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Updated July 23. 2021

Application for COVID subsidies is made via CRA’s My Business Account.

Canada Recovery Hiring Program (CRHP)

This new program provides a subsidy based on the increase in eligible wages compared to period 14 of CEWS (March 14, 2021 to April 10, 2021). This program runs from June 6, 2021 (CEWS period 17) to November 20, 2021. The initial subsidy rate of 50% reduces over time to 20%. Starting period 18, the company must have a revenue reduction of at least 10%. The company can claim either CEWS or CRHP, whichever is higher.

https://www.canada.ca/en/revenue-agency/services/subsidy/recovery-hiring-program.html

Canada Emergency Wage Subsidy (CEWS)

This program has been extended to September 2021 (period 20). It provides a subsidy of all eligible wages based on the % revenue drop of the company. The maximum subsidy rate decreases from 75% in period 17 to 20% in period 20. Starting period 18, the company must have a revenue reduction of at least 10%.

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

Canada Emergency Rent Subsidy (CERS)

This program has been extended to September 2021 (CEWS period 20). You are eligible if you rent or own a commercial property. The subsidy is based on the % revenue decline. The maximum subsidy of 65% reduces over time to 20%. Payments are made directly to the company.

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

Canada Emergency Business Account (CEBA)

This program closed June 30, 2021. The original program provided $40,000 of emergency funding to assist business impacted by COVID-19. 25% of this loan is forgivable if repaid before December 31, 2022. The program was expanded to provide an additional $20,000 (ie. up to $60,000), with an additional $10,000 being forgivable if repaid before December 31, 2022.

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

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 sometimes have a lower tax rate.
 
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 up to $6,400 per year).
A salary reduces the company’s income tax instalments, as a salary is an expense deductible by the company.
A salary reduces personal income tax instalments, as tax deductions are remitted monthly.

 

Corporate Tax (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

When CRA audits a business, they have the right to request business and personal bank statements going back several years.
They will also disallow 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

Medical Expenses

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 (including drugs, dental, glasses, therapy). This process turns a personal medical expense into a company expense. You pay the expense and submit a claim online. The funds are withdrawn from the company and deposited into your personal bank account.

Conditions:

  • You own a corporation
  • You receive a salary from your corporation
  • Your family medical expenses are usually over $1,000 per year
  • You or your spouse 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.