Improve Cash Flow & Access New COVID and BIPOC Funds
20 min Power Chat with BBB
- Need Cash Flow Generation Ideas?
- Are you a small business?
Wondering what you can qualify for now under changes to CEWS, CERS & CEBA funding? - Wondering which funding options will benefit you the most?
- Need a summary of New CERP changes?
- Do you have unpaid receivables or idle inventory?
- Are you a Black Entrepreneur?
- Want to know about new funding options?
For more information visit:
Canada’s COVID-19 Economic Response Plan
Here are the summarized highlights:
Download the slide deck
Canada Emergency Wage Subsidy (CEWS)
Announced Changes
- The subsidy is extended to June 2021
- The deadline to apply is January 31, 2021 or 180 days after the end of the claim period, whichever comes later
- The subsidy per employee is based on Revenue Drop, no longer are businesses required to meet 30% minimum
- Employment of 14 days within subsidy period is lifted
- Period 8-13: Top-up rate based on 1-month, or 3-month
- Base revenue drop comparison month for period 11, is the same as Period 10
Subsidy Rates
- Safe Harbour of 75% subsidy through period 6
- Commencing Period 5 (July 5-Aug 1), top-up rates were introduced to earn up to 85%, where revenue drop > 50%
- For Periods 8-10, rate is capped at 65%
- Revenue drop of 70% or more: 65%
- Revenue drop of 50%-70%: 40%-65%
- Revenue drop of 1%-50%: 0.8%-40%
Subsidy Rates
- Safe Harbour of 75% subsidy through period 6
- Commencing Period 5 (July 5-Aug 1), top-up rates were introduced to earn up to 85%, where revenue drop > 50%
- For Periods 8-10, rate is capped at 65%
- Revenue drop of 70% or more: 65%
- Revenue drop of 50%-70%: 40%-65%
- Revenue drop of 1%-50%: 0.8%-40%
How to Apply
- Ensure you have access to CRA My Business Account, or Represent a
Client, or Web Forms Application - Ensure Direct Deposit is set-up (CRA or Bank)
- Select period and correct CEWS Spreadsheet
- Determine best base year comparison:
• Same month from 2019, or Jan-Feb 2020 Avg
• 3-month Top-up base, or 1-Month
Canada Emergency Rent Subsidy (CERS)
Where eligible entities have experienced a revenue drop due to COVID-19, a subsidy rate of up to 65% of commercial rent may be received.
With a top-up of 25% for entities forced to close due to lock-down. Subsidy to run through June 2021.
Who
Canadian businesses, non-profit organizations, or charities who had:
- A CRA # on September 27 or
- A Payroll Account on March 15
- Experienced any drop in revenue
- Have eligible expenses up to $75,000 per business location, per period ($300,000 for affiliated locations)
- Rent to 3rd parties
- For property owned: property tax, insurance & mortgage interest
When
A CERS application must be filed no later than 180 days after the end of a claim period.
- Eligible expenses must be for the claim period
- For expenses under a written agreement in place before October 9, 2020
- Claim Periods:
- September 27 –October 24
- Current: Dec 20 – Jan 16
How
Apply through My Business Account or Represent a Client
- Apply for CERS Number within your CRA online Account
- Ensure Direct Deposit is setup
- Ensure expenses are paid or will be paid within 60 days of receipt of subsidy
- Application has questions for rent paid, as well as sections for property owned (not all sections will apply)
Watch out for Non-arm’s Length and Related Party Transactions.
Canada Emergency Business Account (CEBA)
CEBA provides interest-free, partially forgivable ($10,000 forgiven if remaining loan
repaid by Dec 31, 2022), loans of up to $40,000, to small businesses and not-for-profits,
that have experienced diminished revenues due to COVID-19 but face ongoing nondeferrable costs (agreements in place before March 1, 2020), such as rent, utilities,
insurance, taxes and wages.
- CEBA expanded for an additional $20,000 interest–free loan, with 50% forgiven (up to
$60,000 interest free and $20,000 forgiven)
Application Requirements
- Applicants now have until March 31, 2021 to apply (apply online with Bank)
- 2019 payroll between $20,000 and $1,500,000, or
- Non-deferrable Expenses of $40,000 -$1,500,000
- Rent, Property Tax, Utilities, Insurance (support to be provided with application)
- Offset expense by other COVID-19 stimulus received. Is CEBA more beneficial?
- Filed a 2019, or 2018 tax return
- Forgiven portion should be included in 2020 tax return
Canada Recovery Benefit (CRB)
Support for Self-Employed Individuals:
The CRB gives support to employed and self-employed individuals who are directly affected by COVID-19
and are not entitled to Employment Insurance (EI) benefits. The CRB is administered by the CRA.
If you are eligible for the CRB, you can receive $1,000 ($900 after taxes withheld) for a 2-week period.
If your situation continues past 2 weeks, you will need to apply again. You may apply up to a total of 13 eligibility periods (26 weeks) between September 27, 2020 and September 25, 2021.
Eligibility:
- During claim period you were not employed, or self-employed, or weekly income dropped 50% from
the same period in 2019 - You did not apply for, or receive, EI or other Canada Recovery benefits (Sickness, Cargiving)
- You were not eligible for EI
- You reside in Canada (Travelling internationally may make you ineligible for CRB)
- You have a social insurance number, are at least 15 and earned at least $5000 in 2019 or 2020
- You did not quit your job voluntarily on or after September 27, unless it was reasonable to do so
- You are seeking working either as employee or self-employed and can earn up to $38,000 while on CRB
How to Apply:
- Ensure you have access to My Account with the CRA and setup direct deposit
- Apply on the first Monday after the 2-week period you are applying for has ended
- Apply through My Account, or by calling 1-800-959-2019, or 1-800-959-2041
- Period 5 is the earliest period open for application (November 22 to December 5)
Black Entrepreneurship Program (BEP)
National Ecosystem Fund: The Ecosystem Fund will award funding to regional and national not-for-profit
Black-led organizations across Canada.
- It will allow not-for-profit Black-led organizations to develop new services or expand those they
already offer such as mentorship, networking, financial planning, and business training for Black
entrepreneurs. - Program is currently closed (Filing Deadline December 21, 2020)
- New Application periods may open
- http://www.ic.gc.ca/eic/site/150.nsf/eng/00003.html
BEP Loan Fund: Will provide for-profit owners and entrepreneurs with loans between $25,000 and $250,000
- This program has not opened at this time, more details to come.
Tax Planning
Cash-Flow Generators
- Cash-Flow Generators
- Increase Tax Loss for carryback and refund of PY Tax
- Allowance for specified uncollectible receivables
- Inventory with declined value, write-down to FMV
- Base 2021 Tax instalments on 2020 profitability
- File tax return ASAP for refundable tax credits (SR&ED, Co-op students)
- Consider stock-based compensation to attract talent without salary
commitment
Employees Working From Home: $400 or T2200
- For employees that had to work from home at least 50% of the time for 4
consecutive weeks, they can claim a deduction on their tax return for $2
for each day that hey worked from home during that period, and any other
day they worked from home in 2020, up to $400 with no T2200 - If home office expenses are greater than $400, a T2200 (new simplified
form) will be required to be signed by employer - Form T777 needs to be completed in both situations
Loss Utilization (multiple entities)
- Consider reasonable management fees
- Opportunity to transfer assets and sell or lease back.
- Is there an opportunity to amalgamate
- Loss utilization plan: using a daylight bank loan to subscribe for preferred
shares. Interest income to LossCo, corresponding dividend back to
ProfitCo. Transfers loss to profitable entity.
Bonus:
CRA will allow employees working from home in 2020, due to Covid-19, to deduct up to $400 under a simplified home office expense deduction on their 2020 tax return. This replaces the regular T2200 process. More details to come.
