Help for Small Businesses
Small businesses are the backbone of our economy but they continue to face economic challenges and uncertainty during the COVID-19 pandemic. The Deputy Prime Minister and Minister of Finance announced that the application deadline for the Canada Emergency Business Account (CEBA) is extended from August 31 to
October 31, 2020.
The government is working closely with financial institutions to make the CEBA program available to those with qualifying payroll or non-deferrable expenses that have so far been unable to apply due to not operating from a business banking account. Further details on these changes will be released in coming days, including a new business account opening process through which qualifying businesses will be able to apply.
The Deputy Prime Minister is also announcing that the Business Credit Availability Program (BCAP) is extended to June 2021. Through BCAP, the government is supporting the flow of additional credit that businesses need to maintain operations and keep employees on the payroll. Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) will continue to work with lenders to support access to capital for Canadian businesses of all sizes in all sectors and regions.
CEBA and BCAP are both part of the Government of Canada’s COVID-19 Economic Response Plan, which is helping Canadians and businesses deal with the economic impact of the ongoing pandemic. The measures under this plan are helping businesses protect the jobs that Canadians depend on, keep their doors open, and bounce back as the economy gradually recovers
August 26, 2020
New T4 Requirements for 2020
There will be four new boxes required on the 2020 T4 slip, to report remuneration paid to employees in four different periods. If the dates look familiar, they should - the first three periods are 8 weeks long, and each cover two CEWS periods, and the last is four weeks long, and covers the seventh CEWS period. But CRA says to report the income for the period in which it was paid, not the period in which it was earned. And guess what? Those are also the CERB periods, and CERB will not have an eighth, ninth or tenth period. CRA notes that "Additional reporting requirements will apply to all employers, and will help the CRA validate payments under the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Response Benefit (CERB), and the Canada Emergency Student Benefit (CESB)." It seems like it will be more useful for CERB and CESB than for CEWS, as a thought.
Also, more time will be needed to prepare these slips this year.
New T4 reporting requirements
For the 2020 tax year, the Canada Revenue Agency (CRA) will be introducing additional reporting for the T4 slip, Statement of Remuneration Paid.
Additional reporting requirements will apply to all employers, and will help the CRA validate payments under the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Response Benefit (CERB), and the Canada Emergency Student Benefit (CESB).
How to report employment income during COVID-19 pay periods
For the tax year 2020, in addition to reporting employment income in Box 14 or Code 71, use new other information codes when reporting employment income and retroactive payments for the following periods:
Code 57: Employment income – March 15 to May 9
Code 58: Employment income – May 10 to July 4
Code 59: Employment income – July 5 to August 29
Code 60: Employment income – August 30 to September 26
Eligibility criteria for the CERB, CEWS, and CESB is based on employment income for a defined period. The new requirement means employers should report income and any retroactive payments made during these periods.
If you are reporting employment income for the period of April 25 to May 8, payable on May 14, use code 58.
August 20, 2020
Period 5 and 6 CEWS Claims and then Period 7 to 9 (More Changes)
The rules for calculating the subsidy changed after Period 4 from an “all or nothing” system dependent on a 30% decline in revenue “original system”, to a scaling system (comprised of a top-up subsidy and base subsidy) available from the first dollar of revenue decline “new system”. Periods 5 and 6 are transitional, providing the higher of the claims under the two systems.
Important: The rules for calculating specific subsidies and eligibility are very complex and dynamic. Please contact me as professional assistance should be sought in making these go forward claims.
More Government Announcements August 20, 2020
First Step – CERB Extension
The CERB was originally limited to four periods of four weeks each, then extended to six such periods. In order to bridge the gap until the new benefits announced today, CERB will be available for seven periods. This will allow Canadians who have been receiving CERB since it commenced in March, 2020 to retain access until the end of CERB on September 26.
Second Step – Simplify the EI Program
Commencing September 27, 2020, the EI rules will be revised for a period of one year to facilitate access, and enhance benefits, under the EI program. These revisions will apply uniformly across Canada. These changes will effectively:
Reduce required insurable hours to 120 hours in the 52 weeks prior to EI application. For example, assume an individual lost their job in early March, 2020 due to COVID-19. They then collected CERB for all seven periods, to September 26, 2020. They would look back to September 29, 2019 for insurable hours to determine whether they are eligible for EI when CERB ends on September 26, and would require 120 insurable hours (3 weeks at 40 hours per week, less than four weeks at 35 hours a week, or 10 hours a week for 12 weeks). Under the normal rules, the minimum hours required range from 420 to 700. Special rules will also facilitate EI eligibility for individuals transitioning from CERB to EI special benefits (maternity, parental, compassionate care, family caregiver and sickness).
Increase minimum weekly benefits to $400. Normally, the weekly benefit is 55% of average weekly earnings for a period between 14 and 22 weeks, to a maximum weekly benefit of $573. If the normal rules would result in a higher benefit, that higher benefit will be paid. Due to the minimum unemployment rate being set at 13.1% across Canada, as announced on August 10, 2020, the best 14 weeks will apply to all claims under the normal rules. Individuals receiving extended parental benefits will receive a minimum of $240 per week, as these benefits are 60% of normal benefits to offset the additional weeks for which benefits are received.
Increase minimum weeks eligible for EI to 26 weeks (that is, about six months). Under the normal rules, EI is available for 14 to 45 weeks. If the normal rules would result in access to more weeks of benefits, benefits will be available over that longer period.
The usual rules for working while on claim will apply, meaning that the worker can earn income while receiving benefits, with their EI benefits reduced by 50 cents for every dollar of other earnings, up to 90% of their prior earnings.
Third Step – New Benefit Programs
For the same one-year period commencing September 27, 2020, three new benefits will be implemented to extend benefits to individuals who would otherwise be ineligible for EI under the normal rules, as follows:
The Canada Recovery Benefit will be available to self-employed individuals and other workers who are not eligible for EI but still require support due to an inability to return to work. This will be a benefit of $400 per week for up to 26 weeks. Eligibility criteria will be similar to CERB – the individual ceased working, or has had their income reduced, due to COVID-19. However, they must be available and looking for work. They may continue to earn income while receiving benefits. However, they will be subject to a clawback of 50% of net income, up to the total benefit received in the calendar year. The Canada Recovery Benefit will be excluded from net income for this purpose, but all other forms of income will count, including CERB, CESB and investment income.
The Canada Recovery Sickness Benefit will be paid to workers who are ill or must self-isolate for reasons related to COVID-19. This was noted as meeting the government’s Safe Restart Agreement commitment to make every Canadian worker eligible for at least ten days of paid sick leave. It will provide $500 per week for up to two weeks for individuals who cannot work due to illness or self-isolation related to COVID-19. It is not available in combination with other paid sick leave or benefits. Eligibility conditions will be similar to CERB, including the requirement for $5,000 of earned income in 2019, or the twelve months prior to claim.
The Canada Recovery Care-giving Benefit will be paid to workers who are unable to work because they must care for a child under the age of 12, dependent or family member because schools, daycares or care facilities are closed due to COVID-19. It will provide $500 per week for up to 26 weeks per household. It can be shared, but only one member of the household may receive it at any one time. The benefit will not be available where the schools or care facilities have reopened. In the media briefing, government officials responded to a question and confirmed that, if medical advice indicates the person would be at risk (for example, they are immuno-compromised) by returning to school or daycare, the benefit would remain available.
All three benefits will be available for one year, commencing September 27, 2020, and will be administered by CRA. Applications will be required, and will be based on the applicant’s attestation that they qualify, subject to possible verification at a later date. The benefits will be paid in arrears, so the first relevant two week period will end on October 10, 2020. A web page will be established by mid-September. These benefits will be taxable, with source deductions withheld. Potential applicants were recommended to sign up to My Account, if they have not already done so.
August 19, 2020
The Canada Revenue Agency says its online services will be fully restored by Wednesday.
The system was shut down on the weekend after hackers used thousands of stolen usernames and passwords to obtain government services.
Officials say about 5,600 CRA accounts were targeted.
Hackers used what officials call “credential stuffing” schemes, where passwords and usernames from other websites were used to access CRA accounts.
The government says Canadians to use unique passwords for all online accounts. The RCMP is investigating the breaches. The suspension of CRA’s online services comes as many Canadians are using thr website to access financial support related to the COVID-19 pandemic.
Canadians can still apply for benefit programs by calling 1-800-959-8281.
August 12, 2020
COVID-19: One-time payment to persons with disabilities
The Government of Canada announced a one-time $600 payment in recognition of the extraordinary expenses faced by persons with disabilities during the COVID-19 pandemic.
You do not have to apply for the one-time payment, it will be automatically issued to:
holders of a valid Disability Tax Credit certificate, and
beneficiaries as at July 1, 2020 of:
Canada Pension Plan Disability
Quebec Pension Plan Disability Pension, or
one of the disability supports provided by Veterans Affairs Canada
If you are eligible but never applied for the Disability Tax Credit, or your certificate expired in 2019, you must do so by September 25, 2020.
Seniors with disabilities, who were eligible for the one-time seniors payment announced on May 12, 2020, will also be eligible for the one-time payment to persons with disabilities.
If you are eligible for both payments, you will receive a total amount of $600 broken into 2 payments:
if you received the $300 one-time seniors payment for the Old Age Security (OAS) pension, you will receive an additional $300
if you received the $500 one-time seniors payment for both the OAS pension and the Guaranteed Income Supplement (GIS) or the Allowance, you will receive an additional $100
They expect to issue the payments beginning this fall.
August 4, 2020
Extension of Normal Reassessment Period- from Aird Berlis Law Firm July 30, 2020
As discussed in our prior release, the Canada Revenue Agency (the “CRA”) can normally reassess a taxpayer within three years following the date of the original assessment for income tax, or four years following the date that the GST/HST return was filed. Once this period is over, the CRA is generally prevented from reassessing unless they can establish that, among other things, the taxpayer made a negligent misrepresentation or committed fraud.
The Time Limits Act gives the Minster of National Revenue the power to retroactively extend reassessment limitation periods, and certain other periods, that would have otherwise expired between March 13, 2020 and December 31, 2020. The Minister must make a public announcement prior to September 30, 2020 for an extension order to take effect. Extensions cannot exceed six months, and limitation periods cannot be extended beyond December 31, 2020.
Based on statements from senior CRA officials, we anticipate that the Minister of National Revenue will only order the extension of periods that ended on or after May 19, 2020, when the Time Limits Act was first proposed. Practically speaking, a limitation period that would otherwise have expired on May 19, 2020 may not become statute barred until November 20, 2020. The exact time frame will become clear once the Minister exercises her discretion under this legislation.
However, a limitation period that would have otherwise expired after June 30, 2020 can only be extended to December 31, 2020. The Time Limits Act cannot affect a limitation period that expires on or after January 1, 2021.
Appeal Timelines Extended
The Time Limits Act also permits taxpayers to take advantage of temporarily longer periods for appealing to the Tax Court of Canada and Federal Court of Appeal (“FCA”). Normally, after a taxpayer has objected to a reassessment, the taxpayer has 90 days to appeal a decision from the CRA’s Appeals Division to the Tax Court. Following a judgment of the Tax Court, the taxpayer has 30 days to appeal to the FCA.
The Time Limits Act suspends these appeal deadlines for the period between March 13, 2020 and September 13, 2020, effectively extending the time to appeal until September 14, 2020. While the federal cabinet retains the discretion to abridge the extension period, we anticipate that such discretion will not be exercised for appeals to the Tax Court and FCA.