GST, CERB, CEWS, CECRA, CEBA
So many new acronyms or abbreviations created in March and April. So many new programs to learn about.
Last month I tried to explain the newly created programs the federal government launched late March in response to the financial fallout of COVID-19. This month, we’ll review more of what we know and some of what we still do not know.
The GST Credit has been around for decades (1991).
In March, the federal government announced they would give eligible taxpayers a Special GST credit. It would be equal to the annual amount. So if you normally received about $100 every three months from July 2019 to April 2020, you received an extra $400 on April 9.
In April, many taxpayers who have never received GST credits or hadn’t for many years, found a Special GST Credit deposited to their account on April 9. We received some frantic calls from clients about this GST credit that suddenly showed up in their bank account. We heard from taxpayers with family incomes between $45,000 and about $60,000 that received the unexpected GST credit. There was no formal announcement from CRA except that low and “moderate” income Canadians would receive this Speical GST Credit.
We determined that there were many moderate income families that received the unexpected credit. If you look at your 2018 tax returns and your combined family income was under $60,000, you likely received this Special GST credit. If you can, spend it in your local community to help your local businesses and our economy.
The Canada Emergency Response Benefit (CERB) was announced in March and has been very well received. From the feedback I am getting from clients, it was easy to apply for, either on-line (CRA my account) or via the toll free number (1.800.959.2019 or 1.800.959.2041).
The CERB, a $2,000-a-month benefit, was designed to quickly put cash into the pockets of millions of unemployed Canadians amid the novel coronavirus pandemic. The CERB was created to help those who lost their income due to COVID-19, whether employed or self-employed.
CERB payments will be made in respect of 4-week periods. And you need to re-apply for each of the 4-week periods.
You can earn a nominal income of up to $1,000 over a four week period and not affect CERB. If you are self-employed, you meet the eligibility criteria if you stopped working due to COVID-19 and do not earn more than $1,000 in a period of at least 14 consecutive days in the first benefit period and for the entire four-week benefit period of any subsequent claim.
If you are already receiving Employment Insurance regular benefits, you will continue to receive these benefits until the end of your benefit period. You cannot exit the Employment Insurance system to apply for the Canada Emergency Response Benefit before the end of your Employment Insurance benefit period.
You are eligible for the Canada Emergency Response Benefit if you are a former Employment Insurance claimant who used up your entitlement to your Employment Insurance regular benefits between December 29, 2019 and October 3, 2020, and are unable to find work due to COVID-19.
The date for which you would potentially become eligible for the Canada Emergency Response Benefit would be the week following your last Employment Insurance benefit payment or March 15, 2020, whichever is most recent. You may not receive EI benefits and the Canada Emergency Response Benefit for the same period.
Students can apply for CERB. Applications must be made by the end of September. This is for students who cannot find employment because of COVID-19. The payment will be $1250/month (or 1750/month with dependants or if you have a disability)
A severance payment does not impact an individual’s eligibility for the Canada Emergency Response Benefit.
If you start back to work and your income from your employer is back-payed because your employer received the CEWS (see below), then you will need to pay back the CERB you received for the same period.
The CERB is taxable and you will receive a tax slip for the income for 2020. (Next year’s tax season will be another interesting one.)
The Canada Emergency Wage Subsidy was introduced at the end of March but not with a lot of detail.
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 wage subsidy will enable you to re-hire workers previously laid off as a result of COVID-19, help prevent further job losses, and better position you to resume normal operations following the crisis.
An eligible entity includes individuals, taxable corporations, partnerships, non-profit organizations and registered charities.
Eligible entities will be able to access the subsidy if they have suffered a drop in gross revenues of at least 15% in March 2020, 30% in April 2020, and/or 30% in May 2020 as compared to the same timeframe in 2019 or to the average monthly revenue for January and February 2020
Eligible entities must apply before October 2020, attest that the application is complete and accurate, and have a business number for purposes of payroll withholding remittances on March 15, 2020 to qualify.
The Canada Emergency Commercial Rent Assistance was announced in April.
Small businesses with monthly rents of less than $50,000 will be eligible for a 75% reduction for April, May and June. 50% will be covered by the federal government. The remaining 25% will be covered by the lessor. Non-profits and charities will also be eligible. The details are extensive, so I suggest you go to the CRA site that explains it more.
The CEBA was created to ensure that small businesses have access to the capital they need to see them through the current challenges. The Government of Canada launched the new Canada Emergency Business Account, which has been implemented by eligible financial institutions in cooperation with Export Development Canada (EDC). This $25 billion program provides 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, due to the economic impacts of the COVID-19 virus. This will better position them to quickly return to providing services to their communities and creating employment. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000). Contact your bank or credit union to find out more.
For the month of May, there will be a one-time special payment. The Canada Child Benefit will increase by $300 per child for the one month only.
Working from home
Many employees are working from home for the first time. You may be able to claim some of your home expenses on your income tax for 2020. First you will need a form T2200 signed by your employer that requires you to work from home. Next you need to measure out your “working area” and it cannot be not used for personal use (mixed use is a bit more complicated). And what is the square footage of your entire home (main level if you have a basement)? Most employees can only claim a portion of their electricity and heat and regular maintenance. Only those receiving commission income can also claim part of their mortgage interest, property taxes, and home insurance and/or rent.
What we know for now
These are some of the programs we know about and for now. If you need more details, I recommend you visit the Canada.ca website.
And be cautious of scams by email or by phone.
Thank you to those on the front lines: our health care workers and those in essential services businesses. Stay safe.
At Ste Anne Tax Service, we are open and working hard to get taxes completed fairly quickly, but we are not allowing clients in our office; and likely will remain so for the rest of the tax season. We provide “curbside service”: we will meet you outside, or at your car to receive your documents or deliver your completed taxes.
A reminder that the normal April 30 tax deadline has been extended to June 1st. The self-employed and their spouse have until June 15 (unchanged).
Everyone has until September 1 to pay their taxes owing without additional interest.
AnniMarkmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Clearview Co-op) or firstname.lastname@example.org