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As Small and Medium Enterprises (SMEs) are impacted by Coronavirus, many are turning to CPAs for advice as they navigate through these complex and fast-changing business conditions. Below are some suggestions from CPAs across the province to help SMEs understand government wage subsidies and tax relief.

WAGE SUBSIDY STRATEGY

Most SMEs are looking to benefit from tax relief and financial measures. Noah Jensen, CPA, CA, in Cambridge, is advising all his eligible clients to claim the federal government’s 10 per cent Temporary Wage Subsidy for Employers for immediate cash flow relief. But, he explains, the benefits of doing so will be felt in the months to come.

“Applying for the Temporary Wage Subsidy first, will likely be less money than the Canada Emergency Wage Subsidy, but will be a more immediate cash flow relief,” says Jensen. Employers who experience the specified decline in revenue will be eligible for the additional Canada Emergency Wage Subsidy of 75 per cent of wages for 12 weeks. “Yet there is so much uncertainty, employers don’t know if their revenue will fall to the eligible levels in the coming months,” says Jensen. “So, employers should get as much funding behind them as possible right now.” Even those with sufficient cash flows to cope today, don’t know how long these conditions will last and when they’re going to need more.

UNCERTAINTY ABOUT ELIGIBILITY

CPAs are having to act quickly to assist SMEs as new rules and programs are continually being introduced. Ken Bell, CPA, CA, in Brampton, says this has meant his clients are looking for more clarity. “One professional services firm I have been speaking to could see the downturn coming and so billed heavily in March to ensure there was no lag in billing and collecting receivables. They’re regretting that now since the government’s subsidies only apply to firms with a specific drop in revenue. They won’t be eligible for March but will likely see that drop in later months. That’s a real source of concern.”

 

THE IMPORTANCE OF KEEPING UP-TO-DATE

A tip for SMEs from Celia Meikle, CPA, at GMS Professional Corporation in Mississauga, is to make sure that companies’ books are up to date. “My clients who are on top of their financials and have all their documentation and financial information up to date are in a good position to act quickly and take advantage of the loans and programs being announced.”

Below is a summary of government announcements on tax and financial relief measures, some of which have been discussed above.

NEW FEDERAL AND ONTARIO DEADLINES FOR INDIVIDUALS

(Updated as of August 4, 2020)

NEW FEDERAL AND ONTARIO DEADLINES FOR TRUSTS

NEW FEDERAL DEADLINES FOR CORPORATIONS

NEW FEDERAL DEADLINES FOR CHARITIES

Further information regarding new Federal and Ontario deadlines can be found here.

* CRA is further extending the payment due date for 2019 individual tax returns and 2019 or 2020 corporation, or trust returns, as well as for instalment payments, from September 1, 2020, to September 30, 2020. The previously extended filing due dates for individual, corporation, and trust income tax returns remain unchanged. CRA encourages everyone to file their income tax returns as soon as possible, even though payment deadlines are being extended. However, CRA will not charge late-filing penalties where a 2019 individual return or a 2019 or 2020 corporation, or trust return is filed late as long as it is filed by September 30, 2020. Interest on existing tax debts related to individual, corporate and trust income tax returns from April 1, 2020 to September 30, 2020 and from April 1, 2020 to June 30, 2020 for goods and services tax/harmonized sales tax (GST/HST) returns will be waived. While this measure for existing tax debts does not cancel penalties and interest already assessed on a taxpayer’s account prior to this period, it will ensure that a taxpayer’s existing tax debt will not grow through interest charges during this time.

CPA Canada has noted some inconsistencies and uncertainties between CRA’s news release announcing the extension and CRA's income tax deadline summary page. A note has been sent to CRA to ask for clarification. Updates will be made when CRA provides more details. 

We thank the CPAs who shared their experiences with us and encourage our members to contact Professional Advisory Services at 416 204.3106 or 1 800 387.0735 x4456 or by email at memberadvisory@cpaontario.ca for further guidance.

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