Now 90+ days into the government programs underway to aid businesses navigate Covid-19, some updates and a few heads-up.
Whether a corporation or a proprietorship, if the business has a payroll the government has announced the Canada Emergency Wage Subsidy (CEWS) and Temporary Wage Subsidy (TWS) programs have been extended another 2.5 months, ending now on Aug. 29.
As a side note, if you are a proprietor and as such not on “payroll”, there is the Canada Emergency Response Benefit (CERB). New to CERB eligibility, it now allows for up to $1,000 of earnings in a claim period.
Back to the wage subsidies, apparently the application process for these programs has not been smooth.
Confusion is occurring in several ways.
If a business qualifies for the CEWS, both the 75 per cent CEWS and the 10 per cent TWS have to be calculated. Some businesses are only calculating the 75 per cent CEWS and then making the application, but it’s incomplete and therefore rejected.
Those businesses that do follow the instruction to calculate both the CEWS and TWS, some of them immediately make subsidy claims based on the total of these two gross calculations, again an error in the application and it is rejected.
There is a required second step in the wage subsidy calculations before application.
The TWS must be subtracted from the CEWS. Then application is made for both eligible subsidies separately.
By the way, the government is making it abundantly clear that businesses must retain records proving their calculations for the subsidies. It may be safe to assume that 2021 will be a busy year for reviews.
While on the topic of businesses with payrolls, the $40,000 Canada Emergency Business Account (CEBA) program has had a revamp. The eligibility criterion requiring a business to have had a minimum payroll of $25,000 in 2019 is now reduced to $20,000, and there are discussions to lower this further.
Regarding government filings for businesses, there has been an array of announced deferrals of due dates for filing reports and also due dates for payments, but not all have been deferred.
In particular, anything to do with payroll reporting and payments has not been deferred. At the same time, GST and PST have allowable deferrals.
GST reporting periods that have a payment due date anytime in March right up to June 30, can defer payment as late as June 30.
The GST Report itself should be filed on its scheduled due date but the government has stated that a late filed GST report will not be subject to penalty as long as payment is made by June 30.
PST reporting periods that have a payment due date anytime in March right up to Sept. 30, can defer both the filing of the report and payment to Sept. 30.
For the filing of tax returns, corporations with a T2 Tax Return filing due date after March 18 and before June 1, have to file the T2 Tax Return no later than June 1.
Tax due has to be paid by Aug. 31.
Filing by June 1 will qualify the corporation for interest fee deferment of taxes payable. To be clear, the T2 Tax Return must be filed by June 1 and tax paid by Aug. 31 to avoid interest charges and possible late filing penalty.
Proprietors have until the usual date of June 15 to file their T1 Tax Return. The payment of tax is deferred to Aug. 31.
Filing by June 15 will qualify the proprietor for interest free deferment of taxes payable. Again to be clear, the T1 Tax Return must be filed by June 15 and tax paid by Aug. 31 to avoid interest charges and possible late filing penalty.
As a footnote to the proprietorship June 15 filing due date, do not confuse this date with the regular T1 Tax Return filer’s due date just around the corner on June 1.
Finally, the government has stated that anything paper filed will be delayed in its processing, and may in fact sit idle until after Covid-19.
If not already in place, set up electronic communications, transfers and deposits with the government.
For enquiries, the COVID-19 programs are reached at 833 966 2099 and for business issues, contact 800 959 5525.
Ron Clarke has his MBA and is a Trail business owner, providing accounting and tax services