These days, being a service provider of business accounting and tax prep, as well as personal tax prep, there is no shortage of questions. Here are some answers as of “press time”, so as a disclaimer – in this fluid situation we’re living in, things will likely change, and may have already changed.
Federally, the 75% wage subsidy is now an all inclusive program for the employees of Canadian Corporations and registered not-for-profits. The government is supporting the unincorporated proprietor under a separate program.
Three up front facts at this time about the Wage Subsidy Program. First, it’s a 90 day program with the eligible time frame being those periods when remuneration is paid to employees between March 15 and June 20. Second, no maximum subsidy benefit to an employer has been announced. Third, any subsidy received will be taxable income to the business at the end of the day.
The way the Wage Subsidy Program works. The process is self administered by the business, and to qualify there must be proof that revenue dropped by at least 30% during any period a subsidy is calculated.
Calculating the subsidy is based on 75% of each employee’s weekly gross pay, up to a maximum of $847/w per employee, including the owner if on payroll. Totaling all employees’ subsidies arrives at the eligible subsidy amount the business can claim for that month.
Claiming the subsidy is completed when paying source deductions for the month by subtracting the subsidy from the “tax withheld” amount. CPP and EI remittance amounts remain untouched. And if the subsidy exceeds the “tax withheld” amount, that balance is carried forward and claimed against future Source Deduction Remittances, including months after the end of the program in June.
For proprietors and individuals – by “tax code” definition, a proprietor is an individual – there is the Canada Emergency Response Benefit (CERB). This benefit replaces two previously announced benefit programs. Application for CERB will be on-line and by phone April 6. The start date is at your choosing but the benefit payments will end October 3.
CERB is a $2,000/m flat rate federal government taxable benefit paid for up to four months for those not eligible for EI. These are people who are wage earners, contract workers and self employed proprietors, and have lost their job or still have their job but are experiencing disrupted work, or these are people who are sick, quarantined or who are taking care of someone who is sick, or working parents having to stay home to care for kids. The only qualification for CERB is that the person must have earned $5,000 or received $5,000 maternity or parental EI in the 12 months prior to application.
If one of the above noted situations still exists at the end of the four month CERB benefit period, application can be made to EI.
CERB is not available to those who currently qualify for EI, however those currently on EI will have their case evaluated automatically and may be shifted to the CERB benefit if they qualify. Then after the CERB benefit terminates, application to EI will be possible.
As a top up to this federal CERB benefit and all other federal emergency programs including those qualifying for EI, the BC government is offering a onetime $1,000 tax free benefit to be paid in May, with application open in early April.
Other measures include top ups of $300/m per child to the Canada Child Benefit, at least $400 to the GST rebate, and at least $200 to the BC Climate Action tax credit.
Tax payment deferrals to August 31 for businesses and individuals are now in place. However, be mindful of your choice whether or not to delay filing your tax return since the government has stated to “file by June 1 to make sure your benefits and credits are not interrupted.”
Besides, if there’s a refund owing to you, why not file now?
Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca.