Archive for the ‘Business’ Category

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!

Curb the Clutter Crisis – Start Housekeeping Now!

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Regular housekeeping is good for us mentally, physically and emotionally – especially when managing our personal tax paperwork. How so? Well, suppose you got a notice today from CRA asking for your 2017 tax return and all supporting documentation. Would that notice send you into panic mode wondering where you put everything? It has for many taxpayers. If your paperwork is scattered from here to oblivion, now is the time to sort through the clutter. Where should you start?

Sorting Through the Madness

This can actually be fun and very liberating. Book a date with yourself and start pulling out all your files, shoe boxes, envelopes or folders and sort your tax documents by calendar year. In Canada, it is important to keep personal tax information and all supporting documents for at least 6 years, in case of the dreaded CRA review. Any older tax information can, and should, be shredded. YUP – toss it! Just think of how Zen you’ll feel without all the extra clutter. In fact, why not pass on the “Zen” by getting all last year’s documents organized and ready for your accountant.

Keep Organized Going Forward

Once you’re in a happy place with your files – follow good housekeeping habits going forward. If you think it’s easier to throw your invoices or receipts in your car, wallet, or on your desk, think again! Receipts can easily get lost, damaged or destroyed this way. Instead, best practice is to designate ONE location where you keep all personal tax documents, then deal with each document ONCE. Knowing where they are and scheduling time regularly to address each one will ensure nothing gets lost and you will stay up to date. Also, take advantage of businesses that offer e-receipts and ensure you have a file on your computer, or on the cloud, to store these as well. In fact, it’s a good idea to scan all your other receipts and keep them altogether electronically.

Hubdoc – The Housekeeping Specialist

If you’re self-employed or a small business owner with loads of receipts and supporting tax documents, you’ll want to check out Hubdoc to manage and organize your records and receipts in softcopy – liberating you from drowning in endless paperwork. 

Benefits Await You

  • Face a CRA review with confidence
  • Avoid late penalties (with CRA or other vendors)
  • Increase your tax return refund
  • Keep your accountant happy
  • Peace of mind going forward

Now’s the time to kick clutter to the curb! Get organized today and you’ll reap good housekeeping benefits now and for years to come.

Tax Loss Selling – Turn a Loss Into a tax Win!

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When it comes to investing let’s face it, you win some, you lose some. While capital gains are always the goal, sometimes selling shares incurs a loss – but is it all bad? Not when you consider the “glass half full” strategy – “Tax Loss Selling”.

What is tax loss selling?

Tax loss selling is a tax planning tool that can reduce potential tax liability by minimizing capital gains. So, if you have realized capital gains during the year, and don’t mind selling investments at a loss to help reduce your taxes, then tax loss selling is a strategy for you.

How it works

Let’s say you have two securities, ALPHA and BETA. During the year you decide to sell security ALPHA which would yield a capital gain, but you also held security BETA which underperformed and has an unrealized loss. If you sold security BETA as well, you could recognize the losses and reduce your overall capital gain, which reduce the taxes you pay.  In this way, your loss could become a win!

What else you should know

  • You (and your spouse) cannot repurchase the same shares within 30 days of the sale (that means before or after the sale). Otherwise, the CRA will consider your loss as superficial. That means the loss will be denied and added back to the cost of the newly purchased shares.
  • This selling strategy should only be considered when dealing with a non-registered portfolio.
  • If you have had gains in the previous three tax years and are expecting capital losses in the current year, you may be able to carry those losses back three years.
  • Conversely, capital losses this year may be carried forward if you are anticipating gains in the future. Capital losses can be carried forward indefinitely with no expiry.

In order to take advantage of the tax savings of this strategy, remember that December 27, 2019 is the last day to sell your shares. This is because only trades settled on or before December 31 will be considered for tax purposes. If you would like more information on tax loss selling, give us a call today and let us help you WIN at the tax game.

Business Owners – Meet Bookkeepers of the Future!

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From self check-out at the grocery store to the convenience of ATMs, many of us have come to appreciate technology that makes our lives easier. If you’re a business owner and in the market for a bookkeeper, there’s new technology available to make your life easier too! That is, if you’re informed and make the right choice. We encourage you to consider why many business owners are embracing automated bookkeeping tools, as apposed to hiring a traditional “human” bookkeeper. Here are some pros and cons to consider:

The DOWNSIDE to traditional bookkeeping

  • Bookkeepers are one of the unregulated professions in Ontario, so it’s hard to know if you have hired a good one – until it’s too late.
  • Many bookkeepers limit their role to simply balancing books, and then walk away. A good bookkeeper should help you keep a pulse on the health of your business, keep you CRA compliant, ensure you have the proper reports to make sound business decisions, and more.
  • Some bookkeepers shy away from technology viewing it as a threat to their job, as apposed to an opportunity to help you grow and manage your business.
  • Qualified bookkeepers are out there, but they are few and far between and almost impossible to secure because all the good ones are maxed out. Then, if you can find one, they’re not cheap!
  • Many business owners lack proper communication with their bookkeepers and aren’t kept in the loop with what’s going on with their finances. This has resulted in poor business decisions.

The UPSIDE to embracing automated bookkeeping tools

  • Automation tools are cloud-based, so you can access your data anywhere that has an internet connection and from any device.
  • Allows you to easily grasp what is going on with your business in real-time.
  • Routine tasks (i.e. bank reconciliations, accounts payable and receivable processing) are automated to the click of a button, eliminating the many hours of mundane, repetitive data entry.
  • Helps you keep CRA compliant, is always current and secure which saves you many IT headaches.
  • Automation of data-importing ensures data completeness and reduces the risk of other human errors.
  • These tools are easy to navigate and allow for real-time reports at your fingertips anytime, anywhere.
  • Add-on tools mean you can migrate to a paperless retention of important back-up documents quite easily.

Certainly, bookkeeping is evolving for the better. Understandably, you may have many questions. How easy is the transition to a more automated bookkeeping platform? Does that mean you won’t need a bookkeeper? How much does it all cost? Call us today to get your questions answered and see the many ways we can assist you in making your life easier!

Introducing: Plooto!

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No, it’s not a planet. But if you’re a small business owner, Plooto may just change your world.

Plooto is a cloud-based technology that allows you to streamline repetitive, monthly bookkeeping tasks so you have more time to grow your business. When you connect Plooto to your cloud accounting software great things happen. Here are a few we wanted to share.

Pay vendors with your money, not your time

After some simple set up, you can auto-load upcoming accounts payables (bills) which saves you valuable time each month.

  • Customize payment approval – with a click of a button, anytime, anywhere.
  • Transfer money via email – from your bank to their bank, directly and securely.
  • Pay vendors easily – using only their email address, no login required or storing of confidential or sensitive information.
  • Payment continuity – allows you to pay anyone, anywhere with no surprises or confusing interfaces.
  • Payment records are automatically updated – without you having to match payments with invoices.

Make paying you foolproof

Plooto ensures that paying you isn’t frustrating for your clients. This helps your cash flow to – well, flow.

  • Getting paid through email – lets clients log into their bank account to schedule a payment.
  • Accepting credit cards – without having to share sensitive credit card information.
  • Accepting pre-authorized debit – ensures clients pay you on time, every time.
  • Payment status – allows you to see if your client opened your email and can gently remind them if they haven’t paid.  

So, while Pluto may have been decategorized as a dwarf plant, Plooto cloud-based software is hardly small or insignificant in comparison to other accounting software. Call us today to learn how you can start letting Plooto work for your business.

Cloud-Based Payroll Apps – TO THE RESCUE!

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We all enjoy getting paid. However, the process to ensure everyone gets paid accurately and on time can be a challenge. If payroll is part of your responsibilities, then you know what we’re talking about. Chained to your desk for hours, struggling to keep up with compliance rules, stressing to reach your payroll deadline and then – YIKES – you’re right out of cheques! Does this sound familiar? It might, if you’re using desktop payroll software. If you’re stuck in this vicious cycle, then cloud-based payroll apps may be the rescue remedy you need!

Set up takes minutes

Once you’ve transitioned to cloud accounting solutions, such as QuickBooks Online, it’s really becomes quite simple. A few minutes of your time setting up a payroll app today can save you BIG TIME down the road. For example, if your payroll is pretty consistent every month – it can basically run itself. Hourly employees, salaried employees, or contractors can all be set up to be paid at the same time.

Why should  you do all the work?

Most payroll apps offer similar features, some even do more than just payroll. The payroll apps outlined below allow employees to set themselves up and be responsible for their personal information. For example, they can review and access their paystubs on-line whenever they want. The apps also automatically perform payroll calculations and update the latest tax tables which takes the pressure off you! Here are some other liberating features:

  • Direct deposit – No more cheques required!
  • Automatic payroll calculations – No more tedious number cruching!
  • Online paystubs – Help save the environment!
  • CRA/WCB Remittances – Ensures you’re compliant!
  • Records of Employment – Off-boarding made easy!
  • Year end T4/T4As – The app prepares these, not you!

So, if you’re interested in breaking free and saying good-bye to the old-school approach to payroll, call us today. We’ll help you get current, get organized, and save you the precious time you need to focus on growing your business.

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