To Our Clients

Throughout 2020, the Canadian Government has introduced several different COVID-19 Relief and Subsidy programs for eligible individuals and businesses. We understand that the reporting requirements for these loans and subsidies may have been unclear thus far. We would like to share some of the current updates and guidelines from CRA for a few of these programs.

Canada Business Emergency Account (CEBA)

The CEBA is a $40,000 interest-free loan to pay for immediate operating costs such as payroll, rent, utilities, insurance, property tax, or debt service. The application deadline for this loan is being extended to March 31st, 2021.

25% of this loan ($10,000) will be forgiven if the balance is repaid by December 31st, 2022. However, you are required to automatically include the 25% ($10,000) as income on the date that you received the loan. If it is later determined that you are ineligible for the forgiven portion, we will deduct it from your income during the year of 2022.

If you have received this loan or are planning on applying for it later, please ensure that you send us the CEBA loan agreement that you received or will receive from your financial institution.

The Government has proposed to provide an additional interest-free loan of up to $20,000. Further details, including launch date and the application process will be announced soon. For this specific loan, an attestation of the impact of COVID-19 on the business will be required to access the additional financing. 50% of this additional financing would be forgivable if the balance is repaid by December 31st, 2022.

WE ENCOURAGE ALL OF OUR CLIENTS TO FREQUENTLY CHECK THE CANADA.CA WEBSITE DIRECTLY FOR UPDATES.

Here is the link for current details: https://ceba-cuec.ca

10% Temporary Wage Subsidy (TWS)

The 10% temporary wage subsidy for employers was a three-month (March 18th – June 19th) measure that allowed eligible employers to reduce the amount of payroll deductions required to be remitted to the Canada Revenue Agency.

The subsidy is equal to 10% of the remuneration paid from March 18, 2020 to June 19, 2020, up to $1,375 for each eligible employee, and a maximum of $25,000 total per employer.

If you have utilized the TWS, you must report the total subsidy amount as income on your tax return in the same year you received the subsidy.

CRA has also requested that if you have utilized this subsidy, you are required to file a form PD27 by December 31st, 2020. Within the following weeks, we will be contacting you individually about this form if we are responsible for your payroll account, or if we issue your T4 slips and T4 summary for the year.

If you have claimed this subsidy without our notice and if we will be responsible for issuing your T4 slips and summary, please contact us immediately to ensure accurate filing.

WE ENCOURAGE ALL OF OUR CLIENTS TO FREQUENTLY CHECK THE CANADA.CA WEBSITE DIRECTLY FOR UPDATES.

Here is the link for current details: https://www.canada.ca/en/revenue-agency/services/subsidy/temporary-wage-subsidy.html

Canada Emergency Wage Subsidy (CEWS)

The CEWS is a subsidy provided to employers in cases where revenue has decreased by a certain percentage.

The amount is taxable and is to be included in income of the employer. The eligible remuneration paid to the employee will be a deductible expense for the employer.

This means that if you apply for the subsidy on a later date, you will still need to report the subsidy as income in the month that the subsidy relates to.

Example: if you apply for the period 1 CEWS subsidy (March 15 to April 11, 2020) in January of 2021, you will need to report the subsidy amount in the business’ income effective April 11, 2020.

If you have applied for the CEWS at later dates, please inform us when we complete your tax return to ensure accurate filing.

You may apply for Period 1 through 5 until January 31st, 2021. The applications for all other periods will be due 180 days after the end of the period.

This program has been extended until June of 2021.

WE ENCOURAGE ALL OUR CLIENTS TO FREQUENTLY CHECK THE CANADA.CA WEBSITE DIRECTLY FOR UPDATES.

Here is the link for current details: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html

T4 Slips

For the 2020 tax year, CRA is introducing additional reporting for the T4 slips. This will apply to ALL employers.

When providing your T4 information to us, please include the following amounts you paid to each of your employees during the following periods:

  1. March 15th, 2020 to May 9th, 2020
  2. May 10th, 2020 to July 4th, 2020
  3. July 5th, 2020 to August 29th, 2020
  4. August 30th, 2020 to September 26th, 2020

WE ENCOURAGE ALL OF OUR CLIENTS TO FREQUENTLY CHECK THE CANADA.CA WEBSITE DIRECTLY FOR UPDATES.

Here is the link for current details: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/completing-filing-information-returns/t4-information-employers/t4-slip.html

Canada Emergency Rent Subsidy (CERS)

Canadian businesses, non-profit organizations, or charities who have seen a drop in revenue due to the COVID-19 pandemic may be eligible for a subsidy to cover part of their commercial rent or property expenses, beginning September 27th 2020, until June 2021.

This subsidy will provide payments directly to qualifying renters and property owners, without requiring the participation of landlords.

If you are eligible for the base subsidy, you may also be eligible for lockdown support if your business location is significantly affected by a public health order for a week or more.

The application for each period will be due 180 days after the end of each period.

Please note that this subsidy only applies for a commercial property.

WE ENCOURAGE ALL OF OUR CLIENTS TO FREQUENTLY CHECK CANADA.CA WEBSITE DIRECTLY FOR UPDATES.

Here is the link for current details: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-rent-subsidy.html

Questions?

We will do our best to communicate on a continual basis in response to changing scenarios in order to keep our clients informed. We thank you for your trust and understanding.

Stay safe and healthy everyone,
Your JP Accounting & Tax Services Inc. Team