COVID-19 financial relief measures and 2020 Federal Fall Economic Statement
December 15, 2020 Instalment Reminder:
- If you are required to make personal income tax instalments, the fourth personal income tax instalment for 2020 is due no later than December 15, 2020.
$500 Tax-free Reimbursement:
- Canada Revenue Agency (CRA) is allowing employers to reimburse employees up to $500 in allowable home office expenses for items such as furniture and computer equipment without taxing the amount. This is due to the number of employees forced to work from home because of COVID-19.
- The reimbursement is conditional based on receipts which must be provided to the employer as proof of purchase of home office items.
Employees Claiming Office in Home Expenses:
- CRA will permit a simplified home office expense deduction for employees working from home due to the COVID-19 pandemic. Employees will be allowed to deduct up to $400 in respect of home office expenses, with no requirement to track or report detailed expenses. CRA will generally not request a signed T2200 from employees for amounts claimed up to this maximum. Further details are expected to be announced by CRA soon.
- CRA is also reviewing Form T2200 Declaration of Conditions of Employment and considering a simplified form for employment expenses relating to COVID-19. Further details will be announced once changes have been confirmed.
Canada Emergency Rent Subsidy (CERS) Applications Now Open:
- The CERS is now open on CRA’s website. Eligible organizations can apply for periods 1 and 2 (September 27 to October 24, 2020, and October 25 to November 21, 2020, respectively). Applications for claim period 3 (November 22 to December 19, 2020) will open on December 23, 2020.
- CERS applications must be filed no later than 180 days after the end of the claim period.
- Eligible expenses include commercial rent, property taxes, property insurance, and interest on commercial mortgages for qualifying property. Any GST/HST paid do not form part of the eligible expense.
- Eligible expenses would be limited to those paid under agreements in writing, entered into before October 9, 2020 (and continuations of those agreements), and would be limited to expenses related to real property located in Canada. Expenses which relate to residential property used by the taxpayer (such as a home or cottage), payments made between non-arm’s-length entities, or expenses for a timeframe that fall outside of the claim period for which you are applying, would all be ineligible.
- SRC LLP has a CERS-designated team to assist with review of CERS eligibility criteria, drop-in-revenue tests, and eligible expenses for your business. We are available to assist with the complex program calculations and application process. Please reach out to us for assistance in preparing these CERS claims.
Canada Emergency Wage Subsidy (CEWS):
- The government is proposing to increase the CEWS to a 75% wage subsidy if there is a decline of 70% or more in revenue (for the periods from December 20, 2020 to March 13, 2021).
- Please note that the deadlines to submit the wage subsidy applications are as follows:
- January 31, 2021 deadline for the following periods: March 15 – April 11, 2020; April 12 – May 9, 2020; May 10 – June 6, 2020; June 7 – July 4, 2020; and July 5 – August 1, 2020;
- February 25, 2021 for August 2 – August 29, 2020;
- March 25, 2021 for August 30 – September 26, 2020;
- April 22, 2021 for September 27 – October 24, 2020;
- May 20, 2021 for October 25 – November 21, 2020; and,
- June 17, 2021 for November 22 – December 19, 2020
- If you require assistance completing the CEWS applications, SRC LLP has a team designated to help you. Please feel free to contact us for next steps
Ontario’s Main Street Relief Grant: Personal Protective Equipment (PPE) Support:
- The government of Ontario is helping small businesses cover the costs of PPE. Eligible small businesses will receive one-time grants of up to $1,000.
- To be eligible, the business must have two to nine employees, and be in one of the following industries:
- Accommodation and food services;
- Repairs and maintenance;
- Personal and laundry services; or,
- Gyms and yoga studios
- To apply, receipts or proof of costs for PPE purchased since March 17, 2020 will need to be submitted. This includes: gloves, gowns, face shields, eye protection, masks, sanitizer, sanitizing wipes, thermometers, temperature monitors or cameras, physical changes such as installing hand sanitizer stations and plexiglass dividers, signs to guide or inform customers and employees.
Ontario’s Property Tax and Energy Bill Rebates:
- The government of Ontario is helping businesses required to shut down or significantly restrict services due to provincial modified Stage 2 public health measures announced on October 9, 2020. Eligible businesses will be provided with grants to cover some fixed costs for property taxes and/or energy costs including electricity and natural gas (or propane and heating oil costs where natural gas is not available).
- Types of businesses that are eligible for support include, but are not limited to: restaurants and bars, gyms, facilities for indoor sports and recreational fitness activities, personal care services, meeting or event space, in-person teaching and instruction, photography services, as well as other sectors.
- Funding will cover the entire length of time that regionally targeted public health restrictions are in place.
- To apply, proof of costs for property taxes and/or energy costs must be submitted.
- Businesses will not be eligible if they are located outside provincial modified Stage 2 or control and lockdown regions, if they were subject to public health restrictions but were not required to close or significantly restrict services, or owed by the federal, provincial or a municipal government, or by a person holding federal or provincial office.
Changes to Employee Stock Options:
- On November 30, 2020, it was announced that the government plans to move ahead with the new rules for the taxation of employee stock options. These new rules will be effective for stock options granted after June 2021.
- These rules impose a $200,000 annual vesting limit (based on the value of an option’s underlying shares at the grant date) on options that can qualify for the 50% employee stock option deduction. This annual limit applies to an employee on a calendar year basis for each employer. If the value of the stock to be acquired under options which have vested in a year exceeds $200,000 for an employee, the stock option deduction would not apply to the taxable benefits realized on a portion of those options.
- These new rules also introduce an employer deduction for stock option benefits which exceed the employee annual vesting limit, subject to certain conditions. The employer may be able to deduct a portion of the employee’s stock option employment benefit in the year that could not be claimed as the 50% employee stock option deduction.
Do not hesitate to contact us if you have any questions regarding how any of the above impacts you, your family, 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.