Expansion and Extension of COVID-19 financial relief measures and new Personal Real Estate Corporations
Please see below for new updates and changes to the Government of Canada’s COVID-19 financial relief measures as well as new regulations for Personal Real Estate Corporations.
Deadline and Expansion of Canada Emergency Business Account (CEBA):
- The deadline to submit your CEBA application to your financial institution has been extended to December 31, 2020.
- The CEBA was expanded to enable businesses and not-for-profits eligible for CEBA loans to access an interest-free loan of up to an additional $20,000 over and above the original CEBA loan of $40,000. This would effectively increase CEBA loans to $60,000 from $40,000 for eligible businesses and increase the forgivable portion to $20,000 if the balance of the loan is repaid before December 31, 2022.
- To qualify for the additional financing, organizations will be required to attest to the impact of COVID-19 on the loss of revenue for the business. Further details are expected to be announced soon.
New Canada Emergency Rent Subsidy (CERS):
- On October 9, 2020, the Federal government announced new rent relief measures until June 2021 for qualifying organizations affected by COVID-19. CERS replaces the Canada Emergency Commercial Rent Assistance program (CECRA).
- CERS supports businesses, charities and non-profits that have suffered revenue decreases of at least 70%, by providing a sliding scale of support for up to 65% of eligible expenses (including rent and interest on commercial mortgages) until December 19, 2020. There will be an additional CERS top-up of 25% of eligible expenses for organizations shut down by a mandatory public health order issued by a qualifying public health authority.
- CERS support will be provided directly to tenants through the Canada Revenue Agency (CRA), and there will also be support provided to property owners, though these details have yet to be announced.
- Organizations would be able to make claims retroactively for the period from September 27 to October 24, 2020.
Canada Emergency Wage Subsidy (CEWS) Extension:
- CEWS has been extended until June 2021. The subsidy remains at the current subsidy rate of up to a maximum of 65% of eligible wages until December 19, 2020, after which time further changes to the subsidy rate and calculations may be announced again.
- These calculations have become more complex with each additional period that passes. If you require assistance in preparing the calculations and submissions for the wage subsidy, please reach out to us.
Canada Recovery Benefits Applications Now Open:
- The applications for the Canada Recovery Benefit (CRB), Canada Recovery Sickness Benefit (CRSB) and Canada Recovery Caregiving Benefit (CRCB) are now open on My Account online with CRA. Refer to our last blog for details regarding the recovery benefits which you can also find here: srcllp.com/covid19update_11.html
Personal Real Estate Corporations (Realtors now able to incorporate in Ontario):
- As of October 1, 2020, a new Ontario regulation permitting the creation of Personal Real Estate Corporations (PREC) has come into effect. The Trust in Real Estate Services Act (TRESA) came into force which replaces the Real Estate and Brokers Act (2002). The TRESA allows real estate professionals to incorporate a PREC and enjoy the same tax and income tax benefits of incorporation as other professionals and entrepreneurs able to incorporate, such as low corporate tax rates, income tax deferral and the lifetime capital gains exemption.
- All the equity shares of the PREC must be legally and beneficially owned by the controlling shareholder. The controlling shareholder must also be the sole director, president, and officer of the corporation.
- Incorporating may or may not be the right decision for you and your business. Please reach out to us for guidance on how to best structure your PREC.
Changes to Prescribed Interest Rates:
- CRA announced that prescribed interest rates on family loans will remain at 1% for the 4th quarter of 2020. Funds loaned on or after July 1, 2020 will be eligible for the decreased rate and the rate will be locked in for the duration of the loan.
- Prescribed rate loans can be an effective financial and tax planning tool. We would be happy to advise you on this matter.
Repaying Amounts for the Canada Emergency Response Benefit (CERB) or any of the Canada Recovery Benefits (CRB, CRSB or CRCB):
- If you believe that you received a CERB, CRB, CRSB or CRCB payment in error, please contact CRA and follow the process in My Account for returning payments that you were not eligible for.
- As these benefits are taxable, you will receive a 2020 T4A slip to report payments received. All ineligible payments should be returned to CRA prior to December 31, 2020 to ensure they are not included on the T4A slip.
Do not hesitate to contact us if you have any questions regarding how any of the above impacts you or your company.
NOTE: Due to the rapidly evolving changes with respect to the Government’s Economic Response Plan to Covid-19, please understand that any posts written in the past may not be reflective of the current applicable obligations, rights and benefits of individuals and businesses.