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Updated October 20, 2020

 

Canada Emergency Rent Subsidy (CERS)

This is a new program effective September 27, 2020 that will provide benefits directly to tenants or property owners. The maximum subsidy is 65% of rent or mortgage interest payments, with an additional 25% subsidy provided if the business has been ordered to shut down temporarily by a public health authority.

The subsidy will be calculated on a gradually decreasing scale that corresponds with the amount of revenue loss. Details have not been provided. The program replaces CECRA and will run until June 2021

 

Canada Emergency Wage Subsidy (CEWS)

This program has been extended to June 2021 but no additional details have been provided. The original program ran from March to August 2020 and provided a  subsidy equal to 75% of wages paid if revenue was lower by 30% or more. The second program runs from September to December 2020 and provides a subsidy of 0.8 multiplied by the percentage revenue drop. For example, if revenue declined 20%, the subsidy would be 16% (0.8 x 20% decline). A top-up subsidy is available if revenue has declined more than 50%.

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

Frequently Asked Questions:
https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-frequently-asked-questions.html

Canada Emergency Business Account (CEBA)

The original program allowed eligible companies to apply for a $40,000 interest free loan. In October 2020, an additional $20,000 interest free loan was made available. $10,000 of the original loan and $10,000 of the additional loan will be forgiven if the loans are repaid by December 2022.

You apply for the loans via your financial institution.

Companies initially qualified if  their 2019 annual payroll was between $20,000 and $1.5 million OR they have over $40,000 of non-deferrable operating expenses such as rent, property taxes, utilities, and insurance. The qualification criteria for the additional loan has not been announced.

https://ceba-cuec.ca/

Canada Emergency Commercial Rent Assistance (CECRA)

This program ended in September 2020. It provided for 75% rent relief if revenue was down at least 70%. The application was made by the commercial landlord.

https://www.cmhc-schl.gc.ca/en/finance-and-investing/covid19-cecra-small-business

10% Temporary Wage Subsidy

This program ended in June 2020. It provided for a wage subsidy for the period March 18th to June 19th equal to 10% of the gross payroll.
The maximum for the entire period was $1,375 times the number of employees or $25,000, whichever was less.
Any amounts received under this subsidy reduced the claim. This subsidy was claimed by reducing payroll source deduction payments to CRA.

Additional Information:
https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html

 

How to Register for CRA’s My Business Account

https://www.canada.ca/en/revenue-agency/news/cra-multimedia-library/businesses-video-gallery/register-mybusiness-account.html

If you sign-in via a partner, use your personal, not business, bank card.

Salary vs Dividends (February 2019)

Companies have the option of paying their shareholders a salary, a dividend or a combination of both.
 
The shareholder pays all the income tax on a salary. If a dividend is paid, some of the tax is paid by the company and some by the shareholder. In theory, the total tax paid under either option is supposed to be the same. In practice, however, dividends used to have a lower tax rate.
 
Changes to the income tax act have now eliminated the advantage of dividends over salary. In many cases we are now recommending that you receive a salary instead of a dividend.
 
If a salary is paid, source deductions (CPP & income tax) must be remitted to CRA monthly. As there are significant penalties if a payment is late, we recommend using a payroll service.
 
A salary increases your RRSP room.
 A salary entitles you to future Canada Pension Plan (CPP) benefits (at a cost of $5,500 per year).
 A salary reduces the company’s income tax installments, as a salary is an expense deductible by the company.
 A salary also reduces personal income tax installments, as tax deductions are now remitted monthly.

 

Corporate Tax Changes (January 2019)

Here is a summary of three major changes to the income tax act that will affect some corporations and their shareholders.
 
1) If your company pays a dividend to a family member who does not work more than 20 hours per week in the business, the dividend will be taxed at the top personal tax rate.
 
2) If your company earns more than $50,000 in investment income (interest, dividends, capital gains) AND your company (or a related company) sells products or provides services, the corporate tax rate on the product and service income will increase by up to 13% (from 13.5% to 26.5%)
 
3) If your operating company pays dividends to your holding company, the dividend may be treated as a capital gain subject to 25% tax.

CRA Audits (February 2018)

Did you know that when CRA audits a business, they have the right to request business and personal bank statements going back several years? Would you be able to provide supporting documents for all your business expenses if requested?
 
For example, CRA has recently been auditing travel and professional fee expenses for the years 2014 to 2017. They have been disallowing expenses if the supporting documentation is not provided. 
 
Here is a list of what you need to keep. We recommend saving these documents on your computer in PDF format.
  • Business bank statements
  • Personal bank statements
  • Credit card statements and supporting receipts
  • Supporting documents for expenses (supplier invoices / emails)
  • Investment statements
  • Payroll registers

Ontario Employment Law (January 2018)

Ontario has now passed into law the significant changes that are effective January 1, 2018:
  • Increasing the minimum wage to $14.00 per hour (the proposed increase to $15.00 per hour effective January 2019 has been cancelled)
  • Allowing employees personal emergency leave up to  three days for personal illness, two for bereavement and three for family responsibilities (unpaid).
  • Increasing vacation for employees with at least 5 years’ service to 3 weeks.

Corporate Tax Changes (December 2017)

Both the federal and Ontario governments have decreased the small business tax rate effective January 1, 2018.
  • The federal small business tax rate has decreased to 10.0% (from 10.5%)
  • The Ontario small business tax rate has decreased to 3.5% (from 4.5%)

Medical Expenses (July 2017)

You may be able to reduce your medical costs by setting up a medical benefits plan. If you meet the conditions below, your company can reimburse you for 100% of your medical expenses (these include drugs, dental, glasses, therapy).

Conditions:

  • You own a corporation
  • Your family medical expenses are usually over $1,000 per year
  • You do not belong to a group plan
  • You have no employees (except family members)

Olympia Benefits Inc has set up a plan that is popular with small business owners. Here is a link to additional information: http://www.olympiabenefits.com/health-and-dental-plans-for-small-business

We recommend the Olympia HSA Plus plan.