Archive for the ‘Business’ Category

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.

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!

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.

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.

COVID-19 Updates to Important Subsidy Programs

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“75%” Canada Emergency Wage Subsidy (CEWS)

The Federal government has passed into law the Canada Emergency Wage Subsidy (CEWS) as well as the 10% Temporary Wage Subsidy.  As we noted before, the CEWS provides for an amount to employers equal to 75% of employees’ remuneration paid, up to a maximum of $847 per week per employee, from March 15, 2020 to June 6, 2020.

Employers that qualify for the CEWS in one period will now automatically qualify for the NEXT claiming period.  See our April 8, 2020 Blog for the details on the revenue reduction qualification thresholds. 

It’s important to note that where an employee’s pre-crisis wages were below the threshold of $58,700 the CEWS does in fact provide a subsidy of 75% of the pre-crisis’ wages. In the event that post-crisis wages for that employee are reduced, the CEWS in effect starts to provide a subsidy that is greater than 75%. Read details of this program here.

Remember that for the employers who don’t qualify for the CEWS, the 10% Temporary Subsidy may be available to them – see our April 2, 2020 Blog.


Canada Emergency Business Account (CEBA)

An important criticism of this program was the eligibility criteria of requiring 2019 total payroll between $50,000 and $1M.  In response, the government has widened the eligibility range so that employers with payrolls in calendar 2019 of between $20,000 and $1.5M are now eligible.  The commercial banks are managing this program, and we have seen these loans be processed within about 5-7 banking days after applications were completed. Read details of this program here.


Canada Emergency Response Benefit (CERB)

On April 15, the government announced changes to the eligibility rules of this program as follows:

•    Allow people to earn up to $1,000 per month while collecting the CERB.

•    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.

Read details of this program here.


National Research Council IRAP Innovation Assistance Program

This program assists start-ups during the COVID-19 crisis as follows:

•    This program is for small and medium-sized enterprises with less than 500 employees in the innovation industry. You may qualify if you are in the pre-revenue, high growth, enterprise SaaS and tech space.

•    The focus is on labour costs (i.e. salaries and benefits) with the goal of helping companies retain highly skilled labour. The scale of support is based on the number of skilled labourers.

•    There will be $250 million funding with built-in scalability components. The funding is not tied to COVID-19.

•    If you qualify for the wage subsidy and take advantage of the 75% wage subsidy, you do not qualify for this program.

•    Speaking with the ITA Advisor is required as part of the application process. Unlike the typical IRAP application, this program will not look at the tech component.

COVID-19 Support for Canadian Businesses -April 8, 2020 “75%” CEWS Update and More

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Canadian Emergency Wage Subsidy (CEWS)

On April 1, 2020 the government provided details on the 12-week wage subsidy. The subsidy is 75% of annual employee salary, up to an annual salary of $58,700 for a maximum weekly subsidy of $847. Here are some new important details.

Eligibility update

As of April 8, 2020, the CEWS subsidy will be available to eligible employers who have a gross revenue reduction of at least 15% in March 2020 and a 30% reduction in April or May 2020.

How to calculate decrease in revenue

To measure the revenue loss/reduction, the employer has two broad options:

  1. Compare the current month in 2020 to the same month in 2019; or
  2. Compare the current month in 2020 to an average of their revenue for January and February 2020.

Once you pick the method as noted above, you must stay with this method for entire period of the subsidy.

Accounting method options

Employers would be allowed to calculate their revenues under the accrual method or the cash method, but not a combination of both. Employers would select an accounting method when first applying for the CEWS and would be required to use that method for the entire duration of the program.

How much is the subsidy and who else does it apply to?

Employers will also be eligible for a subsidy of up to 75% of salaries and wages paid to new employees.

The subsidy amount for a given employee on eligible remuneration paid for the period between March 15 and June 6, 2020 would be:

Special rules apply to wages paid to non-arm’s length employees (like employers and their family members), provided they were employed prior to March 15, 2020. The subsidy will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of:

There continues to be no overall limit on the subsidy amount that an eligible employer may claim.


You Must Apply for A My Business Account NOW!

Without this special access account, you will NOT be able to apply for this subsidy.

If you are not sure whether you have a “My Business Account”, then you probably DON’T have one. It will take an investment of time and patience but it is mandatory for the application process. Here are some helpful reminders to get you started:

  1. First, figure out whose SIN will be associated with your corporate tax accounts with the CRA – likely the person who is currently a Director and major shareholders in the business. Then gather personal information on that person – you will need the 2018 personal tax return for that person in front of you as you move through this process.
  2. Watch this video – https://www.canada.ca/en/revenue-agency/news/cra-multimedia-library/businesses-video-gallery/register-mybusiness-account.html
  3. Go to this website https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html 
  4. At the bottom of that page start with “Register CRA” – in purple print .to begin the process.
  5. You cannot complete the process without receiving your security code. Regardless of what the video says about mail or e-mail options of getting this code, it ONLY comes by snail mail at this time. You will need to wait about 5-10 mailing days to obtain the security code and then you must return to the website to complete the registration process.

COVID-19 Support for Canadian Businesses

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Our understanding of the most important provision of the current relief programs is summarized below.  This information is currently as of April 1, 2020 only.


Canadian Emergency Wage Subsidy (CEWS)

On April 1st, 2020 the government provided details on the 12-week wage subsidy. The subsidy is 75% of annual employee salary, up to an annual salary of $58,700 (i.e., up to $847 per week, per eligible employee). Here are some new details:

  • The CEWS subsidy will be available for both large and small employers that have lost at least 30% of revenue due to COVID-19, regardless of the number of employees.
  • The 30% reduction will be determined by comparing the employer’s gross revenue in March, April and May, 2020 to the same month in 2019. Each month that employers experience a 30% reduction in revenue must be applied for separately.

Eligibility would generally be determined by the change in an eligible employer’s monthly revenues, year-over-year, for the calendar month in which the period began.  In determining monthly revenues, the wage subsidy would NOT be considered in revenues.

The Eligible Periods are as follows:

Each month will be a separate application.  It may be possible that a company is not eligible for Period 1, but is eligible for Periods 2 and/or 3.

  • These changes will be retroactive starting from March 15, 2020 to June 6, 2020, and there is no overall limit on the amount of subsidy than an eligible employer may claim.
  • For qualifying employers to receive funds directly from CRA, they must provide CRA the pre-crisis income and the earnings actually paid per employee.
  • Application can be made through the My Business Account CRA portal, and the new links are expected to be available next week. All employers should be certain they have a My Business Account established with the CRA – your accountant CANNOT apply for this relief for you!
  • In the meantime, businesses should ensure they are set up for direct deposit with CRA to expedite the payment process.
  • The subsidy is fully taxable.

10% Temporary Wage Subsidy

Businesses who do not qualify for the CEWS, may still qualify for the previously announced temporary three-month taxable subsidy. This subsidy is available on up to 10% of eligible employee salaries from March 18 to June 20, 2020, with a cap of $1,375 per employee and a cap of $25,000 per employer. The subsidy is fully taxable.

For employers that are eligible for both the CEWS and the 10% Temporary Wage Subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the CEWS in that same period. In other words, eligible employers can choose to reduce remittances up to 10% of the employee’s salary and then receive the CEWS. However, they cannot be added on top of each other. The benefit is limited to 75%, not 85%.


Credit Available to Small and Medium Size Business (SMEs)

Canada Emergency Business Account

This new account will 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. To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.

Loan Guarantee

Export Development Canada (EDC) is working with financial institutions to issue new operating credit and cash flow term loans of up to $6.25 million to SMEs.

Co-Lending Program

Business Development Bank of Canada (BDC) is working with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.

Eligible businesses may obtain incremental credit amounts of up to $6.25 million through the program. These programs will roll out in the three weeks after March 27.


Tax Filing and Payment Flexibility

Income Tax Extension

The government is providing the following extensions for tax deadlines.

Employer Health Tax Support for Ontarians

The Ontario government increased the Employer Health Tax exemption for 2020 from $490,000 to $1 million and have introduced a five‑month relief period for Ontario businesses who are unable to file or remit their provincial taxes on time due to the special circumstances caused by the coronavirus (COVID‑19) in Ontario. This is effective March 20, 2020.

Deferral of Sales Tax Remittance and Customs Duty Payments

The government will allow businesses, including self-employed individuals, to defer until June 30, 2020 payments of the Goods and Services Tax / Harmonized Sales Tax (GST/HST), as well as customs duties owing on their imports.

  • HST Monthly Filers – the deferral will apply to GST/HST remittances for the February, March and April 2020 reporting periods.
  • HST Quarterly Filers – the January 1, 2020 through March 31, 2020 reporting period.
  • HST Annual Filers – the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.
  • GST and Customs Duty Payments – deferral will include amounts owing for March, April and May. These amounts were normally due to be submitted to the Canada Revenue Agency and the Canada Border Services Agency as early as the end of this month.

All HST returns must continue to be filed on time.

If you have any questions regarding any of the above information, please feel free to contact us.

Corona Virus – Because We Care, We’ll Prepare

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On Wedesday, March 11, the World Health Organization declared Coronavirus a Pandemic. Scarrow Yurman & Co. wants to ensure our clients that, while not panicking, we are taking this virus very seriously and are already practicing sanitation procedures and establishing protocols to ensure we can function given any scenario.

Ramping Up Sanitation Protocols

  • As an office, we’ve reviewed the importance of handwashing as well as coughing and sneezing etiquette.
  • We’ve established interoffice hygiene protocols such as disinfecting frequently touched objects and surfaces (i.e. boardroom tables, kitchen counters, taps, doorknobs, etc.).
  • We’ve stocked up on disinfectant wipes and tissues, alcohol-based hand sanitizer, paper towels and hand soap.

Limiting Contact Exposure

  • Because we care about everyone’s health, we are limiting personal contact with a “no handshake” policy in favour of a friendly smile and wave. You know we love you!
  • We’re not sharing phones, pens, each computer mouse or keyboard unless they are sanitized first, especially for shared workstations.
  • We’re encouraging virtual meetings whenever possible.
  • We have determined a quarantine policy for employees returning from travelling to affected areas.
  • Our staff will stay home when sick AND until ALL symptoms are gone.
  • We’ve relaxed sick day policies to support those who may need to be quarantined when ill.

Working During a Crisis

  • We all have the capacity to work remotely from home if there should be restrictions placed on workplaces or if we happen to be quarantined.
  • In the event that Canada Post, Couriers or our clients are not in a position to bring client information to our office, our clients can use ShareFile (our secure file sharing cloud software) to ensure we receive their information.
  • Our mission is to be in the best position to complete our work and file our client’s personal or corporate tax returns on time.

Indeed, EVERYONE has a role to play to protect the health and safety of Canadians.  Being informed and preparing ahead is key for businesses to ride the wave of the corona virus as successfully as possible. Be safe everyone!

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