What is the Canada Emergency Wage Subsidy (CEWS)?

As a Canadian employer whose business has been affected by COVID-19, you may be eligible for a subsidy of 75% of employee wages for up to 12 weeks, retroactive from March 15, 2020, to June 6, 2020.

This wage subsidy will enable you to re-hire workers previously laid off as a result of COVID-19, help prevent further job losses, and better position you to resume normal operations following the crisis.

Program Highlights

• Wage subsidies of 75% (up to $847) per week, per employee for the period of March 15th to June 6th, 2020.

• No overall limit on the subsidy amount that an eligible employer may claim – meaning you can claim the subsidy for all your employees – no matter how many people your business carries on payroll.

• Amounts are calculated based on the average weekly remuneration paid to the employee between January 1st and March 15th, 2020.

• CEWS will also refund 100% of employer-paid contributions to eligible employees for EI, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan for each week that those employees are on leave with pay and are covered by the CEWS.

• Eligible employers must have experienced a year-over-year drop in revenue of at least 15% between March 15th and April 11th, and 30% in the eligible month(s) following.

Who is an eligible employer?

To be eligible to receive the wage subsidy, you must:

• ·       Be an eligible employer

• ·       Have experienced an eligible reduction in revenue, and

• ·       Have had a CRA payroll account on March 15, 2020

Types of eligible employers

• ·       individuals (including trusts)

• ·       taxable corporations

• ·       persons that are exempt from corporate tax (Part I of the Income Tax Act), other than

  public institutions:

  • ·       Non-profit organizations

  • ·       Agricultural organizations

  • ·       Boards of trade

  • ·       Chambers of commerce

  • ·       Non-profit corporations for scientific research and experimental

    development

  • ·       Labour organizations or societies

  • ·       Benevolent or fraternal benefit societies or orders

• ·       Registered charities

• ·       Partnerships consisting of eligible employers

Public institutions are not eligible for the subsidy. This includes municipalities and local governments, Crown corporations, public universities, colleges, schools and hospitals.

What is an eligible revenue reduction?

You must determine if your reduced revenue makes you eligible to apply for the wage subsidy in a particular period.

If you determine that you qualify for the CEWS for one claim period, you will automatically qualify for the following claim period.

Calculate your reduction by comparing your eligible revenue for the starting month of the claim period with your baseline revenue. Your baseline revenue is either:

• The revenue you earned in the corresponding month in 2019, or

• The average of the revenue you earned in January and February, 202

Who are eligible employees?

An eligible employee is an individual employed in Canada by you (the eligible employer) during the claim period, except if there was a period of 14 or more consecutive days in that period where they did not receive any pay (eligible remuneration) by you.

Employee eligibility is based on whether the person is employed in Canada, not where they live.

Retroactively hiring and paying employees?

Employees who have been laid off or furloughed can become eligible retroactively, as long as you rehire them and their retroactive pay and status meet the eligibility criteria for the claim period. You must rehire and pay such employees before you include them in your calculation for the subsidy.

How to apply

Beginning April 27, applications will be open for the Canada Emergency Wage Subsidy.

• ·       Most businesses may apply using My Business Account

• ·       If you represent a business, you may apply using Represent a Client

• ·       Alternatively, you may apply using a separate online application form (available April 27)

The CEWS will be processed at the payroll program (RP) account level, so you will have to file a separate application for each RP account.

Find out more about eligible revenue, revenue reduction calculations, eligible renumeration, baseline renumeration, and calculating your subsidy amount at:

https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html

Information provided herein has been taken directly from the CRA website and is up to date as of April 21, 2020.

What you need to know about the Canada Emergency Response Benefit (CERB)

If you have stopped working because of COVID-19, the Canada Emergency Response Benefit (CERB) may provide you with temporary income support. The CERB provides $500 a week for up to 16 weeks.

Who is eligible?

To be eligible, you must meet the following requirements:

• You did not apply for, nor receive, CERB or EI benefits from Service Canada for the same eligibility period

• You did not quit your job voluntarily

• You reside in Canada

• You are 15 years old or more when you apply

• You earned a minimum of $5,000 (before taxes) income in the last 12 months or in 2019 from one or more of the following sources:

• employment income

• self-employment income

• provincial or federal benefits related to maternity or paternity leave

AND

• You stopped or will stop working due to COVID-19, and:

  • You are applying for the first time

  • For at least 14 days in a row during the 4-week payment period, you do not expect to receive more than $1,000 (before taxes) from employment and self-employment income

  • You are re-applying for another period

  • You do not expect your situation to change during this 4-week period and you do not expect to receive more than $1,000 (before taxes) from employment and self-employment income

OR

• You received regular EI benefits for at least 1 week since December 29, 2019

• You are no longer eligible for EI benefits

Eligibility periods

Eligibility periods are fixed in 4-week periods. If your situation continues, you can re-apply for CERB for multiple 4-week periods, to a maximum of 16 weeks (4 periods).

If you start working again after you get a CERB payment, and then stop working, you need to re-apply for the CERB. When you re-apply, you must confirm that for at least 14 days in a row, during the period you are applying for, you won't receive.

• ·       employment income

• ·       self-employment income

• ·       provincial or federal benefits related to maternity or paternity leave

An online questionnaire will direct you to the service option that best fits your situation (i.e. eligibility for Employment Insurance benefits or not).

Do not apply for the CERB if you have already applied for EI.

Stay in the know. keep up with the federal government changes regarding the CERB benefit by visiting: https://www.canada.ca/en/department-finance/economic-response-plan.html

Information provided herein has been taken directly from the CRA website and is up to date as of April 21, 2020.

The Tax Season Effect

As tax season starts to ramp up I begin to notice a serious correlation between people’s moods and tax balances.  I call it the Tax Season Effect!  This is pretty much what happens:

Step1: People do their taxes

Step 2: Program/person tells them their balance

Step 3:   Refund = absolute bliss / Owing = pure disappointment

 And personally I completely understand.  Who actually likes to pay bills?  Like when you open your hydro bill are you anxiously smiling thinking “oh my gosh what could be inside? I can’t wait!”  Chances are probably not, and if you are excited I would like to extend my congratulations – you are a rarity my friend.

 Taxes are a pain in the butt, but maybe I can offer some advice to help you ease the pain.  If you more often than not owing taxes considering the following strategies:

• Make sure to have all your deductions ready: medical expenses, rent/property tax, employment expenses, daycare providers, school credits etc.

• Consider saving money in a RRSP to reduce your taxable income

• Ask your employer to take off extra taxes

• Have a high interest savings account that you make monthly contribution towards a potential tax bill from additional income not taxed such as interest revenue, dividends, capital gains

Any of the above strategies will help you reduce/contribute to your tax balance and hopefully keep you in a better mood.

Everybody run! Tax season is coming!

Tax season is coming! Tax season is coming! Everybody run!!!!!

I'm joking! Tax season doesn't have to be such a horrible daunting task. I get that most people don't like paperwork and that almost everybody doesn't like paying taxes (there may be a few keeners that do?). But, ultimately the key to tax season is setting yourself up for success.

Here are some helpful tips to make your tax season easier:

1) Get a folder or box and label it 2018 Taxes. Then as you and your family begin to receive all your slips, simply place them in the aforementioned folder/box. Sounds simple enough, but it works like a charm!

2) Have a separate folder for all your medical expenses. Let’s be honest medical bills can add up and you want to ensure that you are entitled to these medical tax credits. Medical receipts can be claimed on a 12 month basis and not necessarily on a calendar year so you will want to ensure that you are claiming the most that you can! Have your 2017 medical expenses on hand as well in case they didn’t meet the tax credit in 2017 but can possibly be claimed in 2018.

3) RRSP = Refunds. Or at least in most cases. The government refunds your highest tax bracket when you contribute to Registered Retirement Savings Plan (RRSP). This is a great way to save money, get a refund and then potential use that refund to contribute to other savings or debt! RRSPs can be used for a down payment on your first home or for the Lifelong Learning Plan (LLP) without any tax consequences. However, if you withdraw money from your RRSP for any other reasons, such as retirement, you will be taxed as if it were income. This seems to upset people, but you need to remember that the government gave your taxes back when you contributed and now it is collecting its taxes. RRSPs are a tax deferral vehicle that when used correctly can give your great benefits.

4) If you run a business like a sole proprietorship and have all your receipts everywhere - get yourself an accordion style file folder system Put your receipts together in categories such as advertising, entertainment, office, fuel etc. This makes it so much easier to add your receipts and to unjam your receipts from your car or purse or couch! Tip: Do this from the beginning of the year and you save even more time for next tax season.

5) If you are always paying taxes when you file your return then you need to get advice from a professional. There are additional ways you can reduce your taxes or maybe you need to contribute extra due to additional income or multiple jobs that push you up to a higher tax brackets. Either way, a sound tax professional should be able to determine what is happening and the best method to avoid these types of surprises.

So you see tax season doesn’t have to be so painful! If you ever need any advice or need your tax prepared don’t hesitate to contact me at mngowing@gmail.com or 905 978-7620. 
Melanie Gowing, CPA, CMA