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COVID-19 UPDATE: CERS & CEWS: What Business Owners Need to Know

CERS & CEWS: What Business Owners Need to Know

The COVID-19 pandemic has had a major impact on Canadian business owners. Most importantly, we hope that you and your loved ones are staying healthy and safe through this challenging time. We are here to help answer any difficult business or tax related questions that may come up. Provincial lockdowns, emergency orders, and numerous restrictions, have created many challenges for Canadian businesses and employers. The federal government has offered some relief, however filing and reporting can be difficult and onerous.

To help you make sense of it all, we have outlined two of the most important COVID-19 business relief programs below. We may also be able to help you with filing and reporting. If you have any questions, please feel free to give us a call.

Canada Emergency Rent Subsidy (CERS)

CERS is a federal program designed to help Canadian businesses, non-profit organizations, or charities who have seen a drop in revenue due to the COVID-19 pandemic. This subsidy may be able to help you cover part of your commercial rent or property expenses and covers both renters and property owners. The subsidy went into effect September 27, 2020 and will continue until at least June of 2021.

You may be eligible if your monthly revenue declined during this time period as compared to the previous year. There are several criteria that you must meet in order to be eligible for the program. The most important is:

  • That you had a CRA business number as of Sept. 27, 2020

You must also:

  • Qualify as an eligible business, charity, or non-profit
  • Have experienced a drop in revenue
  • Have eligible expenses

Note that there is no minimum revenue drop to apply for this program, however the amount of decline will be used to calculate the amount of subsidy you receive. If you have any questions about eligibility, you can visit the Canadian Revenue Agency’s (CRA) website.

CERS covers a portion of eligible expenses as calculated on a property-by-property basis. Qualifying properties include buildings or land in Canada that:

  • Your business owns or rents, and
  • That you use in the course of your ordinary business activities

Eligible expenses can be claimed up to a maximum of $75,000 per location and a total of $300,000 for all locations. Restrictions do apply in terms of residences, rental incomes, and non-arms length entities. For more information on eligible expenses, click here.

In order to apply for the CERS program you must:

  • Have a “My Business Account” with the CRA
  • Create a CERS (ZA) number
  • Set up direct deposit

For more information on how to complete the above requirements and apply for the CERS program or for help applying give us a call.

Canada Emergency Wage Subsidy (CEWS)

CEWS is designed to help Canadian employers who have seen a drop in revenue due to COVID-19. It aims to help employerscover a portion of employee wages, prevent job loss, and re-hire workers. The program can be applied forretroactively to March 15, 2020. However, there have been several changes to the CEWS program as of January 6, 2021. For detailed information on the changes and current subsidy rates visit the CRA website.

In order to be eligible for CEWS you must meet the following criteria:

  • You had a CRA payroll account on March 15, 2020
  • You qualify as one of the accepted types of employers
  • You have experienced a drop in revenue

For a full break down on eligibility criteria, including a list of eligible employer types, eligible revenue, and special revenue circumstances click here.

Please note that there are multiple claim periods. For additional information on current and upcoming claim periods click here. Each claim period has a specific deadline for applications and the subsidy does not renew automatically. You must confirm eligibility and reapply for each claim period, and you must apply separately for each (RP) payroll account that you have.

There are also restrictions and guidelines on which employees are eligible and how much of their remuneration can be covered, in some cases these regulations differ depending on the claim period that you are applying for, so be sure to review claim periods and regulations closely.

In order to apply for the CEWS program, you must:

  • Choose the correct claim period
  • Calculate the subsidy amount for your business
  • Set up direct deposit

Note that there is no minimum revenue drop to apply for this program, however the amount of decline will be used to calculate the amount of subsidy you receive. If you have any questions about eligibility, you can visit the Canadian Revenue Agency’s (CRA) website.

CERS covers a portion of eligible expenses as calculated on a property-by-property basis. Qualifying properties include buildings or land in Canada that:

  • Your business owns or rents, and
  • That you use in the course of your ordinary business activities

Eligible expenses can be claimed up to a maximum of $75,000 per location and a total of $300,000 for all locations. Restrictions do apply in terms of residences, rental incomes, and non-arms length entities. For more information on eligible expenses, click here.

In order to apply for the CERS program you must:

  • Have a “My Business Account” with the CRA
  • Create a CERS (ZA) number
  • Set up direct deposit

You can then apply by signing in to your My Business Account with the CRA or use the Web Forms application using your web access code (WAC). For a detailed application guide you can visit the CRA’s website or for help applying give us a call.

As always, the health and well being of our clients and their businesses is our number one priority. If you have any questions at all about the Government of Canada’s COVID-19 response or how it might affect your business, please don’t hesitate to reach out.

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CRA Temporary Flat Rate Method

Did You Work from Home in 2020?
The COVID-19 pandemic means that many more employees work from home (WFH) who did not do so before the pandemic. If you are one of them, you may be eligible for a new temporary flat rate deduction announced by the Canada Revenue Agency (CRA). As the name implies this deduction is temporary and currently only applicable to the 2020 tax season.

The new flat rate deduction allows eligible applicants to claim $2 for each day they worked from home due to COVID-19 up to a maximum of $400 per individual.

Eligibility Requirements
You are eligible to apply for the new flat rate deduction if you are an employee who meets ALL of the following criteria. If you are self-employed, you can click here to find out more about claiming “Business-use-of-home expenses”.

Eligibility criteria:

• You worked from home in 2020 due to the COVID-19 pandemic.
Note: This applies even if you were not required to work from home but chose to do so because of the COVID-19 pandemic.
• You worked from home for more than 50% of the time for a period of at least 4 consecutive weeks
• You are only claiming home office expenses and not any other employment expenses
• Your employer did not already reimburse you for ALL of your home office expenses. Note: If your employer reimbursed you for part, but not all of your home office expenses, you are still eligible to apply for the remainder.

You can claim days that you worked from home either full or part-time. However, you can not claim days off, vacation days, sick leave, or other leaves of absence.

Should I Use the New Flat Rate or the Existing Detailed Method?
The new flat rate method is designed to simplify the process for claiming home office expenses. However, the flat rate method may not be the best option for everyone. If you were already working from home prior to 2020, or have a larger claim, you can continue to use the existing method for claiming home office expenses. The following chart breaks down the key differences between the two methods:


Temporary Flat Rate Method Existing Detailed Method
• You can claim $2/day you worked from home due to COVID-19 up to a maximum of $400 • You can claim the actual (full) amounts you paid, regardless of COVID-19
• You do not need to keep documents to support your claim • All amounts claimed must be supported by documentation
• Your employer is not required to complete or sign any forms • You must have a completed and signed T2200S/ T2200 form from your employer

 

Have Questions?
The health and well being of you and your businesses is our number one priority. If you have any questions at all about the Government of Canada’s COVID-19 response or how it might affect your business, please don’t hesitate to reach out. Or click here to see the CRA’s list of frequently asked questions related to home office expenses for employees.

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COVID-19 Canadian Support Programs To-Date

Good Morning,

We hope you and your loved ones are staying safe and healthy during these difficult times. With all of the changes going on it can be difficult to stay abreast of the latest information. To help you figure out what you should be applying for we have provided a summary below of the programs currently available from the Provincial and Federal Governments. If you have any more questions about any of the information below, please don’t hesitate to reach out.

Support for Individuals

Canada Emergency Response Benefit (CERB)
The CERB is a $2,000 per 4-week period payment that is available to individuals who are not eligible for EI. It has been expanded to include individuals who are still working during the shutdown and now allows you to earn up to $1,000 per month while collecting the CERB.

There has also been an announcement of a new top-up of salary for essential workers involved in certain sectors including hospitals, nursing homes, and food and retail supply chains and who are earning less than $2,500 a month. This measure is expected to be carried out by the provincial governments in the next little while.

The conditions to qualify are:

• Residents in Canada, who are at least 15 years old
• Who have stopped working because of reasons related to COVID-19 or are eligible for Employment Insurance regular or sickness benefits or have exhausted their Employment Insurance regular benefits or Employment Insurance fishing benefits between December 29, 2019 and October 3, 2020
• Who had employment and/or self employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application
• And, who have not quit their job voluntarily

When submitting your first claim, you cannot have earned more than $1,000 in employment and/or self-employment income for 14 or more consecutive days within the four-week benefit period of your claim.

When submitting subsequent claims, you cannot have earned more than $1,000 in employment and/or self-employment income for the entire four-week benefit period of your new claim.

To apply:

The application itself can be done on your CRA My Account or via an automated telephone service [1-800-959-2019 or 1-800-959-2041]. Whether you are eligible for EI or not, the application site currently handles both these claims.

After you apply, you should get your payment in 3 business days if you signed up for direct deposit. If you haven’t, you should get a cheque in the mail in about 10 business days. If your situation continues, you can re-apply for a payment for multiple 4-week periods, to a maximum of 16 weeks (4 periods). Please note that you must reapply after each 4-week period.

To find out if you are eligible and whether you should apply for CERB with Service Canada or the Canadian Revenue Agency, click this link and answer the questions at the bottom of the page:

https://www.canada.ca/en/services/benefits/ei/cerb-application.html

For more information and answers to commonly asked questions, click this link:

https://www.canada.ca/en/services/benefits/ei/cerb-application/questions.html

GST/HST Credit
If you currently receive this credit, payments starting April 9, 2020 will increase based on the following:

The maximum amounts for the 2019-2020 benefit year will increase from
• $443 to $886 if you’re single
• $580 to $1,160 if you’re married or living common-law
• $153 to $306 for each child under the age of 19 (excluding the first eligible child of a single parent)
• $290 to $580 for the first eligible child of a single parent.

You can get more information on the GST/HST Credit by following this link: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/covid-19-gsthstc-increase.html

Support for Students and Recent Graduates

The Government of Canada is developing a number of programs to help students concerned about finding summer employment, saving for tuition and securing meaningful employment post graduation.

Expanded Student and Youth Programming
• “I Want to Help” Platform will provide information about available service opportunities and ways to pursue service positions.
• Additional funding for youth employment skills training; wage subsidies; work placement programs; research scholarships; etc.

Enhanced Financial Assistance for Fall 2020
• Proposed changes to the Canada Student Loan Program’s eligibility requirements in 2020-21 will allow more students to qualify for supports and be eligible for greater amounts, including doubling the non-repayable Canada Student Grants.

Canada Emergency Student Benefit (CESB)
• A new grant is being developed to support post-secondary students and recent graduates who are ineligible for CERB or EI.
• The CESB would provide $1,250 per month for eligible students from May through August 2020, and $1,750 for students with dependents and those with permanent disabilities.
• The CESB will be delivered by CRA and more details will follow.

Canada Student Service Grant
• To encourage students to participate in the COVID-19 response, the government will launch a new national service initiative and provide support through a new Canada Student Service Grant which will provide up to $5,000 to support student’s post-secondary education costs in the fall.
• More details will be made available on the I Want to Help platform over the coming weeks.

International students
• The Government of Canada will remove the restriction that allows international students to work only a maximum of 20 hours per week while classes are in session, provided they are working in an essential service or function, such as health care, critical infrastructure, or the supply of food or other critical goods.

For more information on these and other programs designed to help students and recent graduates please visit: https://www.canada.ca/en/department-finance/news/2020/04/support-for-students-and-recent-graduates-impacted-by-covid-19.html

Support for Families with Children

Canada Child Benefit
If you currently receive the Canada Child Benefit, the amount is expected to be increased by $300 per child on the May 2020 payment.

Ontario – Support for Families
There is a $200 per child ages 0-12 (disabled – $250 ages 0-21) payment towards the cost of home-schooling children while daycares and schools are closed. Anyone with a child that was in a daycare centre or school can apply. Please make sure you receive a confirmation email as I have heard the page can be fairly buggy.

https://www.iaccess.gov.on.ca/ParentAppWeb/parentapp/index.xhtml

Support for Businesses

Canada Emergency Wage Subsidy (CEWS) – 75% Wage Subsidy
This is a 75% wage subsidy for qualifying businesses, for up to three months. The program is expected to run for a 12-week period, retroactive from March 15 to June 6, 2020. However, additional support may be added later, given that it is unclear how long the COVID-19 crisis will last. We will monitor updates closely and will provide additional information as it becomes available.

The latest information on both eligibility and subsidy amounts is outlined below:

Eligibility

• Businesses now only have to demonstrate a 15% drop in revenues in March 2020. The drop for April and May 2020 remains 30%. In order to remain eligible, you must pay the salary or wages to your employees, and, if your application is accepted you will be repaid through this subsidy program at a later date. Therefore, you will need to keep records demonstrating your reduction in arm’s-length revenues and remuneration paid to employees.
• You can now choose to apply the percentage drop calculation to either the same month in the prior year (i.e. March 2020 vs March 2019) or against the average of revenues in January and February 2020. Which ever method you choose must be consistent for the duration of this program.
• You can also choose to apply the cash method of accounting instead of the normal accrual method. This is implemented to help address businesses with large amounts of unpaid invoices due to Covid-19.

Subsidy

• The amount is calculated as either 75% of the employee’s current pay or 75% of their pre-crisis pay, whichever is greater and up to a maximum of $847 per week. This means that you can pay the employee a reduced salary and claim up to 100% of their salaries under this grant. This is by design as the government’s objective is to have businesses rehire employees even if they are not able to work during this time.
• There is also a 75% of pay subsidy for new employees brought on since March 15th.
• Owner’s and non-arm’s length employees are eligible; however, their subsidy amounts are limited to 75% of the average weekly payroll payments they received from Jan 1 to March 15, 2020 up to $847 per week. In other words, an owner who did not take payroll payments in that time, or who received dividends instead is not eligible.
• If a business is retaining or re-hiring an employee even though the employee is not working, they are also eligible to receive a subsidy of the Employer portion of EI and CPP paid. This is announced to support businesses re-hiring employees who have been laid off while there is no work for them or while they have to stay home to take care of family members etc.

Application

• Applications are open as of April 27, 2020 and can be done through your My Business Account with CRA. Payments are expected in the first week of May

Canada Emergency Wage Subsidy Calculator
• If you would like some assistance determining if you qualify for CEWS and getting a rough idea of how much you could receive per employee, this CEWS calculator can help: https://www.preetbanerjee.com/cews
• You can watch this YouTube video to see how it works.

For more information on the Canada Emergency Wage Subsidy (including how to apply), please visit the following link: https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html

Canada Emergency Business Account (CEBA)
The terms of this loan have been updated to include businesses with total payrolls of $20,000 to $1,500,000 in 2019. This is a line of credit type account and the application for it is currently available for up to $40,000 of financing. This will carry no interest until December 31, 2022 and if 75% of the loan is repaid by that date the remaining 25% will be eligible for complete forgiveness. Applications for this loan are done through the financial institution where you have your business accounts.

The Government of Canada has also added broad terms to the permitted spending of these funds, including non-deferrable operating expenses such as payroll, rent, utilities, property taxes and regular debt payments. Usage is not permitted for refinancing debt, paying dividends or increasing management compensation.

Canada Emergency Commercial Rent Assistance (CECRA)
A new program is being developed for small businesses which will consists of loans and forgivable loans to commercial property owners who in turn forgo rent from small businesses for the months of April, May and June. The details are still being worked out; however, the program is expected to lower rent by 75 per cent for affected small businesses. Essentially, the federal and provincial governments will work together to cover 50% of eligible small business rents during the stated time period and landlords and tenants will be responsible for 25% each.

In order to qualify small business tenants must be paying less than $50,000 per month in rent and have temporarily ceased operations or have experienced at least a 70 per cent drop in pre-COVID-19 revenues. The new program is expected to be operational by mid-May, with commercial property owners lowering the rents of their small business tenant’s payable for the months of April and May, retroactively.

Things are still changing fast and there is a lot of confusion about these programs as they roll out. If you have any questions or are not sure how to handle any of the items above, please don’t hesitate to reach out.

Yours truly,

CPA Plus

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COVID-19 Tax updates – What you need to know.

Our thoughts are with you and your families during the unprecedented situation surrounding COVID-19. We hope you and your loved ones are doing well and staying safe.

We would like to assure you that we are staying on top of changing circumstances and will do our best to keep the public apprised of any essential information as it applies to your tax filings. With that in mind, please be aware that the Canadian Government has announced today that it is extending the tax filing deadline for anyone who has yet to file. The new filing deadline is June 1, 2020. In addition, the deadline to pay off any outstanding balances interest-free will also be extended, this time to July 31, 2020. Furthermore, taxpayers will be allowed to defer tax payments until after Aug. 31, 2020 for any amounts that are due after today and before September.

As you are aware, the situation is rapidly evolving with new announcements and government responses being rolled out daily. Our team is monitoring the situation closely and will continue to keep you informed as more information becomes available.

In order to do our part and help avoid the spread of the COVID-19 virus, we are limiting in-person meetings. However, we are still available for video chat or phone calls. In fact, your personal taxes can be filed completely virtual by us. If you have any questions, please feel free to contact the CPA Plus team directly at (613) 413-8272. We are also taking advantage of the extended deadline to reduce office capacity until April 5th. Please be advised that email responses may be a bit delayed during this time, but we will do our best to get back to you promptly.

Stay safe.

Yours truly,

CPA Plus

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Corporate Year-End Checklist

Either your year-end is coming up in a few weeks or a few months from now, it is always a good idea to start early on preparing your accounting information. This will save you and your accountant a lot of headaches and will make filing to the Canada Revenue Agency (CRA) a lot easier. For most businesses, fiscal year-end typically falls at the end of the calendar year, making it already extremely busy for accountants in the New Year.

This is a checklist that will help you prepare and plan out the year-end tasks ahead of time. Avoid the last minute stress and prepare all your accounting documents early.

• A copy of your Quickbooks database. If you are using cloud accounting, please invite us to your account
• Last year’s trial balance to ensure that last year’s financial statement amounts have not been altered
• Bank statements (along with cancelled cheques), credit card statements, loans and line of credit statements
• All revenue source documents for the fiscal year. This would include all invoices issued to customers and cash register tapes
• All expense source documents for the year. This would include all invoices paid to vendors.
• Cash on hand amount at year-end
• Account receivable list (customers that you billed that you have not collected from yet) and accounts payable list (vendors that you still owe that already serviced your business), if applicable
• Cost of inventory with details of inventory items at year-end
• Capital assets purchases and disposals during the fiscal year
• The latest government correspondence (i.e. GST/HST, Payroll deductions, WSIB)
• Lease agreements, finance contracts and loan agreements
• Payments or withdrawals made by shareholder
• List of any employee benefit to report (i.e. company vehicle)
• List of insurance policy amounts and dates of expiry.
• A copy of last year’s financial statements
• A copy of last year’s corporate tax return, along with Notice of Assessment

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What Cloud Accounting Can Do For You!

It’s no secret that cloud accounting is growing at a significant pace year after year. Not only is it more cost-effective for both accounting firms and small business owners, but it also allows people to work more collaboratively compared to traditional desktop accounting software. I have experienced some daunting situations where traditional accounting solutions have failed me, and I would like to share three real-life scenarios that show readers how cloud accounting can help you work better, smarter and faster.

Scenario One
It is two days before all your tax filings are due, so you head to the office extra early to get down to business. You unlock the door and notice that someone forgot to set the alarm the day before, as you don’t hear it going off. You look closer at the PIN pad and find out something far worse – the alarm didn’t go off because there is a power outage on your block. You call the electricity company to get a status on the situation. The company tells you that it will be back up in an hour. An hour goes by, and the power is still out. You call the company again to realize that it will actually take an extra 3 hours to get it resolved. It finally gets resolved, but you have already lost 4 to 5 hours of work time.

Scenario Two
You just got home from work, and a client calls you asking for information about a particular item on the profit and loss report you sent him right before you left the office and would like to get more detailed information. You are unable to access the office server from home because your office has not implemented this (perhaps due to safety concerns, too costly, etc.). That said, you can’t help your client because you are at home and have no way of accessing the information unless you went back to the office. Your client will have to wait until tomorrow morning.

Scenario Three
One of your clients is at a job site and would like to invoice their client at that moment after gathering all the information from their staff members on how many hours were spent on the services provided. Unfortunately, he would need to go back home and get on his computer workstation in order to produce the invoice and send it to the client.

Solution
As you can see from these scenarios, all these problems could have been mitigated if a cloud-based accounting solution was implemented. In scenario one, staff members wouldn’t have to sit at the office and wait until the power comes back on to start their day. Cloud accounting allows you to work on any computer at any time. Staff members could have all gone home that day and worked straight from their home workstations. The case is similar for scenario two; more detailed information could have been provided to the client once the accountant got home and logged into the client’s books. Even better, cloud accounting allows multiple user access, so the client could have pulled up the additional information requested using this accounting solution. In scenario three, cloud accounting allows convenient access with handheld devices. The business owner could have easily taken out his smartphone and invoiced the customer at that very moment, as opposed to remembering to get your invoices done every time you go home.
Cloud accounting is great for both accountants and business owners. It allows multiple users to access company information. All business data will be stored securely in the cloud, which will save a lot of IT cost, and it allows accountants and business owners to work more collaboratively and access company information virtually anywhere they please.

Conclusion
With that said, it is important to hire an accountant that can react to the trends in the accounting industry to serve you better. We are now in the “information age” where we want information fast and in real time! Not only should your accountant be up to date on new accounting policies, but your accountant should also keep up with the technological advances that are happening in their own industry. As a business owner, it is important to communicate and collaborate more with your accountant to help you understand the numbers behind your business better. Stay more connected with your business data and accountant by implementing a cloud-based accounting solution. If you currently using Quickbooks Desktop, I highly recommend taking a look at Quickbooks Online.

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GST/HST Quick Method and How It Can Save You Money

The quick method is another accounting option available to help small businesses calculate their net tax for GST/HST purposes. This method reduces paperwork and makes it easier to calculate GST/HST remittances and file GST/HST returns because it eliminates the need to report the actual GST/HST paid or payable on most purchases.

That’s right. There is another option where you can file your GST/HST remittances that saves you a lot of time on paperwork. Also, if you are operating a business where you do not claim much input tax credits (ITC), you save on the overall GST/HST balance using the Quick Method.

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What Cloud Accounting Can Do For You!

It’s no secret that cloud accounting is growing at a significant pace year after year. Not only is it more cost-effective for both accounting firms and small business owners, but it also allows people to work more collaboratively compared to traditional desktop accounting software. I have experienced some daunting situations where traditional accounting solutions have failed me, and I would like to share three real-life scenarios that show readers how cloud accounting can help you work better, smarter and faster.

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CPA Plus, Chartered Professional Accountants

Welcome to the CPA Plus Blog!

CPA Plus is a Chartered Professional Accounting firm designed to help business owners with tax and accounting solutions with an emphasis on cloud technology.

Contact us to schedule a complimentary, no obligation consultation to discuss your current accounting process and how we can utilize cloud technology to help you save money.

CPA Plus
(613) 413-8272
info@cpaplus.ca

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