Econom ic St im ulus & Ta x Pla nning - MOVING 2021 TOWARDS POSITIVE CASH FLOW - Strata-G
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Eco n o m ic S t im u lu s & Ta x P la n n in g
MOVING 2021 TOWARDS POSITIVE CASH FLOW
Go ve rn m e n t
In ce n t ive s
Goo g le : Ca n a d a ’s COVID- 19 Econ om ic Re s p on s e P la n
URL: ca n a d a .ca /e n /d e p a rt m e n t - fin a n ce /e co n o m ic- re s p on s e - p la n .h t m l
URL: ca n a d a .ca /e n /d e p a rt m e n t - fin a n ce /e co n o m ic- re s p on s e - p la n .h t m l
Announced Changes:
01 • Subsidy is extended to June 2021
• Deadline to apply is January 31, 2021 or 180 days after the end of the claim
period, whichever comes later
• The subsidy per employee is based on Revenue Drop, no longer are businesses
required to meet 30% minimum
• Employment of 14 days within subsidy period is lifted
• Period 8-13: Top-up rate based on 1-month, or 3-month
• Base revenue drop comparison month for period 11, is the same as Period 10
Subsidy Rates:
CANADA EMERGENCY
W AGE SUBSIDY 02 • Safe Harbour of 75% subsidy through period 6
• Commencing Period 5 (July 5-Aug 1), top-up rates were introduced to earn up
(CEW S ) to 85%, where revenue drop > 50%
• For Periods 8-10, rate is capped at 65%, Periods 11-13 rate increased to 75%
• Revenue drop of 70% or more: 75%
• Revenue drop of 50%-70%: 40%-75%
• Revenue drop of 1%-50%: 0.8%-40%
How to Apply:
03 1. Ensure you have access to CRA My Business Account, or Represent a
Client, or Web Forms Application
2. Ensure Direct Deposit is set-up (CRA or Bank)
3. Select period and correct CEWS Spreadsheet
4. Determine best base year comparison:
• Same month from 2019, or Jan-Feb 2020 Avg
• 3-month Top-up base, or 1-Month
CANADA EMERGENCY RENT SUBSIDY (CERS)
Where eligible entities have experienced a revenue drop due to COVID-19, a subsidy rate of up to
65% of commercial rent may be received.
With a top-up of 25% for entities forced to close due to lock-down. Subsidy to run through June 2021
W ho W he n How
Canadian businesses, non-profit A CERS application must be filed no Apply through My Business Account
organizations, or charities who had: later than 180 days after the end of a or Represent a Client
• A CRA # on September 27 or claim period. • Apply for CERS Number within your
• A Payroll Account on March 15 • Eligible expenses must be for CRA online Account
• Experienced any drop in revenue the claim period • Ensure Direct Deposit is setup
• Have eligible expenses up to • For expenses under a written • Ensure expenses are paid or will be
$75,000 per business location, per agreement in place before paid within 60 days of receipt of
period ($300,000 for affiliated October 9, 2020 subsidy
locations) • Application has questions for rent
• Rent to 3rd parties • Claim Periods: paid, as well as sections for
• For property owned: property tax, • First: Sept 27 – Oct 24 property owned (not all sections will
insurance & mortgage interest • Current: Dec 20 – Jan 16 apply)
Watch out for Non-arm’s Length and Related Party TransactionsCANADA EMERGENCY BUSINESS
ACCOUNT (CEBA)
CEBA provides interest-free, partially forgivable ($10,000 forgiven if remaining loan
repaid by Dec 31, 2022), loans of up to $40,000, to small businesses and not-for-profits,
that have experienced diminished revenues due to COVID-19 but face ongoing non-
deferrable costs (agreements in place before March 1, 2020), such as rent, utilities,
insurance, taxes and wages.
• CEBA expanded for an additional $20,000 interest–free loan, with 50% forgiven (up to
$60,000 interest free and $20,000 forgiven)
Application Requirements
• Applicants now have until March 31, 2021 to apply (apply online with Bank)
• 2019 payroll between $20,000 and $1,500,000, or
• Non-deferrable Expenses of $40,000 - $1,500,000
• Rent, Property Tax, Utilities, Insurance (support to be provided with application)
• Offset expense by other COVID-19 stimulus received. Is CEBA more beneficial?
• Filed a 2019, or 2018 tax return
• Forgiven portion should be included in 2020 tax returnCa n a d a Re cove ry Be n e fit (CRB)
Support for Self-Employed Individuals:
The CRB gives support to employed and self-employed individuals who are directly affected by COVID-19
and are not entitled to Employment Insurance (EI) benefits. The CRB is administered by the CRA.
If you are eligible for the CRB, you can receive $1,000 ($900 after taxes withheld) for a 2-week period.
If your situation continues past 2 weeks, you will need to apply again. You may apply up to a total of 13
eligibility periods (26 weeks) between September 27, 2020 and September 25, 2021.
Eligibility:
• During claim period you were not employed, or self-employed, or weekly income dropped 50% from
the same period in 2019
• You did not apply for, or receive, EI or other Canada Recovery benefits (Sickness, Cargiving)
• You were not eligible for EI
• You reside in Canada (Travelling internationally may make you ineligible for CRB)
• You have a social insurance number, are at least 15 and earned at least $5000 in 2019 or 2020
• You did not quit your job voluntarily on or after September 27, unless it was reasonable to do so
• You are seeking working either as employee or self-employed and can earn up to $38,000 while on
CRB
How to Applly:
• Ensure you have access to My Account with the CRA and setup direct deposit
• Apply on the first Monday after the 2-week period you are applying for has ended
• Apply through My Account, or by calling 1-800-959-2019, or 1-800-959-2041
• Period 5 is earliest period open for application (November 22 to December 5)Bla ck En t re p re n e urs h ip P rog ra m (BEP )
National Ecosystem Fund: The Ecosystem Fund will award funding to regional and national not-for-profit
Black-led organizations across Canada.
• It will allow not-for-profit Black-led organizations to develop new services or expand those they
already offer such as mentorship, networking, financial planning, and business training for Black
entrepreneurs.
• Program is currently closed (Filing Deadline December 21, 2020)
• New Application periods may open
• http://www.ic.gc.ca/eic/site/150.nsf/eng/00003.html
BEP Loan Fund: Will provide for-profit owners and entrepreneurs with loans between $25,000 and $250,000
• This program has not opened at this time, more details to come.Cash-Flow Generators
01 • Increase Tax Loss for carryback and refund of PY Tax
• Allowance for specified uncollectible receivables
• Inventory with declined value, write-down to FMV
• Base 2021 Tax instalments on 2020 profitability
• File tax return ASAP for refundable tax credits (SR&ED, Co-op students)
• Consider stock-based compensation to attract talent without salary
commitment
Employees Working From Home: $400 or T2200
02 • For employees that had to work from home at least 50% of the time for 4
consecutive weeks, they can claim a deduction on their tax return for $2
TAX P LANNING
for each day that hey worked from home during that period, and any other
day they worked from home in 2020, up to $400 with no T2200
• If home office expenses are greater than $400, a T2200 (new simplified
form) will be required to be signed by employer
• Form T777 needs to be completed in both situations
Loss Utilization (multiple entities)
03 • Consider reasonable management fees
• Opportunity to transfer assets and sell or lease back.
• Is there an opportunity to amalgamate
• Loss utilization plan: using a daylight bank loan to subscribe for preferred
shares. Interest income to LossCo, corresponding dividend back to
ProfitCo. Transfers loss to profitable entity.CONTACT Ge t in t o u ch w it h u s & s e n d u s a m e s s a ge t o d a y! We believe that every great business relationship starts with a conversation. Contact us to start the discussion around your accounting, tax and payroll needs. Em a il: ncoburn@strata-g-tax.com Te le p h o n e : +1 (833) STRATA-G (787 2824) Website: www.strata-g-tax.com
Dis cla im e r
The information contained herein is of general nature and is not intended to address the circumstances of any
particular individual or entity. This article expresses the opinion, experience and expertise of staff at Strata-G Tax
Professional Corporation (“Strata-G”).
Although we endeavor to provide accurate, timely and value-add information in all we do, there can be no guarantee
that such information is accurate as of the date it is received or that it will continue to be accurate in the future. At
Strata-G we would be pleased to tailor the facts presented in this document to your specific entity needs to ensure the
advice received is appropriate to your particular situation.You can also read
