The Wage Subsidy plan is taking shape. Those businesses that have some business trickling in should consider this subsidy and re-hire/keep some or all the employees they laid off. Here is why
The most important updates to this subsidy (which is not legislated yet) are:
For the first eligibility period March 15 to April 11 2020 you have to prove a minimum of 15% sales decrease compared to last March.
Employer Contributions (CPP and EI) are being considered to be included in the subsidy
For example:
Employer Adele has a corporation which is a monthly source deduction remitter. Adele has worked with her accountant to review the corporation’s budget and cash flow in the next 3 months. After careful analysis, Adele has decided to rehire Ernest. The corporation still has projects to complete. Also, Ernest is a valuable employee and Adele wants to make sure that she can count on him when things bounce back. Ernest earned $1,000 a week (gross salary) prior to the pandemic. Also it’s been determined that the business can pay the 25% of Ernest’s payroll which is not being subsidized by the government.
On Ernest’s side his paycheque stays essentially the same. He receives gross income minus deductions (income tax, CPP and EI = $221) . At the basic tax level, he is posed to get $779/wk
On Adele’s side the corporation will issue Ernest’s cheque as usual for the $779/wk. When the portal is open within the CRA Business Account she or her accountant will apply for the CEWS. The corporation will then receive a direct deposit of $821.09/wk made out of the $750 (the lesser of $847/week or 75% gross payroll subsidy) plus the employer’s contributions to CPP and EI worth $71.09. When source deductions come due the next 15th of the month (monthly remitter) the corporation will need to send $221/wk (what was deducted from Ernest’s cheque) The corporation nets cash flow out for payroll of $178.91/wk to have Ernest work on what he can (or not) while business bounces back.
*** Math ($821.09 subsidy minus $779 paycheque minus 221 source deduction remittance) Full updates to the CEWS in our website under Free Resources
Canada Emergency Business Account (CEBA)
The loan applications are up and running in most banks- The application is pretty straightforward. You need to provide your 2019 payroll summary to prove that your payroll expense is between $50K and $1M. If your business is approved, you will receive the direct deposit within 5-10 business days into your business bank account. No follow-ups or further information is being provided by the banks or account managers while the application process is taking place.
Should your business qualify for this loan, you should consider applying for this loan. If you do not need it, you would return the funds before incurring any penalties and done. Full updates to the CEBA in our website under Canada Emergency Business Account (CEBA).
Say NO to being misinformed….
I got an email asking me if it is true that the GST HST dues have been “forgiven”. That has NOT happened. Benefits are also NOT being offered over text messages…. Here is the deal….
GST/HST Returns: Filing Due Dates are staying the same. If you are a quarterly remitter (January to March) you are still required to file by April 30th 2020. Payments have been deferred interest free until June 30, 2020.
Payroll Source Deductions: These due dates have NOT changed at all. If you are a monthly remitter, the due date is the 15th of the following month. If you are a quarterly remitter, the due date is 15th of the month following the quarter.
For more deadlines please see the full list here Deadlines with CRA Updates
This may be a good time to file your personal taxes. Refunds will be processed faster as most Canadians are focusing on the Emergency Benefits. Plus the government is better able to calculate all the other benefits you and your family may qualify for.
As usual if you need any help sorting through any of the above, make sure you book time with me!