Archive
Update: Work Space in the Home Expenses
Leave a CommentOn December 15, 2020, CRA published additional guidance with respect to claims for work space in the home expenses on the upcoming 2020 personal tax return. The guidance outlines details relating to the new temporary flat rate method, new optional detailed method, changes to the claims process, and new eligible expenses.
Temporary Flat Rate Method
The temporary flat rate method allows eligible individuals to claim a simplified expense of $2 per work day (up to $400) on their 2020 personal tax return. Work days include days that you worked full-time or part-time hours from home either due the requirement of your employer or voluntarily if your employer gave the option to work from home due to the pandemic. You must have worked from home more than 50% of the time for at least 4 consecutive weeks during the pandemic to be eligible.
You do not need to calculate the size of your workspace, keep supporting documents, or obtain a signed Form T2200S or Form T2200, from your employer to use this method.
The temporary flat rate method is not available if claims are being made for other employment expenses, such as vehicle expenses, or if your employer reimbursed all of your home office expenses. If your employer reimbursed some but not all home office expenses, you are still eligible to use this method.
Optional Detailed Method
The optional detailed method for home office expenses allows you to claim expenses you paid for the period you worked from home. Eligibility for the detailed method is similar to the flat rate method with the additional requirements that you obtain a completed signed Form T2200S, or Form T2200, from your employer and the expenses claimed are used directly in your work during the period.
The CRA has created a simplified Form T2200S and Form T777S as well as a new web calculator. The CRA has also stated that they will accept electronic signatures on Form T2200S, or Form T2200, for the 2020 tax year only.
The CRA has also published a list of home office expenses for employees and guidance on how to determine your work space use.
If you are expecting to make a claim on your 2020 personal tax return using the detailed method, you should reach out to your employer to ensure you get a signed T2200S. In addition, all supporting invoices should be kept to support the claim under the detailed method. To make a claim on your 2020 tax return, please complete Form T777S summarizing the home office expenses you incurred during the year.
If you would like our assistance in deciding which method is best for you please do not hesitate to contact us!
Working from home expenses
Leave a CommentAs a result of COVID-19, many people have found themselves working from home. You may be asking yourself what, if anything, can I deduct as an employment expense? The 2020 Fall Economic Statement announced that the Home Office Expense Deduction will be simplified due to millions of Canadians unexpectedly working from home because of COVID-19. CRA will allow employees working from home in 2020 due to COVID-19 with modest expenses to claim up to $400, based on the amount of time working from home, without the need to track detailed expenses.
In order for the expense to be deductible, your employer must have required you to pay it, and must not have reimbursed you for the cost. This year CRA will generally not request that employees provide a signed form from their employers, however it is highly recommended that you get in writing that you have been required to work from home and what expenses, if any, your employer has required you to pay. You may do this in an amended employment contract, by you and your employer completing a T2200 Declaration of Conditions of Employment or, at the very least, an email from your employer specifically outlining these conditions.
As an employee required to use space in your home for work, you can deduct the part of your costs that relates to your work space, such as the cost of electricity, water, heating and maintenance. If you are a commission sales person, you can deduct a portion of property taxes and home insurance. However, you cannot deduct mortgage interest or capital cost allowance on certain assets unless you are self employed. Also, if renting, a reasonable portion may be deducted.
Another important note on working from home during these times, is the cost of home office equipment. The employer may pay or reimburse up to $500 towards computer and office equipment required to work from home. Amounts above $500 will be considered a taxable benefit unless the employer maintains ownership. Therefore, it is important to discuss this with your employer prior to the purchase of these items.
If you would like our assistance in deciding whether your home workspace expenses are deductible please do not hesitate to contact us!
Continuing Changes to the Canada Emergency Wage Subsidy (CEWS)
Leave a CommentOn November 19, 2020, the passage of Bill C-9 brought several changes to the CEWS program, such as decreasing the wage subsidy rate to 65% and extending the subsidy program to June 2021.
As part of the 2020 Fall Economic Statement released by the Government of Canada on November 30, 2020, the maximum rate under the Canada Emergency Wage Subsidy (“CEWS”) is proposed to be increased to 75%. The new rate would be effective for the period beginning December 20, 2020 and would last until March 13, 2021. The wage subsidy available will still depend on the revenue decline for the business.
If you would like our assistance in applying for the CEWS, be sure to contact us!
Extended Support Through the Canada Emergency Rent Subsidy (CERS)
Leave a CommentUnder the Canada Emergency Rent Subsidy (CERS), rent relief is provided directly to tenants and supports businesses, charities, and non-profit organizations until June 2021.
The subsidy provides for a percentage of expenses on a sliding scale of up to 65% of eligible expenses, such as rent and interest on a commercial mortgage with an additional 25% top-up if the organization is temporarily shut down by way of a mandatory public health order.
The subsidy is based on revenue decline, the greater the decline in revenues the greater the amount of the subsidy. The maximum amount of the subsidy is $75,000 per location and an overall maximum of $300,000 per claim period for an affiliated group.
As part of the 2020 Fall Economic Statement released by the Government of Canada on November 30, 2020, the CERS is being extended at its current rate of 65% plus the 25% top-up for an additional three periods. Previously, the current rate was set to change after December 2020. The three additional periods extend from December 20, 2020 to March 13, 2021.
Application for the CERS is available through CRA My Business Account since November 23, 2020 and retroactive applications can be made for any previous period for up to 180 days after that period has ended.
For more information on this program, click here.
If you would like our assistance in applying for the CERS program, be sure to contact us!
Additional Funds Available through the Canada Emergency Business Account (CEBA)
Leave a CommentAs part of the 2020 Fall Economic Statement released by the Government of Canada on November 30, 2020, the maximum amount available under the Canada Emergency Business Account (CEBA) has been increased by an additional $20,000 per qualifying business.
Up to $10,000 of the additional $20,000 loan is forgivable if the loan is repaid by December 31, 2022. Therefore, qualifying businesses now have access to a total of $60,000 in interest-free loans with up to $20,000 being forgivable if the balance (i.e., $40,000) is paid back by December 31, 2022.
The government of Canada has also extended the deadline for applying for a CEBA loan to March 31, 2021. Applications are to be done at your financial institution. If you previously applied for the $40,000 CEBA loan and would like to benefit from the additional $20,000 CEBA loan, you will need to submit a new application and attestation to the financial institution that provided you with your original CEBA loan.
It is important to note that one of the conditions for the maximum loan forgiveness to be obtained is that the full amount of the loan must be drawn and used towards “Eligible non-deferrable Expenditures”. This is particularly important if the financial institution has setup CEBA as a line of credit and not advanced the full amount of the loan to the qualifying business. We advise that qualifying businesses who have obtained a CEBA loan verify that the full amount has been advanced by the financial institution before March 31, 2021.
In addition, it is imperative that you carefully read the details within the attestation of the loan application to ensure you meet the details outlined for eligibility.
For more details on frequently asked questions relating to the CEBA program, click here.
If you would like our assistance in applying for the expanded CEBA loan, be sure to contact us!
Canada United Small Business Relief Fund
Leave a CommentOn October 20, 2020, the Honourable Mary Ng, Minister of Small Business, Export Promotion and International Trade, announced an investment of $12 million in the Canada United Small Business Relief Fund.
Canada United is a national fundraising campaign created by the Royal Bank of Canada (RBC) in collaboration with private sector partners and provincial and territorial chambers of commerce, including the Ontario Chamber of Commerce (OCC).
Starting on October 26, 2020, small businesses can apply online through the Ontario Chamber of Commerce for grants of up to $5,000 to cover the costs of personal protective equipment, make physical modifications to their businesses to meet local health and safety requirements, and enhance their digital or e-commerce capabilities.
- have between $150,000 and $3 million in annual sales;
- have up to 75 employees;
- are registered in Canada; and
- would use the grant to cover the costs of personal protective equipment, make physical modifications to their businesses to meet local health and safety requirements, and enhance their digital or e-commerce capabilities.
Click here to read frequently asked questions.
If you have any questions about the Canada United Small Business Relief Fund, please be sure to contact us!
An update on Personal Real Estate Corporations (PREC)
Leave a CommentOn March 4, 2020 Bill 145 An Act to amend the Real Estate and Business Brokers Act, 2002 received Royal Assent in the Legislative Assembly of Ontario. The bill amended the Real Estate and Business Brokers Act, 2002, including a name change to the Act which is now known as the Trust in Real Estate Services Act, 2002, the “Act”.
On October 1, 2020 the first phase of the regulatory changes was approved. This phase allows real estate professionals to incorporate and be paid through a Personal Real Estate Corporation “PREC”. The PREC and its prescribed members are able to trade in real estate only to the extent of providing the services of its controlling individual to a brokerage without registering under the Act, subject to prescribed conditions.
Incorporation offers several benefits to real estate agents, such as the availability of a tax deferral, flexibility with remuneration, and greater options when it comes to estate and retirement planning.
The potential for a deferral of tax in a corporation is significant due to the difference in applicable tax rates. For real estate professionals in the top personal tax bracket for 2020 (53.53%) a deferral of over 40% is possible due to the 12.2% corporate tax rate on the first $500,000 of income in the corporation.
If you would like our assistance in deciding whether you would benefit from incorporating your real estate practice, be sure to contact us!
Canada Emergency Wage Subsidy Calculator
Leave a CommentOn August 11, 2020, the Honourable Diane Lebouthillier, Minister of National Revenue, launched an updated and improved Canada Emergency Wage Subsidy online calculator. This will help small and large employers prepare to apply for the next period of the CEWS program. The CRA opened applications for CEWS Period 5 on August 17, 2020. Enhancements to the program, which are being introduced in Period 5, will include expanding eligibility criteria, introducing a sliding revenue-decline test to determine the subsidy amount, and providing a top-up subsidy for the most impacted employers.
The CEWS calculator can be found here on the CRA’s Canada Emergency Wage Subsidy web page, which includes information to help employers understand how the CEWS can support their employees and operations, who is eligible to apply, and how claim periods are structured. Employers can enter information about their business situation to obtain an estimate of the subsidy they can expect to receive.
You can also click here to access a third party wage subsidy calculator.
If you have any questions about how the new Wage Subsidy or Top-Up Subsidy may impact you or your business, please be sure to contact us!
Enhancements to the Canada Emergency Wage Subsidy (CEWS) have been approved – does your business qualify under the CEWS new rules?
Leave a CommentOn July 27, 2020, Bill C-20, An Act respecting further COVID-19 measures, received Royal Assent. The Canada Emergency Wage Subsidy (CEWS) will continue to protect jobs by helping businesses keep employees on payroll and encouraging employers to re-hire workers previously laid off. The amendments to the CEWS program will be in effect for the remainder of the year.
The broader and better targeted CEWS will make sure that Canadian workers and businesses are in a better position as our economy safely re-opens. Many businesses that were not previously eligible to receive the CEWS may now receive a portion of CEWS. In addition, businesses with severely impacted revenues may receive an additional Top-Up Subsidy.
Summary of Key Changes introduced in Bill C-20
- Allow the extension of the CEWS until December 19, 2020, including redesigned program details from July 5, 2020 until November 21, 2020.
- Make the subsidy more accessible to a broader range of employers by providing a gradually decreasing base subsidy to all eligible employers that are experiencing a decline in revenues (30% revenue decrease criteria is not relevant under the new regime). Financial support provided by the new CEWS regime applies on a sliding scale dependent on the exact revenue decline.
- Businesses now have the option to use the previous month’s revenue as a reference for revenue decline.
- Introduce a top-up subsidy of up to an additional 25 per cent for employers that have been most adversely affected by the COVID-19 crisis. This will be particularly helpful to employers in industries that are recovering more slowly. With this top-up, the highest possible subsidy amount per employee is $960 per week (calculated on a maximum remuneration per employee of $1,129 per week).
- A “Safe Harbour” provision that enables employers to receive the same subsidy amount for July and August (Periods 5 and 6) as they would have under the previous rules if the new rules result in a lower subsidy.
While the new CEWS regime becomes more accessible to a wider range of businesses, the CEWS program has become considerably more complex. If you have any questions about how the new Wage Subsidy or Top-Up Subsidy may impact you or your business, please be sure to contact us!
Click here for information related to this new change.
Click here for in formation regarding CEWS frequently asked questions. This information will continue to get updated for the new rules.
CRA Further Extends Payment and Filing Deadlines
Leave a CommentThe CRA is further extending the payment due date for 2019 individual tax returns and 2019 or 2020 corporation, or trust returns, as well as for instalment payments, from September 1, 2020, to September 30, 2020. Penalties and interest will not be charged if payments are made by the extended deadline of September 30, 2020 (includes the late-filing penalty provided return is filed by Sept. 30, 2020).
The CRA will be waiving interest on existing tax debts related to individual, corporate, and trust income tax returns from April 1, 2020, to September 30, 2020 and from April 1, 2020, to June 30, 2020, for Goods and Services Tax/Harmonized Sales Tax (GST/HST) returns.
The previously extended filing due dates for individual, corporate, and trust income tax returns remain unchanged. However, CRA will not impose late-filing penalties where a current year individual, corporation, or trust return is filed late provided that it is filed by September 30, 2020.
Click here to read more.
