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  • Writer's pictureFort Group CPA

COVID-19 Tax Update including Wage Subsidy and CERB

Effective today, Fort Group remains open as an essential business under Section 67 of The Public Health Act. In complying with the new orders, we will be restricting in-person meetings unless necessary and abiding by the two metre guidelines for required meetings as well as drop offs. We will also be quarantining documents being dropped off so there may be delays in the preparation of your personal tax return.


Over the past week, the Federal Government has announced a number of measures aimed at aiding individuals and businesses affected by COVID-19. We are still waiting on details and legislation to be passed on a number of these measures.


Currently, here is an update based upon our understanding on some of the programs most relevant to our clients:


75% Wage Subsidy Program


On Monday, March 30, 2020, the Government of Canada announced further adjustments to the 75% wage subsidy program (but without specific details of implementation). The announcement was only a high-level description of the subsidy.


Finance Minister Bill Morneau was expected to deliver the details by yesterday, however this has been delayed. It is our understanding that the Government intends to provide further information as soon as possible.


What we currently know about the 75% wage subsidy:

  1. The government will subsidize up to 75 percent of employee wages for eligible employers, backdated to March 15, 2020.

  2. An eligible employer is any business whose revenue has decreased by 30 percent or more due to the pandemic. This definition includes businesses of all sizes, as well as non-profit organizations and charities.

  3. The 75 percent subsidy will apply to the first $58,700 of salary per employee, resulting in a maximum subsidy of $847 per employee per week.

What we still need to know about the 75% wage subsidy:

  1. Which types of employers qualify for the subsidy (i.e. corporations, individuals and partnerships)?

  2. How will the 30 percent decline in revenue be measured? (i.e. over what time period)?

  3. Does the subsidy apply to employees who are also shareholders of a company in the case of a family business?

  4. How do the existing programs (including the Work-Sharing Program and the Canadian Emergency Relief Benefit (CERB)) interface with the wage subsidy program to provide benefits and support to employees, including seasonal, contract and commission-based workers?

We will be able to provide insight as to how these announcements will impact you when further details are released (within 24 – 48 hours). We also plan to provide you with a calculator for the 75% subsidy once released.


10% Wage Subsidy Program


Please note that the 10% wage subsidy has received royal assent, and our understanding is that it will still apply for organizations not qualifying for the 75% wage subsidy. We have updated our calculator for the finalized legislation. If you would like access to our wage calculator, please contact your advisor for this tool and to approve the calculation before reducing your source deduction payment.


Canadian Emergency Response Benefit (CERB)


CERB offers a monthly $2,000 payment for a period of up to 16 weeks for those who wouldn't otherwise be eligible for Employment Insurance.


Any Canadian who has ceased working for a 14-day period due to COVID-19 is eligible. That includes wage earners, contract workers, or self-employed individuals; those who've had to stay home without pay to self-isolate or care for loved ones; and anyone else who hasn't been permanently laid off but has stopped receiving pay cheques.


The CERB application portal is slated to open on April 6, while those who are eligible for EI can currently apply on the Government of Canada website: Canadian Emergency Response Benefit


Canada Emergency Business Account ($40,000 loan)


Limited details have been provided on how to apply. We have been provided with the following information from our financial institution, CIBC late yesterday. We would recommend reaching out to your bank to confirm if their terms are the same.


What is it?

  1. $40,000 interest free, government-guaranteed loan to help pay operating costs that you are not able to defer as a result of COVID-19.

  2. $10,000 (25%) of the $40,000 loan is eligible for complete forgiveness if $30,000 is repaid by December 31, 2022.

  3. If the loan is not repaid by December 31, 2022, it can be converted to a 3 year term loan with interest at 5%.

Who is eligible? Businesses or not-for-profits will be eligible if they have:

  1. An operating company in Canada.

  2. Annual payroll of between $20,000 and $1,500,000.

  3. CIBC is their primary bank (i.e. operating account open on or before March 1, 2020).

When is it available?

  1. Applications will be accepted beginning the week of April 6.

  2. More details to come. Please talk to your bank so steps can be taken to get your business ready.

Tax Filing and Payment Deferrals


Individuals

  • Filing - June 1, 2020

  • Payment - September 1, 2020

Self Employed

  • Filing - June 15, 2020

  • Payment - September 1, 2020

Corporations

  • Filing - June 1, 2020 (applies for normal filing due date that land between March 18 and June 1, 2020)

  • Payment - September 1, 2020 (applies to balances that become due between March 18 and June 1, 2020)

Trusts

  • Filing - May 1, 2020 (for December trusts)

  • Payment - September 1, 2020 (for December trusts)

Charities

  • Filing - T3010's - December 31, 2020 (for T3010 forms due between March 18 December 31)

  • Payment - Not applicable

Payroll

  • Payment - Unchanged

Partnership Returns

  • Filing - May 1, 2020

U.S. Tax Returns

  • Filing - July 15, 2020

  • Payment - July 15, 2020

GST/HST

  • Filing - Unchanged

  • Payment - June 30, 2020 (The payment extension of June 30 will apply to GST/HST remittances for the February, March and April 2020 reporting periods for monthly filers, the January 1, 2020 through March 31, 2020 reporting period for quarterly filers and for annual filers, the amounts collected and owing for their previous fiscal year and installments of GST/HST in respect to the filer's fiscal year)

Manitoba PST

  • Filing - Unchanged

  • Payment - June 22, 2020 (Businesses with monthly remittances of no more than $10,000 per month that would normally be due on April 20th and May 20th will now be due June 22, 2020)

Manitoba Provinicial payroll tax remittances (The Health and Post-Secondary Education Tax Levy - HE Levy)

  • Filing - Unchanged

  • Payment - June 15, 2020 (Businesses with monthly remittances of no more than $10,000 per month that would normally be due on April 15th and May 15th will now be due on June 15, 2020)

As always, please contact us if you have any questions.

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