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Monthly Archives: April 2020

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COVID-19 Updates for Individuals & Business Owners

Category : blog

April 22, 2020,
Dear Clients & Friends,

I wanted to take this opportunity to provide you with the most up to date changes to the CRA benefits related to COVID-19 since my last update on April 10. Note that all my COVID-19 updates are updated on our website at www.arjcpa.ca

Furthermore, please connect and follow the links to my social media at your convenience (Facebook, Twitter, LinkedIn, Instagram) to stay fully updated on COVID-19 and tips & tax planning for individuals & businesses.

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For Individuals

  1. Canada Emergency Response Benefit (CERB) Update:
  2. On April 15, CRA announced the following changes to the eligibility rules:

    • Allows people to earn up to $1,000 per month while collecting the CERB.
    • Extend the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work because of COVID-19.
    • Extend the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job because of COVID-19.
    • If individuals receive non-eligible dividends from the business, you could be eligible for the CERB as long as you meet the requirements of having earned a minimum of $5K income in 2019. Non-eligible dividends also count toward the $1000 income threshold for a benefit period.

    If you require assistance with the application process, please don’t hesitate to contact us.

    Full details are available on the CRA Website at: https://www.canada.ca/en/department-finance/economic-response-plan.html#individuals

  3. Canada Emergency Student Benefit (CESB):

This morning, Prime Minister Trudeau announced benefits for students:

  • Eligible students include postsecondary students currently in school, those planning to start postsecondary school in September or those who graduated in December 2019
  • Working students earning less than $1,000 per month are also eligible
  • The eligibility period covers May 1st to Aug 31st.
  • The benefit amount is $1,250 per month
  • If you are supporting another person or if the student has a disability, the benefit is up to $1,750 per month
  • The government will also be creating 76,000 new jobs specifically for post-secondary students within sectors contributing to the fight against COVID-19

Income Tax Reminder

A gentle reminder to submit your personal tax documents if you have not done so for us to be able to complete and file your tax returns by the extended deadline of June 1st. You many send the documents digitally (either via dropbox, google drive, box or secured email).
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For Businesses

  1. The Canada Emergency Business Account (CEBA) Update:
    • Last week the government made some changes to CEBA.
    • The new qualification requirements have been extended to allow for organizations to demonstrate they paid between $20,000 to $1.5 million in total payroll in 2019.
    • The government will then provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced.
    • Repaying the balance of the loan on or before December 31, 2022 will result in a loan forgiveness of 25 percent (up to $10,000).
    • Business owners can apply for support from the Canada Emergency Business Account through their banks and credit unions.

    Further information is available at: https://ceba-cuec.ca

  2. Canada Emergency Commercial Rent Assistance (CECRA):
    • Last week the government announced its intent to establish assistance to commercial property owners who will in turn lower or forgo the rent of small businesses for April, May and June
    • This will include assistance and/or forgivable loans
    • Implementation of the program will be in partnership with the provincial governments
    • Details will be provided by the government soon
  3. Canada Emergency Wage Subsidy (CEWS) Update:
    • As a Canadian employer whose business has been affected by COVID-19, you may be eligible for a subsidy of 75% of employee wages for up to 12 weeks, retroactive from March 15, 2020, to June 6, 2020. This will allow employers to re-hire workers previously laid off as a result of COVID-19.
    • CRA has launched a calculator as of yesterday to determine the amount of the subsidy.
    • Applications will be accepted as of April 27, 2020
    • The program will be available through My Business Account or through the Represent a Client service for Accountants
    • There will be an automatic audit for all employers to ensure compliance with the program
    • The government hopes to process the applications by May 5th. They expect at least a million applications

Full details on the calculator and process are available at: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html

As trusted advisors, we realize the application process may be a little complicated and are therefore working with our clients to assist with the applications. As these applications will play a critical role to your cash flows, we recommend that you try and apply as soon as possible. Please contact us at your convenience and we would be happy to provide this service.

Stay Safe!


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Recent Updates on the COVID 19 Economic Measures

Category : blog

April 10, 2020

Dear Clients and Friends:

Wishing you all a Happy Easter long weekend! I hope you will take this opportunity to reflect and spend precious time with your families as we continue to fight the pandemic. In my latest email, I will be outlining and summarizing the most recent update by Prime Minister Trudeau that he outlined on Thursday. This is the latest update further to my email on April 2, 2020.

As a way of protecting jobs through the pandemic, Prime Minister Justin Trudeau, proposed the new Canada Emergency Wage Subsidy. This wage subsidy aims to prevent further job losses, encourage employers to re-hire workers previously laid off as a result of COVID-19, and help better position Canadian companies and other employers to more easily resume normal operations following the crisis. While the Government has designed the proposed wage subsidy to provide generous and timely financial support to employers, it was done with the expectation that employers will do their part by using the subsidy in a manner that supports the health and well-being of their employees. The application process will take up to 3 weeks (revised from the previously announced 3 to 6 weeks). They will be setting up a microsite to allow for applications.

Revisions & Updates to Previously Announced Economic Measures: For further details, please refer to the CRA website at https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html

1. Canada Emergency Wage Subsidy (CEWS):

Change in the reference period and revenue reduction percentage for the 75% Wage Subsidy Eligibility (decrease of at least 15 per cent of their revenue in March 2020 and 30 per cent for the April & May (see Eligible Periods)).

A. Are You Eligible?

Eligible employers would include individuals, taxable corporations, partnerships, non‑profit organizations and registered charities. This subsidy would be available to eligible employers that have experienced at least decrease in their revenue (see Periods of Eligibility). In applying for the subsidy, employers would be required to attest to the decline in revenue. Note the revision to the eligibility (previously identified as a 30% decrease for all periods, but now revised to a 15% reduction in revenue in March and a 30% reduction in April and May; please see the revised the chart and revised reference periods)

Eligible Periods

Claiming period Reference period for eligibility Required Reduction in Revenue
March 15 – April 11 March 2020 over:

  • March 2019 or
  • Average of January and February 2020
15%
April 12 – May 9 April 2020 over:

  • April 2019 or
  • Average of January and February 2020
30%
May 10 – June 6 May 2020 over:

  • May 2019 or
  • Average of January and February 2020
30%

 

For eligible employers established after February 2019, eligibility would be determined by comparing monthly revenues to a reasonable benchmark.

B. Subsidy Calculation:

An employer’s revenue for eligibility would be based on revenue from business carried on in Canada earned from arm’s-length sources. Revenue would be calculated using the employer’s normal accounting method, and would exclude revenues from extraordinary items and amounts on account of capital.

The government subsidy for a given employee on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:

  • 75% of remuneration paid, up to a maximum benefit of $847 per week or,
  • The lesser of:
    • the amount of remuneration paid, up to a maximum benefit of $847 per week or
    • 75% of the employee’s pre-crisis weekly remuneration

The government has now stated that pre-crisis remuneration for a given employee will be based on the average weekly remuneration paid between January 1 and March 15, 2020 inclusively, excluding any seven-day periods that the employee did not receive remuneration.

Employers will also be eligible for a subsidy of up to 75 per cent of salaries and wages paid to new employees.

A special rule will apply to employees that do not deal at arm’s length with the employer. The subsidy amount for such employees will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration.  There would be no overall limit on the subsidy amount that an eligible employer may claim.  Employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.

C. Employers would be allowed to calculate their revenues under the accrual method or the cash method, but not a combination of both. Once the accounting method is chosen, it must be used throughout the program.

D. 100% Refund for certain employer paid contributions to EI and CPP Premiums. This refund would cover 100 per cent of employer-paid contributions for eligible employees for each week throughout which those employees are on leave with pay and for which the employer is eligible to claim for the CEWS for those employees.

E.  Eligible employees:

  1. An eligible employee is an individual who is employed in Canada.
  2. Eligibility for the CEWS of an employee’s remuneration, will be limited to employees that have not been without remuneration for more than 14 consecutive days in the eligibility period, i.e., from March 15 to April 11, from April 12 to May 9, and from May 10 to June 6.
  3. This rule replaces the previously announced restriction that an employer would not be eligible to claim the CEWS for remuneration paid to an employee in a week that falls within a 4-week period for which the employee is eligible for the Canadian Emergency Response Benefit.

F. Application Process:

Eligible employers would be able to apply for the Canada Emergency Wage Subsidy through the Canada Revenue Agency’s My Business Account portal as well as a web-based application. Employers would have to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to employees. More details about the application process will be made available shortly.

G. 10% Temporary Wage Subsidy:

The Temporary Wage Subsidy of $25,000 per employer and $1,375 per employee continues to be available.   For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10 per cent wage subsidy for a period, any benefit from the 10 per cent wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period.

2. Support For Students

100% Wage subsidy to the Canada Summer Jobs Program for Employers providing up to 100% to small businesses. These subsidies are extended up until and end date of employment of February 28, 2021 and will apply to both part time and full time employees.

3. Special rules for charities

    1.  The government also advised that registered charities and non-profit organizations will have additional flexibility for the revenue decrease calculation. Specifically, these employers will include most forms of revenue in the calculation, excluding revenues from non-arm’s length persons.
    2. These organizations would be allowed to choose whether or not to include revenue from government sources as part of the calculation. Once chosen, the same approach would have to apply throughout the program period

 

4. Work Sharing Program:

A program that helps employers and employees avoid layoffs when there is a temporary decrease in business activity beyond the control of the employer. The program provides Employment Insurance (EI) benefits to eligible employees who agree to reduce their normal working hours and share the available work while their employer recovers. Work-Sharing is an agreement between employers, employees and the Government of Canada.

      1. Extension of the maximum possible duration of an agreement from 38 weeks to 76 weeks
      2. EI benefits received by employees through the work sharing program will reduce the benefit that their employee is entitled to receive under the subsidy

5. Major Banks:

Are now accepting applications for the Canada Emergency Business Account. Please log in to your business bank account for further details. If you require assistance on T4 summaries or your Payroll account number, please contact our office.

6. Compliance Process & Penalties:

The government confirmed that employers that do not use the subsidy as intended would face “stiff and severe” penalties. In particular, the government advised that employers that engage in artificial transactions to reduce revenue to claim the subsidy would be subject to a penalty equal to 25% of the value of the subsidy claimed, and must also fully repay the subsidy that was improperly claimed. The Finance Minister also noted in his news conference on April 8, 2020, that employers who create artificial transactions would effectively be subject to a fine of up to 225% of the amount received under the subsidy. In addition to this fine, the Finance Minister also noted that such employers may be punished by up to five years in prison.

We are committed to serving our valued clients during this difficult time and our team is ready to assist you via phone email or video conferencing.

Stay Safe!


  • 0

COVID 19 Summary of Canadian Economic Measures

Category : blog

April 2, 2020
Dear Clients and Friends:
I hope your families are staying safe and positive during the challenging times we are all facing.   I have outlined and summarized latest update on the economic measures that the government of Canada has provided.  As outlined by Bill Morneau yesterday, the government is investing $71B to assist small businesses during the pandemic.

As a way of protecting jobs through the pandemic, Prime Minister Justin Trudeau, proposed the new Canada Emergency Wage Subsidy.   This wage subsidy aims to prevent further job losses, encourage employers to re-hire workers previously laid off as a result of COVID-19, and help better position Canadian companies and other employers to more easily resume normal operations following the crisis. While the Government has designed the proposed wage subsidy to provide generous and timely financial support to employers, it was done with the expectation that employers will do their part by using the subsidy in a manner that supports the health and well-being of their employees.  The application process will be available in about 3 to 6 weeks as per Minister Morneau’s address yesterday.  They will be setting up a microsite to allow for applications.  This would provide a 75%  temporary 12 week wage subsidy to eligible employers, retroactive to March 15, 2020.  The maximum amount eligible per employee is $847 per week up 75% of employees’ remuneration paid.  I have listed further details below under Subsidy Calculation.

Are You Eligible?

Eligible employers would include individuals, taxable corporations, partnerships, non‑profit organizations and registered charities.  This subsidy would be available to eligible employers that have experienced at least a 30% decrease in their revenue (see Periods of Eligibility). In applying for the subsidy, employers would be required to attest to the decline in revenue.

Eligible Periods

Claiming period Reference period for eligibility
March 15 – April 11 March 2020 vs March 2019
April 12 – May 9 April 2020 vs April 2019
May 10 – June 6 May 2020 vs May 2019

For eligible employers established after February 2019, eligibility would be determined by comparing monthly revenues to a reasonable benchmark.
Subsidy Calculation:

An employer’s revenue for eligibility would be based on revenue from business carried on in Canada earned from arm’s-length sources. Revenue would be calculated using the employer’s normal accounting method, and would exclude revenues from extraordinary items and amounts on account of capital.

The government subsidy for a given employee on eligible remuneration paid between March 15 and June 6, 2020 would be the greater of:

  • 75% of remuneration paid, up to a maximum benefit of $847 per week or,
  • The lesser of:
    • The amount of remuneration paid, up to a maximum benefit of $847 per week or
    • 75% of the employee’s pre-crisis weekly remuneration

(Further guidance with respect to the definition of pre-crisis weekly remuneration for a given employee will be provided by CRA in the coming days)
Employers will also be eligible for a subsidy of up to 75 per cent of salaries and wages paid to new employees.
A special rule will apply to employees that do not deal at arm’s length with the employer. The subsidy amount for such employees will be limited to the eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration. There would be no overall limit on the subsidy amount that an eligible employer may claim. Employers must make their best effort to top-up employees’ salaries to bring them to pre-crisis levels.

Periods of Eligibility:

Eligibility would generally be determined by the change in an eligible employer’s monthly revenues, year-over-year, for the calendar month in which the period began. The amount of wage subsidy received by the employer in a given month would be ignored for the purpose of measuring year-over-year changes in monthly revenues. For example, if revenues in March 2020 were down 50% compared to March 2019, the employer would be allowed to claim the Canadian Emergency Wage Subsidy (as calculated above) on remuneration paid between March 15 and April 11, 2020.

Application Process:

Eligible employers would be able to apply for the Canada Emergency Wage Subsidy through the Canada Revenue Agency’s My Business Account portal as well as a web-based application. Employers would have to keep records demonstrating their reduction in arm’s-length revenues and remuneration paid to employees. More details about the application process will be made available shortly.

Compliance Process & Penalties:
The government said that employers that do not use the subsidy as intended would face “stiff and severe” penalties. In particular, employers that do not meet the eligibility requirements will have to repay subsidy amounts. New anti-abuse rules will ensure that the subsidy is not inappropriately obtained and employees are paid the amounts they are owed. Penalties may also apply to taxpayers who make fraudulent claims.

10% Temporary Wage Subsidy:

The Temporary Wage Subsidy of $25,000 per employer and $1,375 per employee continues to be available. For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10 per cent wage subsidy for a period, any benefit from the 10 per cent wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period.

Canadian Emergency Response Benefit (CERB):

The government has indicated that the subsidy is not available for remuneration paid to an employee in a week that falls within a four-week period for which the employee is also eligible for the Canadian Emergency Response Benefit. However, employers who are not eligible for the Canada Emergency Wage Subsidy would still be able to furlough employees who will receive up to $2,000 a month.

Taxable Income:

The wage subsidy received by an employer would be considered government assistance and be included in the employer’s taxable income. Assistance received under either wage subsidy would reduce the amount of remuneration expenses eligible for other federal tax credits calculated on the same remuneration.

For further details, please refer to the CRA website at https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html
We are committed to serving our valued clients during this difficult time and our team is ready to assist you via phone email or video conferencing.

Stay Safe!


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