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Canada Government Subsidy News For Businesses

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On October 9, 2020, the Canadian government announced its intention to introduce new, targeted supports to help hard-hit businesses cope with the affects of the pandemic. It is hoped that this support will assist businesses navigate through the second wave and end up in a good position for a strong recovery.

NEW: Canada Emergency Rent Subsidy

This subsidy is designed to essentially replace the failed existing program on rent relief. It allows the tenant to apply and will hopefully provide simple and easy-to-access rent and mortgage support until June 2021 for qualifying organizations affected by COVID-19. Please read some of the highlights here.

EXPANDED: Canada Emergency Business Account (CEBA)

Canada Emergency Business Account (CEBA) has also been expanded. The highlights are that eligible businesses would be able to access the CEBA interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000. The deadline for CEBA has also been extended to December 31, 2020. Further details, including the launch date and application process will be announced in the coming days. We will keep you updated as things are rolled out.

5 Ways That Lead to $avings

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“Do not save what is left after spending but spend what is left after saving.”

– Warren Buffett

An interesting quote indeed! It actually makes a lot of sense. Life can be hectic, and when we’re tired and busy it’s easy to make decisions about money far too quickly. However, taking a step back before we spend allows us time to weigh our options and make better financial decisions. This investment of time can lead to impressive savings.

Even the simplest of strategies can reap large saving rewards. We’ve put together 5 simple things you can do NOW to help you save your money.

Know Where Your Money is Going

If you don’t have a budget, make one – budgets work and there are plenty of Apps to assist you. If you already have a budget – do you look at it? REALLY look at it? Knowing how much money you actually have and where your money is going can be a wake-up call. Get the family involved. Budgeting and the value of money are good life lessons for the next generation.

Before You Spend, Ask Yourself:

  • Do I need this? If your budget shocks you, try defining your needs from your wants. Be honest! Keeping nonessentials to a minimum can help your cash flow and protect your savings. Run the numbers and see for yourself.
  • Do I have the best deal? Whether its insurance premiums, cable, or phone plans, make it a habit to know what deals your providers are offering compared to their competitors. Don’t be shy to call your provider to let them know you’re not happy with what your paying. You may be surprised at what they might offer you. If they are not willing to budge, don’t be afraid to take your business elsewhere if you find a better deal – every little bit you save adds up over a year.
  • Is this the best price? Take advantage of coupons. If you cringe at the idea of cutting coupons and flipping through flyers – then don’t! Truth is, it’s never been easier to know where the deals are. For example, if you use an app like FLIPP, you can search for the exact item you want, find the best price, and know where to get it – in seconds. A good motto is never to pay full price for anything, when possible!

Boost Your Cash Flow

Most of us are at home far more than usual this year. Now may be the best time to look around the house and make a list of items you haven’t used in over a year (i.e. furniture, appliances, tools, etc.). Ask yourself “Do I really need this”? If not, sell it! It’s money in your pocket and could fill a need for someone else who is trying to save money.

Are there any memberships you don’t use anymore? For example, hanging on to a gym membership in the hopes that “one day” you’ll use it does not keep you in shape physically or financially.

Also, review your credit card cash back and points plans. Perhaps you can convert reward points from credit cards, Air Miles, or Aeroplan into cash or gift cards. Bottom line is, if your points plans aren’t really benefitting you, maybe it’s time to investigate other options.

Take Control of Debt

COVID-19 has made paying our bills more challenging than ever. Now is a great time to renegotiate debt. Call your bank to see if you can get a cheaper interest rate, or if there is a way to consolidate debt that makes sense for you.

Develop a Savings Plan

Have definite savings goals. Decide on a percent to save for both long-term goals like retirement, mid-term goals like a house, or short-term goals like your dream vacation. Also, don’t forget an emergency fund. Once you have a savings plan, commit to it and ensure your money is somewhere that you cannot see it or touch it until you really need to.

While these suggestions are a great place to start, there are many other ways to save money. Don’t put it off – ACT NOW and call us today. We’ll do our best to understand where you’re at and inform you of other options you may never have considered before.  

Canadian Emergency Wage Subsidy (CEWS) – UPDATE

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If you still have questions about the Canadian Emergency Wage Subsidy (CEWS) – you’re not alone. We’ve scratched our heads a few times too!

For the first sixteen weeks (Periods 1-4), eligible employers that saw a drop of at least 15% of their qualifying revenue qualifying revenue in March 2020 and 30% for the following months of April, May and June, when compared to their qualifying revenue for the same period in 2019 (or the average of January and February 2020), qualified for the wage subsidy.

However, things changed dramatically starting in Period 5. For the following twenty weeks (Periods 5-9) the wage subsidy has been modified to include ALL eligible employers that experience ANY decline in revenue for a claim period.

Just to recap, CEWS applies to you if your business:

1)    Experienced a decline in revenue when comparing the current or previous month to either:

  • the same month in 2019 (based on revenue recognized or cash received);

OR

  • an average of January and February 2020 (based on revenue recognized or cash received).

2)    Has at least one employee (arm’s-length or non-arm’s-length).

3)    Had a CRA payroll account on March 15, 2020.

Please don’t hesitate to give us a call if you have any questions or would like assistance with your CEWS application. Our experienced SYC team is here to help!

Wills & Estates – What’s Your Legacy Plan?

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It’s been said that nothing is as certain as death and taxes. As CPA’s we might add another certainty – tax implications after your death. However, being aware of the inevitable does not automatically prepare us for the inevitable.

Our experience has taught us that the legacy people leave for their loved ones can either be fair, sensible, and considerate; or one that results in confusion, confrontation, and chaos. What makes the difference? A desirable legacy plan starts with being accurately informed of your options and then taking the necessary steps to prepare a legally binding arrangement – before the unavoidable happens.

Being accurately informed first involves understanding the “lingo”. Many of us have heard terms like “Wills, Executors, Trustees and Estates”, but what do they all mean exactly? Here is a brief breakdown.

Wills

A Will sets out your wishes regarding all your belongings after your demise. There are many reasons why people hesitate to write their Wills. If something has been holding you back, think of what a Will accomplishes:

  • Safeguards guardianship for your beneficiaries of your most valuable belongings
  • Outlines your wishes, which takes some pressure off your already grieving family
  • Ensures specific people receive what you choose from your assets
  • Protects your business interests
  • Makes sure donations go to charities dear to your heart
  • And a lot more (Consulting a lawyer is also a MUST DO step)

It’s good to review your Will every 3-5 years. That said, while a Will is valuable, it works in harmony with many other important legal documents. However, a Will only controls what happens to assets that flow into your estate (i.e. assets not held jointly with another person who has rights of survivorship; insurance policies, registered accounts, and pension plan benefits without named beneficiaries, etc.).

Estates

Your Estate is the collection of assets and liabilities that legally flow under the terms of your Will into what amounts to a newly created separate entity.  That separate entity, called your Estate, is a separate taxpayer under our tax laws and has the obligation to follow the instructions contained in your Will, as carried out by your “Executor/Executrix”.  The Estate can be in existence for many years, or a short time depending on the instructions in your Will.  Choosing an Executor of your Will (who becomes the Trustee of your Estate) is likely one of the most important decisions you make in drawing up your Will.  Picking your best friend is often a first-choice, but it may not be the best idea. Think about this, if you pass at the ripe old age of 93 and your best friend is also older, leaving them this important and demanding job could be very stressful for them. It’s good to think carefully and discuss the implications frankly with the individual you are thinking of selecting.

Estate Plans

A common misconception is that Estate Plans are only for the extremely wealthy. If you own a car, a house, and have bank accounts – then you could benefit from an Estate Plan. It’s especially important to have an Estate Plan if you own a business, have minor children, have assets in foreign countries, or have any concerns that your Will may be contested by a relative, business associate, or a previous life partner.

An Estate Plan not only assures your assets are distributed with maximum tax benefits to the beneficiaries after your death but can also outline how to deal with your needs while you are still alive. For example, if because of health conditions you are unable to speak for yourself or make sound decisions, your Estate Plan can include a Power of Attorney or Living Will which speak for you or designate others to make decisions on your behalf.

An Estate Plan includes (among other things):

  • Your Last Will and Testament
  • Beneficiary designations – registered accounts
  • Transfers of property or financial assets (before death or under the terms of your Will)
  • Power of Attorney for Property (designated individual to take care of your finances)
  • Power of Attorney for Personal Care (designated individual to make medical decisions on your behalf)
  •  A “Living Will” (your written request regarding life-prolonging treatments)

This blog is meant clarify things, but this is not the entire story.  The easy part is understanding the “lingo”. The challenging part is implementing a plan as there are lots of critical decisions to be made. That’s where the professionals at SYC can help. We have used our knowledge and experience to help clients with Estate Plans for decades. We can work with you and your legal counsel to create a legacy plan that will give you peace of mind now and enable those you care about to remember you with fondness for years to come.

Retirement Planning – Be Future Ready!

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Contrary to popular belief, retirement planning should begin as soon as you start working. However, even if you are middle-aged or older, it’s never too late to start taking control of this important planning.

2020 is a sobering reminder of how unsettling not being prepared can feel. While we cannot prepare for everything life throws at us, there is much that is in our control. Retirement planning is a good example.

Here are some simple, yet important, questions to think about now as you plan for your retirement:

What is your retirement vision? Have you set goals?

  • What will you do with your new freedom?  Have you thought of short-term or long-term goals? Do you have a dream list? 
  • If you want to semi-retire, what part-time work makes sense for you? How much extra income would you like, or need, to make?
  • What post-retirement responsibilities will you have? Will you be supporting children, aging parents, or other family members?

Now for the elephant in the room: “How much money will you need?”

  • Consider your current lifestyle. What are your ACTUAL expenses monthly and annually? If you’re uncertain, start tracking them now – you may be surprised.
  • When budgeting, don’t forget the details – everything from vacations, to car purchases, to clothing.
  • Factor in inflation. 2020 is a good example of how prices rise each year.
  • Scope out big family events – upcoming weddings, anniversaries, etc.
  • Plan for unexpected costs, such as dental work, home and car repair, etc.
  • How is your present health? How long do you expect to live?

What will be your sources of income?

  • Consider whether you will be eligible for CPP, OAS, or employer-sponsored pension.
  • Review your existing investment portfolio such as RRSP/RRIF, TFSA, non-registered investment accounts and personal savings. Maximize savings now by investing early to take advantage of compound earnings.
  • If you are a business owner, how long will you be able to draw salaries or dividends from your corporation?

Tax planning questions

  • How can you minimize taxes during your retirement? Are your investments and other sources of income structured in the most tax-efficient manner?
  • Do you understand the differences between an RRSP, RRIF and TFSA, as well as their tax treatment in retirement?
  • When should you apply for benefits under CPP and OAS? Keep in mind, the age you start to receive CPP benefits will impact the amount of payment you will receive.
  • Are there specialized tax credits or tax planning available upon retirement?  For example, depending on your situation, you may be able to share CPP and split pension income with your spouse.

Wondering where to start, or how to move forward?

Feeling confused is totally understandable! During this COVID crisis investment portfolios were severely impacted, but then bounced back strongly. Many who had plans to retire may have decided to postpone their plan, while others were forced into retirement due to layoffs. Other Canadians are simply not ready because of large debts, or insufficient savings. Even Canadians who have been diligent savers simply don’t know where to begin when it comes to retirement planning.

Have no fear – SYC is here! We have been providing retirement planning services for years. So if your goal is to be “future ready”, don’t delay! Call one of our team members and take the first step.

HEADS UP – CEWS Eligibility Has Been Expanded!

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As we mentioned in our July blog, the Canadian government recently extended the CEWS subsidy program until December 19, 2020. Along with the extension, they have dramatically expanded the eligibility requirement for the subsidy. Employers who have not qualified in the past may now be eligible under the new requirements.

Eligibility Update

The latest eligibility rules remove the 30% revenue reduction threshold requirement. This means that any employer that is experiencing a revenue reduction may now qualify for the subsidy even if the reduction is less than 30%. Before you begin calculating, please remember:

  • The CEWS subsidy application is done separately each month and the revenue reduction must be determined each time.
  • Revenue reduction is determined by comparing the monthly revenue for the subsidy period to a number of other data points and this is what provides more complexity, but more opportunity as well.

If you think you may qualify for the CEWS subsidy program under the new requirements, please contact us and we will be happy to assist you.

Income Tax Payment Deadlines Extended AGAIN!

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The New Payment Deadline is now September 30, 2020!

The CRA initially extended the payment deadlines for individual, corporate and trust income tax returns to September 1, 2020. The CRA has now extended the payment deadlines once again to September 30, 2020.

That means the CRA will waive any late filing penalties and interest for returns filed after their normal filing deadline – as long as you file the return and pay the taxes owing the return by September 30, 2020. This includes any elections, forms and schedules that are to be filed with the return (i.e. T106, T1135).

The CRA is also waiving any arrears interest on existing tax debts related to individual, corporate, and trust tax returns from April 1, 2020 to September 30, 2020. For GST/HST returns from April 1, 2020, to June 30, 2020. (NOTE: This does not include penalties and interest incurred prior to this period.)

In the case of financial difficulties, it’s still important to file the return by September 30 to avoid an additional 5% late filing penalty on top of what you may already owe. In fact, the CRA is still encouraging Canadians to file their income tax returns as soon as possible even though the deadlines have been extended. We agree! Let’s get this done!

Canadian Emergency Wage Subsidy (CEWS) – Further Extension Announced

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The Canadian government has announced an extension to the CEWS subsidy. Eligible employers will now be able to claim this subsidy until December 19, 2020. We thought it appropriate to give you a heads up as they have also announced proposed changes to the CEWS as follows:

  • Starting with the July 5 to August 1 reporting period (Period 5), new rules will be in place to allow for possible eligibility to employers who previously did not meet the 30% revenue reduction threshold.
  • The previous CEWS subsidy will be replaced with a two-part subsidy. There will be a “base” amount and a “top-up” amount. The top-up amount will apply to employers who are experiencing a 50% or greater revenue decline.
  • Under the new rules, the amount of the wage subsidy an eligible employer could qualify for would vary depending on their revenue decline. Where the revenue decline is less than 30%, the subsidy falls in proportion.
  • Interestingly, this proposal included an option for employers to apply under the previous rule for July and August (Periods 5 and 6) should the amount of the CEWS subsidy received result in a larger amount under the old rules compared to the new rules. 
  • New continuity rules are in place for employers that have recently purchased assets of a business.
  • There will be a CEWS appeal process and an extension to the subsidy application deadline.
  • The legislative proposals also include previously announced measures for the subsidy affecting employers with a paymaster arrangement, amalgamated corporations, tax exempt trusts, and seasonal employees.
  • The draft legislation further includes previously tabled measures to allow the government to temporarily extend or suspend certain federal statutory deadlines and time limits (i.e. tax filing and payment deadlines) up to December 31, 2020.

Clear as mud? Based on our first read through the new rules, they are by far more complex than what we had before, but ultimately perhaps “fairer”. We are going to need time to fully absorb how all of this works and will be issuing additional guidance when we feel we understand this better.

In terms of urgency and timing, we are presently in Period 5 of the subsidy which ends August 1, so no applications for Period 5 can be processed until after that time. Until then, we will monitor any updates and do our best to keep you posted as things are clarified by the Government of Canada.

COVID-19 Home Office Expenses – What You Need to Know

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COVID-19 has resulted in many learning curves for 2020. For example, some of us are working from home for the first time. So, it’s not surprising that we’ve been asked by many clients if and how they can claim home office expenses.

As you would imagine, it’s tricky. Here’s what you need to know.

Definition of home office space

First, you must meet the qualifications of a home office space according to the Government of Canada, which is that it must be:

  1. Used principally (“principally” meaning “more than 50% of the time”) for the performance of office or employment duties. It can be any place in the home such as a kitchen or dining room, OR
  2. Used exclusively during the period to which the expenses relate, to earn employment income, and on a regular and continuous basis, used for meeting clients* or other persons in the ordinary course of performing the employment duties.

*It is the CRA’s view that “ ‘meeting customers or other persons’ as used in subsection 8(13) of the Income Tax Act includes only face to face encounters”. That said, we believe that video calls and phone calls constitute a “meeting” with clients in the context of the work-at-home COVID-19 scenario.

Employer responsibility

Once you have determined that you qualify, your employer must provide a signed T2200 Condition of Employment form which outlines the type of expenses that can be claimed as part of the employment contract.  

What you can claim

It starts to get tricky at this point. Here are some of the more common expenses incurred while working from home – but as you see – not all are claimable expenses. (Due to the pandemic, we will not cover expenses related to meals, entertainment, and travel costs). 

How much of the “Home expenses” you can claim 

Now you will need to calculate the proportionate business usage. There is no specific rule, it can be based on either:

  • Square footage of the workspace as a percentage of the overall square footage of the home; OR
  • Calculated based on business hours used as a percentage of total hours for mixed used home office. For example, if the business hours are 9:00 am to 5:30 pm for five days a week for 36 weeks, the business usage for year 2020 would be 15.45% (37.50/ 168 hours per week x 36/52 weeks).  

Whatever approach you choose, it must be reasonable. You must also be able to provide CRA your supporting documentation (such as the workspace home floor plan and bills) if they should ask. In addition, the home office expense deduction is limited to the amount of employment income.  Any unused deductions (although unlikely) can be carried forward and deducted against future employment income.   

Special COVID-19 reimbursement for 2020

To assist the transition to home office, CRA allows a special rule for an employee to receive up to $500 for a reimbursement from the employer for the purchase of a computer used primarily for the benefit of the employer.  This reimbursement is not taxable to the employee.   

We hope this blog has helped flattened the learning curve as you get yourself organized to work from home. If you need any more information, don’t hesitate to give us a call.


Disclaimer: Information is based on existing tax law as at July 2020, subject to CRA changes/updates on claiming any home office expenses.    

The 75% Canadian Emergency Wage Subsidy (CEWS) – EXTENDED to August 29, 2020

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As we outlined in our April 9 blog, a Canadian employer whose business has been affected by COVID-19 may be eligible for the Canadian Emergency Wage Subsidy (CEWS). On Monday, May 15, the Government of Canada announced that this subsidy (which has been available from March 15, 2020) has now been extended an additional 12 weeks, to August 29, 2020.

The current eligibility criteria for the subsidy will apply to the current June period (period 4). It is possible that the criteria will be different in period 5 (July 2020) and/or period 6 (August 2020). We will keep you posted as the government releases the updates.

*Whatever Baseline Revenue option you used to date will be the method you are locked into for entire period of the subsidy.

* = required field