESE SUBSIDIES TO SUPPORT YOU.
If you qualify for both, the amount you have taken in the 10% program, will be deducted from your payment resulting from the 75% program.
We highly recommend that you have a My Business Account with CRA, and that you also have a My Account with CRA to access services. We also highly recommend that you have Direct Deposit services with the CRA.
CANADA EMERGENCY RESPONSE BENEFIT (CERB)
This program will be accessed through your My Account with the CRA and you will be able to apply starting April 6, 2020. This benefit will pay out at the rate of $2,000/mo. for four months. You will need to be able to prove that you had no income for 14 consecutive days to qualify. Payments are expected to start arriving to you (or to be sent to you) 3-5 days after your application is received. You cannot receive CERB and EI at the same time. You can claim them back to back. If you have already claimed EI and are already receiving those benefits (which can be more than $500/wk if you managed to get the maximum), you will continue to receive those regular or sick benefits and can apply for CERB (and get the 16 weeks/four months) when they run out. If you have already applied for EI but your claim has not yet been processed, you will automatically be transitioned to the CERB after April 6. You will claim the CERB first, and if you are still unemployed, you will then collect EI. This is a taxable benefit. For those without an online presence, you can apply using the automated phone line.
Business owners are also eligible for CERB, but you cannot be receiving a salary from your business during the claim period.
Anyone accessing CERB CAN NOT access other programs at the same time.
CANADA CHILD TAX AND GST/HST CREDIT ENHANCEMENTS:
The Child Tax Program and GST/HST credits will be enhanced in May as well to assist.
For over 12 million low- and modest-income families, who may require additional help with their finances, the Government is proposing to provide a one-time special payment by early May 2020 through the Goods and Services Tax credit (GSTC). This will double the maximum annual GSTC payment amounts for the 2019-20 benefit year. The average boost to income for those benefitting from this measure will be close to $400 for single individuals and close to $600 for couples. This measure will inject $5.5 billion into the economy.
For over 3.5 million families with children, who may also require additional support, the Government is proposing to increase the maximum annual Canada Child Benefit (CCB) payment amounts, only for the 2019-20 benefit year, by $300 per child. The overall increase for families receiving CCB will be approximately $550 on average; these families will receive an extra $300 per child as part of their May payment. In total, this measure will deliver almost $2 billion in extra support.
The application process of this program has been stream-lined so that it may be processed much, much faster now (previously about 30 days). You still need to be approved first before accessing this program, but the employee signatures and involvement in the process as well as the detailed recovery plan has been eliminated and employers no longer have to require a 10% activity drop to qualify. Once approved, access codes will be provided to employers to give to their employees to use to access benefits paid under this program. This program can be used to bring back your workers that are already laid-off and collecting EI. You would need to report the information on these soon to return employees in the application process. Your employees can suspend their EI regular benefit claims and then access this program with you. Employees claiming CERB CAN NOT be included.
CANADA EMERGENCY BUSINESS ACCOUNT (CEBA)
This is a government guaranteed loan of up to $40,000 to help eligible businesses pay for operating costs. If you pay it all back by December 31, 2022 you will be forgiven 10% of the value of the loan (up to $10,000). I do not believe this forgiveness is taxable income at this time, however this is not clear. This loan is administered through the chartered banks and applications will be accessed through your online banking portal. This product will act as a revolving line of credit until December 31, 2020 at which time it converts to a term loan with no interest until December 31, 2022. If still unpaid at January 1, 2023 interest will apply and your term will continue until December 31, 2025. You must have
$50,000 – $1,000,000 in payroll in 2019 to qualify and you will need to provide your T4 Summary and CRA acknowledgement of this filing in the application process with your eligible bank of choice. There are no restrictions on how these funds are used. There is no personal guarantee on this loan.
BUSINESS CREDIT AVAILABILITY PROGRAM (BCAP)
This direct lending product is to help business owners to cover cash flow shortages over the next 6 months. BDC Application requirements apply; including cash flow projections, financial statements and evidence of discussing need with current lender is still in place. The rate is currently 2.8%, the term is 36 months; with interest only payments in the first 12 months and a 60% balloon payment at the end of the term. The loans amounts will be $100,000 – $2,000,000. EDC has not yet released requirements for this program. https://www.bdc.ca/en/financing/business-loans/pages/small-business-loan.aspx
EDC CONTRACTS AND PERFORMANCE SECURITY PROGRAMS
The EDC (Export Development Canada, a Crown Corporation) has programs to support you with dwindling revenues/cash flow, cancelled contracts and performance security. Whether you export or not, these folks are worth the call and very connected with many Domestic support services as well for those that may not qualify under their mandates. https://www.edc.ca/en/credit-insurance-support/contact.html
PAYMENT DEFERRAL OPTIONS
Banks are working with individuals and businesses to defer payments, lower interest rates and increase credit limits. RBC for example has announced that all existing RBC small business clients who have been registered as a business as of March 1, 2020 will be eligible to enroll for the Emergency Business Account relief offered by the Government of Canada. Further program eligibility and enrollment details will be available on
GUARANTEES ON LOANS AND CO-LENDING PROGRAM
EDC will guarantee new operating credit and cash flow term loans up to $6,250,000
Under the co-lending program incremental credit amounts up to $6,250,000 can be supported as well. Eligible financial institutions will conduct underwriting and manage customers in these programs.
AGRI-CANADA PROGRAM ENHANCEMENT
The near term credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada. https://www.fcc-fac.ca/en/financing/agriculture.html
Every Municipality has measures in place to support you from the Municipal level as well, so check with your local Business Development professionals and check their websites often for help.
Your local Chamber of Commerce will have support and information for you, check with them often.
Your local CDCs and CFDCs as well, there are many programs they can help with, other services they can connect you to and they usually have lots of free supports to offer.
The Government of Ontario has introduced temporary hydro rate relief for Ontario electricity customers during the COVID-19 pandemic. https://www.hydroone.com/about/corporate-information/rate-relief
The school boards are working on an online model and solutions to be able to get those services to every child everywhere as well and hopefully we will hear more about this soon. I have been using home school tools and leveraging help through other Moms and kids to help one another (through Zoom/Skype/FaceTime currently while we are all respecting the protocols of distancing)
The CRA has suspended audits for at least four weeks and has increased the speed in which refunds are released for all types of returns to get that money into the hands of Canadians as soon as possible.
TAX FILING AND PAYMENT DEADLINES
Individuals June 1, 2020 September 1, 2020
Self-Employed Individuals June 15, 2020 September 1, 2020
(& their spouses)
Trusts May 1, 2020 September 1, 2020
Partnerships May 1, 2020 N/A
Corporations June 1, 2020 for all that Federal Tax and
came due between instalments due are
March 18-June 1, 2020 extended to September 1, 2020
**For Trusts and Partnerships, check with CRA and your Tax Professionals to ensure deadlines, as different circumstances may apply to you – this is general information and IS NOT tax advice.
Remember to continue to file your returns on time and at every refund opportunity file them ASAP.
For those of us in Ontario, the list of essential workplaces to keep up to date on your option to be “open for business” or not:
There are also so many free courses available for your higher learning and personal growth right now…. search out something you’d love to learn
OTHER SUPPORTS AND STREGIES (IN GENERAL)
- Take advantage of federal and provincial indirect tax payment deferrals
- Change your filing frequencies to gain access to refunds and subsidies sooner
- Conduct an analysis to see if you have unclaimed refund amounts
- File returns as quickly as you can when you are in a refund position
- Consider electing to exempt closely related corporations transactions from HST
- Claim your digital Media Credits and SR&ED Credits
- You can factor your SR&ED credits while you wait for them to arrive (not beneficial)
(Note: there is no support for losses of these claims due to mandatory closures)
- Be VERY VIGILENT in cash flow projections & tracking (Huge risk coming in June – be ready)
- Be aware of US systems for those with related companies in the USA
WHAT WE ARE WORKING ON (In addition to business as usual, while physically isolating)
- Website re-development to improve communication
- YouTube videos to explain common concerns
- Cash Flow tools and training sessions (Virtual)
- Time Management and Work at Home flows (Virtual)
- Member Login area for safer data sharing
- MasterMind Group specific to coping mechanisms for business related to COVID-19
- Virtual Networking Sessions to keep us connected and sharing
Many small businesses are taking the same generous and kind approach, so ask around and see what is open to you from the strength of the private sector of your community as well. Your friends, neighbours and other community groups are also pitching in with many volunteer efforts.
WE MUST UNIFY NOW…. THIS IS HAPPENING FOR A REASON AND WE NEED TO LEARN THE LESSON. TAKE CARE OF ONE ANOTHER. PLEASE OBSERVE AND RESPOND. PLEASE DO NOT TAKE ACTION FROM A PLACE OF FEAR.
THIS IS THE FIRST ROUND OF SUPPORT in response to a fluid situation that has not been handled before. I do expect support for those not yet included will come and I will also do all that I can to bring those gaps to the collective awareness, as are may others. Together we are strong.
KEEP THE COMMUNICATION LINES OPEN…. And if you have an idea on something you’d like us to work on, please tell us at email@example.com
At present we remain open seven days per week to serve and are pumping out as many tax returns as we can. We thank you for your compassion and patience and look forward to when this is all behind us.
We truly appreciate the opportunity to be of service to you,
Christie Buckley, Managing Director
Buckley & Associates Inc.
Payroll / Bookkeeping / Taxes / Coaching / Co-working / Collaborations
705-681-0300 ext 201