Corporate Income Tax, Personal Income Tax, Small Business

BCEBW, CESB, CECRA & CEWS

This post deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein.

Although every reasonable effort has been made to ensure the accuracy of the information contained in this article, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents or for any consequences arising from its use.

CRA Calls

A reminder, if you ever get a call from someone claiming to be from the CRA, you should exercise caution.  One option is to contact the general business number at 1-800-959-5525 or individual number 1-800-959-8281 to confirm that this a valid call (either confirm a name, phone number or badge number).

Even in times of crisis, there are those looking to take advantage of others.

BC Emergency Benefit for Workers

The BC Government has opened applications for a one-time tax-free payment of $1,000 for BC residents who have met the eligibility requirements for the Canada Emergency Response Benefit (CERB).

To be eligible for the BCEBW, you must:

  • Have been a resident of British Columbia on March 15, 2020
  • Meet the eligibility requirements for the CERB
  • Have been approved for the Canada Emergency Response Benefit, even if you haven’t received a federal benefit payment yet
  • Be at least 15 years old on the date you apply
  • Have filed, or agree to submit, a 2019 BC income tax return
  • Not be receiving provincial income assistance or disability assistance

Note

If you have returned to work and still meet the requirements of the CERB, you will still be eligible for the BCEBW as long as you are not required to repay the CERB.

More details on applying can be found here.

Canada Emergency Student Benefit

The Federal Government has announced that the Canada Emergency Student Benefit (CESB) will be available for students and new graduates who are not eligible for the CERB or EI.  The CESB will provide $1,250 per month for eligible students or $2,000 per month for eligible students with dependents or disabilities.

The CESB will be available for May to August 2020, and more details will be released “soon.”  We’ll try to update when this becomes available, or you can watch here for updates.

Canada Emergency Commercial Rent Assistance

The Canada Emergency Commercial Rent Assistance (CECRA) has been created by the Federal Government and administered by the Canada Mortgage and Housing Corporation (CMHC).  It will offer forgivable loans to Property Owners so that they can reduce the rent owed by small business tenants.

Eligibility

Property Owners will be eligible if they:

  • generate rental revenue from commercial real property located in Canada and have declared rental income on your personal or corporate tax return for 2018 or 2019
  • are the owner of the commercial property where the tenant is an impacted small business
  • have a mortgage secured by the commercial real property (alternative mechanisms will be implemented for those without a mortgage)
  • have or will reduce rents for April, May and June by at least 75% (must be all months by the looks of it)
  • agree to a moratorium on evictions for April, May and June

If rent has been collected at the time of approval, a credit for a flexible 3-month period to the tenant for future rent will be acceptable if agreed to by the property owner and tenant.

What is an “impacted small business”

An impacted small business is:

  • a small business tenant or subtenant
  • a business, non-profit or charitable organization
  • one that pays no more than $50,000 in gross monthly rent
  • one that generates no more than $20 million in gross annual sales calculated on a consolidated basis (at the parent level), and
  • one that has ceased operations, or has experienced a decline of 70% or more compared to pre-COVID19 revenues.  The decline of revenues will be calculated similarly to the CEWS, so April, May and June 2020 compared to April, May and June 2019 or to the average of Jan/Feb 2020 (potentially a hard bar to meet…)

How it will work

The CMHC will provide a forgivable loan to the property owner:

  • the loan will be 50% of the gross rent owed by the impacted small business during the three months of April, May and June 2020
  • the tenant will be responsible for paying no more than 25% of the total rent
  • the property owner will be responsible for paying no less than 25% of the total rent

Example

  • Monthly commercial rent is $10,000
  • The landlord applies for the CECRA and receives 50% of the regular rent, $15,000 for all three months ($5,000/ month) as a forgivable loan
  • The landlord reduces rent by 75%, so the tenant only pays $2,500 per month
  • The landlord will have then received $2,500 for that month from the tenant and $5,000 from the CMHC and will be responsible for the remainder (presumably this will just be absorbed)

Applications are to open mid-May through the CMHC’s website, and you can sign up for notifications here.

CEWS Update

Previously we had taken the stance that the Canada Emergency Wage Subsidy (CEWS) was available based on remuneration paid in the respective claim period.

New guidance provided by the CRA has clarified what we should be looking to in calculating the CEWS. We should be looking to what the employee earned in the period to calculate the subsidy. Additionally, we must wait until the employee has been paid before the application for the subsidy can be made.

Example

The CRA gives the example of an employee that works all of April and then receives payment on May 1.  The first claim period is from March 15 to April 11, and so that employee would not have been paid for the April 1 – 11 period until May 1. Therefore we cannot apply for the subsidy until May 2, which is after that the employee receives payment.

Hourly Workers

The CRA has also clarified cases where employees are paid an hourly wage.  Specifically, they have specified that we cannot use the average for the period to calculate an average daily wage.  Instead, we must use the actual wage for each day in a given claim period.

How does this affect filings already made?

We anticipate any differences resulting from these developments in understanding to be relatively minor and so do not expect a significant effect.  Currently, there is no mechanism for amending a filing, but this would be something to watch for if the difference is more than nominal.

Below are updated videos to reflect this new understanding:

Re-Apply for the CEWS

Re-Apply for the CEWSThe next claim period is April 12 – May 9, so you should be able to apply on May 10, provided you have paid your staff for the period as noted above.

If your business had already qualified for the CEWS based on a decline in March’s revenues, you would be eligible for the April 12 – May 9 payroll claim period, whether you show a decrease in revenues for April or not.  If you did not qualify for March, then you must confirm that you are eligible for April.  We have some guidance on that here and videos on how to do the calculation here.

You here can go to CRA’s site apply for the subsidy.

One thing to note is that the application asks you to attest that the business qualifies.  We strongly urge caution here.  If there is any doubt as to whether your business qualifies or not, please contact us, and we’ll do our best to provide some guidance.

We hope you’re all staying healthy!

Best regards,
Andrew de Verteuil, CPA, CGA
de Verteuil & Company Inc.

Personal Income Tax

CEWS – How to Apply on April 27

Canada Emergency Wage Subsidy

On Monday April 27, applications for the CEWS open.  There is a pretty good summary of what’s needed here, but we’ll try to walk you through the process.

First and foremost, if you do not yet have access to your CRA My Business Account, register for that ASAP.  That can be done here.  Once you have access, make sure that your direct deposit is set up to speed up the receipt of funds.  Directions on how to set up direct deposit are here

Business owners will be also be able to apply using a separate online application form which will be made available here.  Or if you need assistance, please contact our office and we will do our best to assist you through the Represent a Client portal that we have access to.

Eligible Employers

First, employers will need to confirm that they are eligible.  This is done by demonstrating a drop in revenue of 15% or more for March and 30% or more for April and May.

We had an article on the revenue test which needs to be done in order to determine eligibility.  That article can be found here.

We’re going to try something new to us here… We’ve created a few videos on how to produce the reports needed from Quickbooks Online and Desktop and then how to calculate the change in Excel.  For the Sage users, the information you’ll need is the same and once you’ve pulled that from Sage, you can follow the directions in the “Calculate a decline in revenue for CEWS” video below:

If you find those helpful, please let us know and we’ll try to do more of them!

If you would like us to help confirm your eligibility we will need:

  1. Revenues for:
    1. March 2019
    2. April 2019
    3. May 2019
    4. January 2020
    5. February 2020
    6. March 2020
    7. April and May 2020 once available to reconfirm eligibility
  2. If those do not show a sufficient reduction in revenue, we may also need accounts receivable balances at:
    1. February 28, 2019
    2. March 31, 2019
    3. April 30, 2019
    4. May 31, 2019
    5. December 31, 2019
    6. January 31, 2020
    7. February 29, 2020
    8. March 31, 2020
    9. April 30 and May 31, 2020 once available to reconfirm eligibility

Eligible Employees

Once we’ve confirmed the business is eligible, we must then confirm your eligible employees.

For most, it will be those that are employed in Canada, unless they were unpaid for 14 consecutive days.  If you are rehiring someone who was collecting the CERB, they are now allowed to earn up to $1,000 per month without having the CERB clawed back.  Those who know they will need to repay the CERB can find details on that here.

Calculate Subsidy Amount

This is the hard part now…  Before logging on to apply, you need to know how much you’re applying for, so we are asked to calculate the amount ourselves.  You will need to know:

  • Baseline remuneration
  • Actual remuneration during the period
  • The eligible amount of remuneration during the period

Fortunately, the government has developed a spreadsheet to help with some of these calculations.

Download that spreadsheet here and then move on.

We’ve created a few videos on how to calculate the subsidy for the following pay schedules and types:

Apply for the CEWS

Once you’ve gone through those processes and have the reports to support that the business is eligible, you can go to CRA’s site to actually apply for the subsidy.

We’ve done it and with the report produced from the calculation link above, it seemed pretty straightforward.

One thing to note is that you will be asked to attest that the business qualifies.  We strongly urge caution here.  If there is any doubt as to whether your business qualifies or not, please contact us and we’ll do our best to provide some guidance.

Subscribe & Thanks!

If this newsletter has been forwarded to you and you’re interested in receiving them directly in the future, we invite you to go here and complete the form to be added to our mailing list.

Thanks to everyone for the positive feedback we’ve been receiving on the newsletters!

We hope you’re all staying healthy!

Best regards,

Andrew de Verteuil, CPA, CGA
de Verteuil & Company Inc.

Personal Income Tax

How to Set Up Direct Deposit in the CRA My Business Account

The place to setup direct deposit is a bit hidden in the CRA “My Business Account” page, so here is where you’ll go:

Log into your My Business Account

Click on your “Business Profile” at the top of the page (it will show your company name, not mine)

In the left column, there’s a “Direct Deposit” Section. If direct deposit is set up already, it will show the banking details under each program for GST, Payroll, etc. If it’s not set up, it will say so as it shows below.  You’ll have to click on “Manage direct deposit”.

Enter your banking details and you’re done!

Corporate Income Tax, Personal Income Tax, Small Business

Employer and Employee Updates!

Canada Emergency Wage Subsidy

The specific details on the 75% Canada Emergency Wage Subsidy (CEWS) were released today by Finance Minister Morneau.

Retroactive to March 15, 2020 and up to June 6, 2020, if a business’s gross revenue has decreased by at least 30% compared to the same month in the prior year, the business will be eligible for the CEWS.  This applies to all businesses, non-profits and charities, regardless of size and whether incorporated or not. The number of employees does not matter.

Owners will have to confirm that they still qualify each month.

For each employee at a company that meets the 30% test, their income will be covered up to 75% on the first $58,700 of “pre-crisis remuneration” that would be earned annually, up to a maximum benefit of $847 per week.  For those interested that’s $847 per week X 52 weeks per year / 75% = $58,700.

Owners expected to make their best efforts to top up wages to 100%.

Applications will open “soon” through the My Business Account portal on the CRA website.  Business owners should all ensure that they have access to their CRA My Account and My Business Account and that direct deposits are set up.  Funds will be paid out in 3 – 6 weeks.  All businesses should complete their direct deposit details with the CRA my Business account to ensure the funds are received faster.

Employers that receive the subsidy but are not eligible will be required to repay amounts received.  Penalties may apply in cases of fraudulent claims and cases where employees have not been paid.

Businesses that do not qualify for the CEWS may continue to qualify for the previously announced 10% reduction to payroll remittances.

Full details can be found here.

Canada Emergency Business Account 

On Friday the Prime Minister announced a new Canada Emergency Business Account (CEBA). The CEBA will be administered through the banks and is intended for small and medium businesses. The CEBA will provide a loan of up to $40,000, interest-free.  Further, if $30,000 is fully repaid on or before December 31, 2022, then the remaining $10,000 will be forgiven.

This is available to businesses that had a gross annual payroll of between $50,000 and $1,000,000 on their 2019 T4 Summary (Update April 20, 2020, this has been broadened to be between $20,000 and $1,500,000)

Canada Emergency Response Benefit 

Applications for the $2,000 per month CERB will open on April 6 and eligible Canadians can apply online at Canada.ca.  Recipients will have to confirm once a month to continue receiving the benefit.  There is a schedule for applications based on the month of your birth.

If your employer is receiving either of the wage subsidies, you cannot collect the CERB.  Ensure that your CRA My Account access is setup and sign up for direct deposit to receive the funds directly to your bank account in just a few days.  Without direct deposit, a cheque will be mailed and funds will be received in about 10 days.

At a basic level, if you are over 15, earned $5,000 or more in 2019 or in the past 12 months and have no current income because of disruptions from COVID-19, then you will likely be eligible for the CERB.

It’s important to stress that no tax will be withheld from this benefit and recipients will report this on their 2020 tax returns and pay tax on this in April 2021.

The full criteria and a list of questions and answers are available here.

Recap and Resources!

There has been a ton of new developments over the past couple weeks.  We’ve sent out a number of notices that can get lost in the shuffle, so below we’ve created a list of key items:

Sign up for My Account and My Business Account with the CRA (I’ve been told that using your BC Personal Health Number is the easiest way to confirm your identity)

  • Personal tax filing deadline – June 1 (self-employed deadline currently still June 15)
  • Corporate tax filing deadline for December 31 year ends is still June 30
  • Personal and corporate tax payment deadline – August 31 (including instalment payments) No interest will accrue on amounts that would normally have become owing between March 18 and August 31, 2020.
  • GST payment deadline – June 30
  • Canada Child Benefit maximum will increase by $300 (click here to apply if you don’t currently receive)
  • GST Credit for individuals will increase for May by $400 for individuals and – $600 for couples
  • Mortgage support and flexibility from lenders (if anyone has benefited from this please let us know)
  • Canada Emergency Response Benefit (CERB) $2,000 per month details here
  • EI Benefits (click here to apply, possibly more than the $2,000 per month but a massive backlog due to number of applications)
  • Reduction in minimum withdrawals for RRIFs by 25%
  • Student loan repayment deferrals for 6 months, interest-free.  No need to apply.
  • Kids Help Phone received $7.5 million to help young people through this time.  They can be reached here 
  • Work-share program for those with reduced hours through EI has been extended from 38 weeks to 76 weeks (click here to apply)
  • Canada Emergency Wage Subsidy (CEWS) 75% of gross wage subsidy details here
  • Canada Emergency Business Account (CEBA) $40,000 interest-free loan (contact your bank)
  • Loans and Co-Lending Programs for small and medium businesses through BDC and EDC (details here, they suggest contacting your bank for this as well)
  • Bank of Canada interest rate reduction will lower rates on variable mortgages
  • BC Landlords may receive a $500 per month rental supplement, applications opening soon, details here
  • Child care for essential services workers can be found here
  • Child care centres should no longer be charging fees and must reserve spaces for children to return
  • BC Emergency Benefit for Workers, $1,000 one time payment for those that receive the CERB, applications open soon
  • Worksafe BC guidelines for employees and employers can be found here
  • Worksafe postponed deadlines for Q1 reporting and payment until June 30, details here
  • BC Tax Filing and Payment Deferrals until September 30, 2020:
  • BC Art Council Grants of up to $15,000 details here
  • BC Hydro customers can defer payments and access grants, details here and here
  • Business Owners can apply for BC Hydro waiver of charges for up to 3 months, details here
  • ICBC customers can defer monthly payments for up to 90 days, details here

Did we miss anything?  Let us know!

Best regards,

Andrew de Verteuil, CPA, CGA
de Verteuil & Company Inc.

Corporate Income Tax, Personal Income Tax, Small Business

Emergency Response Benefit and BC Response

Canada Emergency Response Benefit


Yesterday, March 25, the Federal Government issued a news release outlining details of the new “Canada Emergency Response Benefit” (CERB).  The CERB replaces the previously announced Emergency Care Benefit and Emergency Support Benefit.

The CERB will provide $2,000 per month for up to four months for Canadians who:

  • have lost their job
  • are sick
  • are quarantined
  • are caring for someone who is sick
  • is a working parent who must stay home without pay to care for children who are sick or at home because of school closures
  • are still employed (have not been laid off), but are not receiving income because of disruptions to their work situation

This benefit will apply to Canadians that are employed, as well as contract workers and self-employed individuals that would not otherwise be eligible for EI.

Canadians who are already receiving EI will continue to receive their benefits and should not apply for the CERB.However, if their EI benefits end before October 3, 2020, they could apply for the CERB.

A new web portal for accessing the CERB will be available in early April.  We will send a link out to this when it is made available.  Individuals eligible for EI can continue to apply for EI here.

It should be noted, though the news release doesn’t say so, that this benefit will be Taxable, similar to EI.  We have found that Service Canada RARELY withholds enough tax and so anyone receiving EI or the CERB should be prepared to have taxes payable when filing their 2020 tax returns in April next year.

The full release is available here

BC Government Response

The BC Government has also released details of how they will respond to COVID-19.  Some highlights are as follows:

Businesses

The BC Government is extending filing and payment deadlines until September 30, 2020, for the following:

  • Employer health tax
  • Provincial sales tax (including MRDT)
  • Carbon tax
  • Motor fuel tax
  • Tobacco

School tax created for some commercial properties will be reduced by 50% for 2020.


Individuals

The BC Emergency Benefit will provide a one-time payment of $1,000 to those who receive EI or the CERB.  This looks to be a separate application and will be open “soon”.  The payment will be paid in May 2020.

The Province has introduced a BC Temporary Rental Supplement (BC-TRS) of $500 per month which will support renters and will be paid directly to landlords on their behalf.  Applications will be made through the BC Housing website in early April.  There has also been a halt on evictions and rent increases.

The Climate Action Tax Credit which gets paid with the GST credit to low to moderate-income families will be increased for the July payment only.

BC Hydro will be allowing customers to defer bill payments and arrange flexible payment plans without penalty.  They have also provided access to a grant of up to $600 for those who have lost their job, are ill or have lost a family member.  Customers are directed to call 1 800 BCHYDRO.

Lastly, ICBC is allowing customers to defer payments up to 90 days without penalty.  Application for the deferral can be made through the online resource tool.

More details from the Province can be found here.

Best regards,

Andrew de Verteuil, CPA, CGA
de Verteuil & Company Inc.

Corporate Income Tax, Personal Income Tax, Small Business

Canada’s COVID-19 Economic Response Plan

The federal Government has now released Canada’s COVID-19 Economic response plan. These items are still very new, so we are developing our understanding as they are released, but if you have any questions please reach out to us.

Below are the highlights from the plan that we see:

Taxpayers

  • Individuals: The April 30 deadline has been extended until June 1, 2020 (we are encouraged to file on the normal timeline though because of credits and benefits like the GST Credit and Canada Child Benefit (discussed more below) that depend on the tax return for calculations
  • Businesses: Changes to income tax payments (as below), but no mention of changes to filing deadlines or GST payments or filing deadlines sadly
  • Taxes Due: Income tax amounts, including instalment payments, that become owing on after March 18, 2020 and before September 2020 (i.e. August 31) will be allowed to defer payment until August 31, 2020 without interest or penalty.

Businesses

  • Businesses eligible for the small business deduction will be eligible for a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. 
  • The Business Development Bank of Canada (BDC) and Export Development Canada (EDC), through the Business Credit Availability Program (BCAP) will provide $10 billion of additional support for individual businesses, including in sectors such as oil and gas, air transportation and tourism. 
  • Credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada.

Income Support for Workers and Parents

  • Waiving the one-week waiting period for those individuals in imposed quarantine that claim Employment Insurance (EI) sickness benefits. This temporary measure is in effect as of March 15, 2020.
  • Emergency Care Benefit providing up to $900 bi-weekly, for up to 15 weeks. To provide support to:
    • Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits.
    • Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent
    • Parents with children who require care or supervision due to school closures, and are unable to earn employment income, 

                     All apply irrespective of whether they qualify for EI or not.

Application for the Benefit will be available in April 2020, and require Canadians to attest that they meet the eligibility requirements. They will need to re-attest every two weeks to reconfirm their eligibility. Canadians will select one of three channels to apply for the Benefit:

  1. by accessing it on their CRA MyAccount secure portal;
  2. by accessing it from their secure My Service Canada Account; or
  3. by calling a toll free number equipped with an automated application process.
  • Introducing an Emergency Support Benefit delivered through the CRA to provide up to $5.0 billion in support to workers who are not eligible for EI and who are facing unemployment.
  • Implementing the EI Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hour as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements, and streamlining the application process.

Income support for low to moderate income families

  • One time doubling of the GST Credit to be made in May 2020 (boosting the credit by $400 for single individuals and $600 for couples)
  • Increase the 2019 – 2020 Canada Child Benefit maximum by $300 per child (note the maximum gets ground down depending on income level)
  • Required RRIF withdrawals will be reduced by 25% for 2020 due to the volatile market
  • The Reaching Home initiative will receive $157.5 million to support the homeless
  • Women and children fleeing violence will receive up to $50 million through shelters and sexual assault centres

Mortgages and Banking

  • Banks in Canada will work with customers to provide solutions for managing through hardships caused by pay disruption, childcare disruption, or illness. Canada’s large banks have confirmed that this support will include up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit products.
  • CMHC will permit lenders to allow payment deferral beginning immediately.
  • Under the Insured Mortgage Purchase Program (IMPP), the government will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). 

 
Best regards,
Andrew de Verteuil, CPA, CGA
de Verteuil & Company Inc.

Corporate Income Tax, Personal Income Tax, Small Business

What COVID-19 Means for Tax Season

As the COVID-19 situation is changing daily there is a lot of uncertainty surrounding business and tax obligations. At de Verteuil & Company Inc., which is the Tax & Accounting Team of Ivory Planning Group and also an independent firm, our primary concern is for the well being and health of our employees and clients. To this end, our bookkeeping, tax and accounting team members will all be working remotely effective immediately. As our core tools are web and cloud-based, our plan is to continue to provide our services without interruption.

Today, March 17th, 2020, the National Post has announced an extension to the tax filing deadline, but this is not yet confirmed. Until we learn otherwise, we should expect that most personal tax returns are due to be filed by April 30 and returns of individuals with self-employed income are due to be filed by June 15. We will update clients if this changes.

If you are not already, we strongly encourage our clients to use the digital tools we offer such as the Karbon checklist that is sent as we begin working on a file, Receipt Bank and the File Drop link on our website. If you don’t have a scanner, these tools can be used with the camera on your phone. If you need help, please contact us. We would like to stress that sending personal documents that may have a SIN on them via email is not considered secure. If you are unable to send documents electronically, we ask that you have them mailed rather than delivering them in person.

If you are looking for current guidelines on best practices for business and COVID-19, we found some excellent information here:

The BC Government has released information about COVID-19 and the workplace, which can be found here in the FAQ.

If ever you have any questions or concerns, please don’t hesitate to reach out to us.
 
Best regards,
Andrew de Verteuil, CPA, CGA
de Verteuil & Company Inc.

Personal Income Tax

We’ve Moved!

Our office will be closed beginning on Tuesday April 30th and will reopen at 8:30am on Monday May 6th.

If during this period there are any urgent needs, please call our office at 604-638-6964 and select the option for the emergency line.

Our new office address effective May 6th:
CRU 210-9084 Glover Road
Fort Langley, BC V1M 0E6

The entrance is on the north side of the building. You can reach our office on the second floor by either going up the stairs or go through the second door to the elevator.

Your patience is appreciated during this time.