The pandemic has wreaked havoc on small businesses, leaving many of you to look for financial support. Here, you’ll find more information about government aid programs, so you can get the help you need.
Important Financial Support Programs
To help pay for wages
To help pay for fixed costs
To help with income support
OTHER SOURCES OF FUNDING
Frequently Asked Questions
Can I still apply to amend my CEWS application for Periods 1-5?
No. As of February 1st it is no longer possible to submit a new CEWS application for Periods 1 to 5 nor can you amend one to increase a previous amount.
CFIB is asking that government show some flexibility around this deadline.
There are no deadlines if you are returning money to the CRA. If you need additional CRA information or assistance, please contact the CRA Business Enquiries Line directly at 1-800-959-5525.
When will we know how CERS and CEWS will work from March to June?
On March 3, 2021, it was announced that the CEWS rate would remain at 75% between March 14 and June 5, 202021 (periods 14-16). It was also announced that the CERS rate would remain at 65% for the same period (periods 7-9).
Will the programs be extended beyond June?
We do not know. We are recommending support programs remain in place for as long as there are restrictions on businesses, and longer for those particularly hard hit as they may need additional support – preferably until the end of the year.
What will the baseline revenue drop comparison be for my CEWS/CERS application come March (CEWS period 14/CERS period 7)?
On March 3, 2021, it was announced that businesses will be able to use their 2019 numbers in their revenue reduction calculation for period 14 of CEWS and period 7 of CERS (March 14, 2021) onwards.
Will Government be deferring any taxes in 2021?
No taxes have been deferred at this point. All taxes are still due at the prescribed times. CFIB is pushing for some tax deferrals and/or leniency around tax deadlines.
How are the different COVID-19 relief programs treated for tax purposes?
CEBA & RRRF - only the forgivable portion of the loan is taxable, and it is taxable in the year that CEBA/RRRF or the CEBA/RRRF expansion loan is received. The rest of the loan you received through CEBA/RRRF is considered a repayable loan and does not need to be included in your revenue.
If you must repay the forgivable portion of the CEBA/RRRF loan in a subsequent taxation year, you will be able to claim a deduction when calculating your income for that subsequent year (i.e., the year you repay the forgivable portion).
You can claim the deduction even if you had previously filed to reduce the income inclusion in the year that you received the CEBA/RRRF loan (because you would have also forgone claiming expenses that you would have otherwise been able to deduct).
CEWS and CERS – must be included immediately before the end of the qualifying period to which they relate, not when the funds are received. This means that a subsidy received for the 4 weeks ending October 24, 2020 is included as income on October 24, 2020, even if you have not yet received the subsidy from government.
Provincial Grants for example, the Ontario Small Business Support Grant – must be included up front and are taxable income when received (hits the account) and should be reported on the corporation’s tax return as a grant/subsidy.
TWS – must be reported using the PD27 form.
Should you have any questions or concerns, please consult your accountant for any tax advice.
Can I elect not to include the forgivable portion of CEBA in my business income in the year in which it was received?
In general terms, if the forgivable portion of a CEBA loan is included in income when received, but is subsequently repaid pursuant to a legal obligation to repay the amount, a deduction may be claimed in the year in which the repayment of the forgivable portion is made.
If a business does not want to claim the forgivable portion of the loan as income, they can instead elect to reduce the amount of expenses they claim when filing their taxes for the year in which the forgivable portion was received.
The principal amount of the CEBA loan in this example is $60,000 and the taxpayer included the forgivable portion of the CEBA loan of $20,000, in their income in the year ending December 31, 2020. The taxation year of the taxpayer is December 31st. The taxpayer makes no repayment of the CEBA loan on or before December 31, 2022 and repays the entire CEBA loan of $60,000 on December 31, 2025. The taxpayer is entitled to a deduction of the forgivable portion of the CEBA loan that was previously included in income. In this example, the repayment of the full principal amount of the CEBA loan is made on December 31, 2025. Therefore, a deduction of $20,000 is available to the taxpayer in the 2025 taxation year.
Should you have any questions or concerns, please consult your accountant for any tax advice.
How does CRA decide who to audit and what does an audit look at?
CRA uses a range of data to determine which tax returns are at a high-risk of non-compliance. Once a return is identified as high risk, CRA reviews information from various sources to determine whether an audit is required, for example:
- Tax-payer's filing
- Third-party information
- Facts on emerging and known areas of non-compliance
Due to COVID-19, CRA has adjusted their thresholds and will only audit those who have the highest risk of non-compliance.
The focus of an audit is determined by the risk issues identified when the file was selected for audit. The auditor will review various documents, which could include:
- Business records (e.g., ledgers, journals, invoices, receipts, contracts, bank statements)
- Personal records of the business owner (e.g., bank statements for personal accounts, mortgage documents, credit card statements)
- Personal or business records of other individuals/entities related to the business owner (e.g., spouse, family members, corporations, partnerships, trusts)
The CRA may also ask for input from the business’s accountant, bookkeeper, and/or employees about information that relates to the books, records, and what was reported in the tax returns.
The best way to prepare for an audit is to ensure proper documentation is maintained and made available to support the amounts reported on your tax returns.
Auditors will work to hold meetings virtually or by secure telephone channels to mitigate the risks associated with COVID-19. It is recommended that businesses sign up for the various CRA portals (My Business Account, My Account, Represent a Client) so they can securely and efficiently submit required documents electronically, and ensure a timely resolution of the audit.
Can an individual deduct home office expenses from both employment income (if they were required to work from home) and self-employment income?
Employees and self-employed persons must meet different conditions under the Income Tax Act to claim a deduction for home office expenses from their employment or business income. Since home office expenses can only be deducted from the income (employment or business) to which they relate, and not from any other income, the claims for an individual earning both employment income and business (self-employment) income must be made separately. In addition, if the individual is using the same workspace, they will need to allocate their work-space-in-the-home-expenses on a reasonable basis between employment and business use. Further, under the Income Tax Act, an individual is generally not allowed to deduct the same amount from both employment and business income. For example, an individual cannot deduct the total cost of office supplies purchased from both their employment and business income.
For information concerning home office expenses for self-employed persons, go to the Business-use-of-home expenses webpage.
What are my employee’s options for claiming work from home expenses?
There are three possible options:
1. The employee can claim $2 for every day they worked from home up to a maximum of $400 for the year on their taxes. There is no obligation for the employer to do anything when this option is chosen.
2. The employee may want to claim more as they incurred expenses exceeding $400. If they are only claiming amounts paid as a result of working from home, they can use the simplified form - T777S to file their claim. They will require their employer to provide them with a completed T2200S (Declaration of Conditions of Employment for working at home due to COVID-19) which only has 3 questions for you to answer confirming that they were required to work from home.
3. If the employee is claiming other employment expenses (e.g., motor vehicle) or parts of the home as expenses, they will have to use the long form process. For the employee that would be the Statement of Employment Expenses T777. As their employer, you would be required to provide them with the completed Declaration of Conditions of Employment T2200.
What is considered employment income?
As per the CRA, Employment income is the number that you would find in box 14 of an individual’s T4 Slip. This includes:
- Salary, wages (including pay in lieu of termination notice), tips or gratuities, bonuses, vacation pay, employment commissions, gross and insurable earnings of self-employed fishers, and all other remuneration (see Box 14 – Employment income for a detailed list) you paid to employees during the year
- Various taxable benefits or allowances
- Retiring allowances
- Deductions you withheld during the year
- Pension adjustment (PA) amounts for employees who accrued a benefit for the year under your registered pension plan (RPP) or deferred profit-sharing plan (DPSP)
What is CFIB advocating for?
What we have achieved
Thanks to our members’ feedback, we have successfully pushed for the government’s aid to be expanded and extended, especially CEWS, CERS and CEBA. Find out more about our many victories for small business.
What we’re pushing for
The federal financial supports have improved, but there are still many gaps in the relief they provide. Here’s what we’re still pushing government to do to provide more and better support.
CFIB members get one-on-one advice from our business counsellors, exclusive access to helpful webinars, weekly email updates, and a voice in the support measures we push for from the government.
CFIB members: Get in touch today.
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