It has been a while since I circulated information with regards to the various programs and assistance offered by our various governments and agencies about COVID relief.
Today, I would like to bring your attention to 3 of these programs, that you may want to put some attention on prior to December 31.
Also, please review this Ontario Gov’t program to help with PPE costs:
1. CERB Payments
Many Canadians received CERB in error. The program was launched at the beginning of the Pandemic, and payments began immediately. This is the list of conditions that made an individual eligible:
“The Benefit is available to workers:
- Residing in Canada, who are at least 15 years old.
- Who have stopped working because of reasons related to COVID-19 or are eligible for
- Employment Insurance regular or sickness benefits or have exhausted their Employment Insurance regular benefits or Employment Insurance fishing benefits between December 29, 2019 and October 3, 2020
- Who had employment and/or self-employment income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and,
- Who have not quit their job voluntarily
When submitting your first claim, you cannot have earned more than $1,000 in employment and/or self-employment income for 14 or more consecutive days within the four-week benefit period of your claim.
When submitting subsequent claims, you cannot have earned more than $1,000 in employment and/or self-employment income for the entire four-week benefit period of your new claim.”
Now is a good time to revisit the eligibility list and figure out if you were entitled to these funds.
If you received CERB in error, it is in your best interest to pay it back PRIOR TO DECEMBER 31, 2020!
If the funds are not repaid by then, the taxpayer will pay tax on this income on their 2020 tax return, and then still have pay it back as well! There will be a deduction later of course, but anyone who received the funds, regardless of whether it was paid in error, will get a T4A slip for the 2020 tax year. Paying it back by the end of December fixes this problem. Less Mess to deal with!
2. CEBA Loans
This is the loan that was originally offered to employers with payrolls of more than $50,000 in 2019, and then changed multiple times. The value of the original interest free loan was $40,000.00.
A new, ‘expanded’ program is now available.
For what seems like a simple bank loan, it is a much more complicated program. Anyone applying was provided a list of Eligible Non-Deferrable expenses that the funds could be used for.
Over the course of the year, the government of Canada has ‘clarified’ its intention of what expenses qualify for the purposes of the CEBA loan.
One of the ‘clarifications’ that will impact the most clients, is with regards to payroll to self and family members in what they include in the list of ‘Eligible, Non-Deferrable Expenses’. In short, on some of the original bank agreements, there was no mention that payroll to self and family was not eligible.
The current loan agreements specifically exclude all payments to ‘Non-Arms Length’ employees, which are those payroll payments to owners and their family. Make sure you have a copy of that loan agreement, in case this becomes an issue at the end of the program!
Caution for anyone applying for the additional $20K CEBA loan! Specialists are interpreting that the new agreement will OVERRIDE your original agreement terms, potentially messing up this eligibility.
It is in your best interest to review your original loan agreement to see what terms are listed.
This is the replacement program to CERB. Just wanted to note, that this program is having some tax withheld before being paid out, but also that you need to be aware that the funds will be clawed back on your tax returns, for anyone that has over $38,000 in total income for the year. You can find more details on the CRA website.