On July 17th, Finance Minister Bill Morneau announced proposed changes to the Canada Emergency Wage Subsidy (CEWS) that will expand the number of businesses that qualify for the program.
The major changes he announced were:
“First, we’re proposing to extend this program through until December 19th.”
“Secondly, we know that it’s also critical that we have the businesses able to continue to hire people even as they get into the restart and we know that the requirements in businesses have a 30% reduction in revenue is not helpful in that regard.”
“businesses will get the wage subsidy if they’ve had any reduction in revenue so it’s going to go all the way down to businesses who even have a small amount of revenue reduction they’ll get the subsidy and it will be in proportion to the amount of the revenue reduction that they will get a subsidy.”
“Third, we’ve tailored the program so that it helps those organizations that are particularly hard hit. So for organizations with over a 50% reduction of revenue over the last few months they’ll actually get a top up, they’ll get up to 25% additional subsidy so that they can deal with this really challenging time for their businesses.”
“What that means for businesses, those that were already in the program that have that 30% revenue decline that will continue to be the case for July and August. For those businesses as I said that are particularly hard hit it will be even more. It will go up to 85% wage subsidy or $960 per person.”
“For those businesses less hard hit but still hit they will be able to get into the program. The program will continue but as we restart, the program will be tailored to help businesses appropriately in that restart.”
The new rules will be retroactive to July 5th but require parliamentary approval.
Great news for Canadians out of work and looking for work. The CERB will be extended another 8 weeks for a total of up to 24 weeks.
As the country begins to restart the economy, the Federal government will be making changes to the program to encourage Canadians receiving the benefit to get people back on the job. From Prime Minister Justin Trudeau’s website:
“The Government of Canada introduced the CERB to immediately help workers affected by the COVID-19 pandemic, so they could continue to put food on the table and pay their bills during this challenging time. As we begin to restart the economy and get people back on the job, Canadians receiving the benefit should be actively seekingwork opportunities or planning to return to work, provided they are able and it is reasonable to do so.
That is why the government will also make changes to the CERB attestation, which will encourage Canadians receiving the benefit to find employment and consult Job Bank, Canada’s national employment service that offers tools to help with job searches.”
More small businesses can apply for CEBA $40,000 no-interest loans
Applications for the expanded Canada Emergency Business Account (CEBA) will be accepted as of Friday, June 19th, 2020. Small businesses that are:
“… owner-operated small businesses that had been ineligible for the program due to their lack of payroll, sole proprietors receiving business income directly, as well as family-owned corporations remunerating in the form of dividends rather than payroll will become eligible this week.”
“The funds from this loan shall only be used by the Borrower to pay non-deferrable operating expenses of the Borrower including, without limitation, payroll, rent, utilities, insurance, property tax and regularly scheduled debt service, and may not be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payments of dividends, distributions and increases in management compensation.”
The much anticipated revised Saskatchewan Budget was delivered on June 15th, 2020 by Finance Minister Donna Harpauer. The budget now anticipates a deficit of $2.4 billion for 2020/2021.
Personal Tax Highlights
New Residential Home Construction PST rebate
“Our government has also introduced a PST rebate for new residential home construction of up to 42% of the PST paid on a new house contract up to $350,000, excluding the land, for new homes purchased after March 31, 2020 and before April 1, 2023. The new rebate will help the province’s construction industry, homebuilders, and associated trades to create jobs. And it will help Saskatchewan families to afford a newly built home.” – Finance Minister Donna Harpauer
Indexation of Personal Income Tax system
“This budget reintroduces full indexation of the Personal Income Tax system, beginning with the 2021 tax year, protecting taxpayers from “bracket creep”—automatic increases in tax caused by inflation.” – Finance Minister Donna Harpauer
Corporate Tax Highlights
Oil Infrastructure Investment Program
“The Oil Infrastructure Investment Program, a SaskFirst new growth tax incentive administered by the Ministry of Energy and Resources, has been introduced to support new and expanded pipelines, as well as new pipeline terminals, to flow oil to market.” – Finance Minister Donna Harpauer
Chemical Fertilizer Tax Incentive
“This budget also introduces a new Saskatchewan Chemical Fertilizer Incentive, providing a 15 percent tax credit to encourage new investment that will grow Saskatchewan’s value-added sector.” – Finance Minister Donna Harpauer
Manufacturing and Processing Exporter Tax Incentive
The M&P Exporter Tax Incentive provides non-refundable tax credits to eligible corporations that expand the number of M&P-related full time employees above the number that were employed in 2014. Eligible businesses are those that derive at least 25% of revenues from the export to the rest of Canada or internationally of their manufactured goods each year and that:
“manufacture or process” goods for sale as defined in the federal Income Tax Act; or
are principally involved in the commercial development of “new economy” products for export, including interactive digital media products and creative industry products.
Please don’t hesitate to contact us if you have questions about how the budget will affect you.
Lower rent by 75% for small businesses that have been affected by COVID-19
The Application portal for the Canada Emergency Commercial Rent Assistance (CECRA) opens at 8:00am EST on May 25th. The description from the CMHC website:
“Canada Emergency Commercial Rent Assistance (CECRA) for small businesses provides relief for small businesses experiencing financial hardship due to COVID-19. It offers unsecured, forgivable loans to eligible commercial property owners to:
reduce the rent owed by their impacted small business tenants
meet operating expenses on commercial properties
Property owners must offer a minimum of a 75% rent reduction for the months of April, May and June 2020.”
Due to expected high volumes of applications, the application dates will be as follows:
Monday – Property owners who are located in Atlantic Canada, BC, Alberta and Quebec, with up to 10 tenants who are eligible for the program
Tuesday – Property owners who are located in Manitoba, Saskatchewan, Ontario and the Territories, with up to 10 tenants who are eligible for the program
Wednesday – All other property owners in Manitoba, Saskatchewan, Ontario and the Territories
Thursday – All other property owners in Atlantic Canada, BC, Alberta and Quebec
“To qualify for CECRA for small businesses, the commercial property owner must:
own commercial real property* which is occupied by one or more impacted small business tenants
enter (or have already entered) into a legally binding rent reduction agreement for the period of April, May and June 2020, reducing an impacted small business tenant’s rent by at least 75%
ensure the rent reduction agreement with each impacted tenant includes:
a moratorium on eviction for the period during which the property owner agrees to apply the loan proceeds, and
a declaration of rental revenue included in the attestation
The commercial property owner is not and is not controlled by an individual holding federal or provincial political office.
CECRA will not apply to any federal-, provincial-, or municipal-owned properties, where the government is the landlord of the small business tenant.
Where there is a long-term lease to a First Nation, or Indigenous organization or government, the First Nation or Indigenous organization or government is eligible for CECRA for small businesses as a property owner.
Where there are long-term commercial leases with third parties to operate the property (for example, airports), the third party is eligible as the property owner.
Also eligible are post-secondary institutions, hospitals, and pension funds, as well as crown corporations with limited appropriations designated as eligible under CECRA for small businesses.
NOTE: Small businesses that opened on or after March 1, 2020 are not eligible.
* We define commercial Real Property as a commercial property with small business tenants. Commercial properties with a residential component and multi-unit residential mixed-use properties would equally be eligible with respect to their small business tenants.
NOTE: Properties with or without a mortgage are eligible under CECRA for small businesses.
What is an impacted small business tenant?
Impacted small business tenants are businesses —including non-profit and charitable organizations — that:
pay no more than $50,000 in monthly gross rent per location (as defined by a valid and enforceable lease agreement)
generate no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level)
have experienced at least a 70% decline in pre-COVID-19 revenues **
NOTE: Eligible small business tenants who are in sub-tenancy arrangements are also eligible, if these lease structures meet program criteria.
** Small businesses can compare revenues in April, May and June of 2020 to that of the same period in 2019 to measure revenue losses. They can also use an average of their revenues earned in January and February of 2020.“
Financial planning for business owners is often two-sided: personal financial planning and planning for the business.
Business owners have access to a lot of financial tools that employees don’t have access to; this is a great advantage, however it can be overwhelming too. A financial plan can relieve this.
A financial plan looks at where you are today and where you want to go. It determines your short, medium and long term financial goals and how you can reach them. For you, personally and for your business.
Why do you need a Financial Plan?
Worry less about money and gain control.
Organize your finances.
Prioritize your goals.
Focus on the big picture.
Save money to reach your goals.
For a business owner, personal and business finances are connected. Therefore both sides should be addressed: Personal and Business.
What does a Financial Plan for a Business include?
There are 2 main sides your business financial plan should address: Growth and Preservation
Cash Management- Managing Cash & Debt
Tax Planning- Finding tax efficiencies
Retaining & Attracting Key Talent
Investment- either back into the business or outside of the business
Insurance Planning/Risk Management
What does a Personal Financial Plan include?
There are 2 main sides your financial plan should address: Accumulation and Protection
Cash Management – Savings and Debt
What’s the Financial Planning Process?
Establish and define the financial planner-client relationship.
Gather information about current financial situation and goals including lifestyle goals.
Analyze and evaluate current financial status.
Develop and present strategies and solutions to achieve goals.
Monitor and review recommendations. Adjust if necessary.
Talk to us about helping you get your finances in order so you can achieve your lifestyle and financial goals.
Feel confident in knowing you have a plan to get to your goals.
Business owners are increasingly recognizing the key importance of implementing employee benefit plans in their organization and this is an area that has grown considerably in recent decades. Employee benefits comprise all of the additional things that you offer to your employees on top of their regular salary, which could include pension contributions, health cover / insurance policies, training and education programs etc. Employees are more and more interested in the total benefits package that a potential employer can offer them, rather than just being focused on a binary salary figure and recognizing and understanding this cultural shift in the modern working world is crucial to maintain your ability to recruit and retain the right talent for your business.
Many employees value the benefits that their employer offers, considering them an integral part of their take home pay, none more so than health cover. This benefit can provide financial and emotional security to your employees and their families, without the need for them to complete any health requirements to be on the plan. They are likely to benefit from a preferable level of cover and the plan may even provide them with insurance products such as long-term disability cover, which can be harder to gain outside of a group plan. What’s more, group plans often offer out-of-country emergency healthcare for employees which has the potential to save them money on personal travel insurance products.
Not only do these benefits provide a sense of security to your employees, they can also help them to feel valued as part of your organization, which may in turn foster higher morale and increased motivation within their roles. It is therefore worthwhile for business owners to encourage their teams to recognize the fact that the benefits package that you offer should be considered as an integral part of their take home pay, alongside their actual salary.
The 2019 budget is titled “Investing in the Middle Class. Here are the highlights from the 2019 Federal Budget.
We’ve put together the key measures for:
Individuals and Families
Business Owners and Executives
Retirement and Retirees
Farmers and Fishers
Individuals & Families
Home Buyers’ Plan
Currently, the Home Buyers’ Plan allows first time home buyers to withdraw $25,000 from their Registered Retirement Savings Plan (RRSP), the budget proposes an increase this to $35,000.
First Time Home Buyer Incentive
The Incentive is to provide eligible first-time home buyers with shared equity funding of 5% or 10% of their home purchase price through Canada Mortgage and Housing Corporation (CMHC).
To be eligible:
Household income is less than $120,000.
There is a cap of no more than 4 times the applicant’s annual income where the mortgage value plus the CMHC loan doesn’t exceed $480,000.
The buyer must pay back CMHC when the property is sold, however details about the dollar amount payable is unclear. There will be further details released later this year.
Canada Training Benefit
A refundable training tax credit to provide up to half eligible tuition and fees associated with training. Eligible individuals will accumulate $250 per year in a notional account to a maximum of $5,000 over a lifetime.
Canadian Drug Agency
National Pharmacare program to help provinces and territories on bulk drug purchases and negotiate better prices for prescription medicine. According to the budget, the goal is to make “prescription drugs affordable for all Canadians.”
Registered Disability Savings Plan (RDSP)
The budget proposes to remove the limitation on the period that a RDSP may remain open after a beneficiary becomes ineligible for the disability tax credit. (DTC) and the requirement for medical certification for the DTC in the future in order for the plan to remain open.
This is a positive change for individuals in the disability community and the proposed measures will apply after 2020.
Business Owners and Executives
Intergenerational Business Transfer
The government will continue consultations with farmers, fishes and other business owners throughout 2019 to develop new proposals to facilitate the intergenerational transfers of businesses.
Employee Stock Options
The introduction of a $200,000 annual cap on employee stock option grants (based on Fair market value) that may receive preferential tax treatment for employees of “large, long-established, mature firms.” More details will be released before this summer.
Retirement and Retirees
Additional types of Annuities under Registered Plans
For certain registered plans, two new types of annuities will be introduced to address longevity risk and providing flexibility: Advanced Life Deferred Annuity and Variable Payment Life Annuity.
This will allow retirees to keep more savings tax-free until later in retirement.
Advanced Life Deferred Annuity (ALDA): An annuity whose commencement can be deferred until age 85. It limits the amount that would be subject to the RRIF minimum, and it also pushes off the time period to just short of age 85.
Variable Payment Life Annuity (VPLA): Permit Pooled Retirement Pension Plans (PRPP) and defined contribution Registered Retirement Plans (RPP) to provide a VPLA to members directly from the plan. A VPLA will provide payments that vary based on the investment performance of the underlying annuities fund and on the mortality experience of VPLA annuitants.
Farmers and Fishers
Small Business Deduction
Farming/Fishing will be entitled to claim a small business deduction on income from sales to any arm’s length purchaser. Producers will be able to market their grain and livestock to the purchaser that makes the most business sense without worrying about potential income tax issues. This measure will apply retroactive to any taxation years that began after March 21, 2016.
To learn how the budget affects you, please don’t hesitate to contact us.
It’s that time of year again, when many of us sit down to complete our income tax return and hope that we have done enough preparation to ensure a smooth tax return. We’ve outlined the key lines to look out for in the 2018 Income Tax Year:
Expenses relating to medical expenses have been expanded to include service animals and can be claimed for non-refundable tax credit. You should also be aware that you can claim for yourself, your spouse or common law partner and any dependent children under the age of 18.
Tax on Split Income (TOSI) (Line 424)
As of January 1, 2018, in addition to applying to certain types of income of a child born in 2001 or later, TOSI may now also apply to amounts received by adult individuals from a related business.
Interest Expense & Carrying Charges (Line 221)
Any fees paid for specific advice about your investments or for tracking your income from investments.
Any fees paid for management of your investments, except administration fees paid for your registered retirement savings plan or registered retirement income fund.
Interest you paid to borrow when borrowing to invest for investment income only except if investment income is considered capital gains.
Insurance policy loan interest you paid in 2018 to make income. To claim this amount, the insurance company must complete Form T2210 before your tax return deadline.
Carry forward information (Line 208 and 253)
If you are not deducting all your RRSP contributions you made in 2018 and the beginning of 2019, your unused contributions can be carried forward.
Generally, if you had an allowable capital loss in a year, you have to apply it against your taxable capital gains for that year. If you still have a loss, it becomes part of the computation of your current year net capital loss. You can use a current year net capital loss to reduce your taxable capital gains in any of the 3 preceding years or in any future year. Capital losses can be carried forward indefinitely and are only deductible against capital gains.
As of January 1, 2018, the first-time donor’s super credit has been eliminated.
If you owe money when your income tax return is complete, the only way to delay payment is to delay the filing until the April 30th deadline. Alternatively, if CRA owes you money, then file as early as possible.
This article and infographic are for illustrative purposes only. You should always seek independent legal, tax, financial and accounting advice with regard to your situation.