CEWS/CERS Filing Deadlines: COVID-19 Update

The Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS) applications are due on or before the later of:

  1. January 31, 2021; and
  2. 180 days after the qualifying period.

This means that the CEWS claim periods 1 through 5 are due to be filed on or before January 31, 2021. 

Please see below a summary of the filing deadlines for your reference:

CEWS/CERS filing deadlines (as of January 11, 2021)

For more information, please contact your Lipton advisor.

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Ontario Small Business Support Grant

The Ontario government continues to provide a variety of supports to employers facing challenges as a result of COVID-19. The government will now be providing even more support to small businesses that are required to close or severely restrict their operations due to the necessary Provincewide Shutdown. This will help ensure they can continue serving their communities and employing people once COVID-19 has been eradicated.

To review this announcement and further details, click here.

For more information, please contact your Lipton advisor.

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Claiming Home Office Expenses – COVID-19

This year has been filled with unprecedented challenges due to the COVID-19 pandemic. Many Canadians unexpectedly had to work from home which resulted in millions of Canadians setting up their work space in their kitchens, bedrooms and living rooms.

In response, the Canada Revenue Agency has now provided additional details and simplified the way employees can claim home office expenses on their personal income tax return for the 2020 tax year. Employees with larger claims for home office expenses can still choose to use the existing detailed method to calculate their home office expenses deduction.

To review this announcement and further details, click here.

For more information, please contact your Lipton advisor.

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2020 Federal Fall Economic Statement Highlights

On November 30, 2020, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, released Supporting Canadians and Fighting COVID-19: Fall Economic Statement 2020.

The economic statement does not change personal or corporate income tax rates, but does:

  • Clarify proposed rules for the taxation of employee stock options, to be effective for stock options granted after June 30, 2021
  • Provide details for the Canada Emergency Wage Subsidy (CEWS), Canada Emergency Rent Subsidy (CERS) and Lockdown Support programs for December 20, 2020 to March 13, 2021
  • Announce a simplified home office tax deduction for 2020 for employees
  • Require non-resident vendors supplying digital products or services to consumers in Canada to register for Goods and Services Tax/Harmonized Sales Tax (GST/HST), effective July 1, 2021
  • Immediate support for families with young children
  • Registered Disability Savings Plan – Cessation of eligibility for the disability tax credit.

Please click here to read the income tax and sales tax highlights.

If you have any questions, please contact your Lipton advisor.

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Congratulations Emily Chen – Our 2020 CFE Graduate

Lipton LLP is proud to announce that Emily Chen was successful in passing the 2020 Chartered Professional Accountants of Canada (CPA) Common Final Examination (CFE).  

The CFE is the final examination that Chartered Professional Accountant (CPA) students take in pursuit of their CPA designation.

For over forty years, Lipton is proud to have assisted many of our CPA students in obtaining their designation. 

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Ontario Budget Highlights – 2020

The Government of Ontario recently tabled its 2020 Budget.

Highlights are outlined below:

Corporate Tax:

Corporate Tax Rates

No new corporate income tax rate changes were announced in this year’s budget. As a result, selected combined 2020 federal and Ontario tax rates are outlined below:

Employer Heath Tax (EHT)

Private-sector employers paying total remuneration of less than $5 million were previously eligible for an EHT exemption on up to $490,000 of their payroll. In March 2020 the EHT exemption was temporarily increased from $490,000 to $1 million for 2020 and was to expire on January 1, 2021. The 2020 Budget proposes to make the increased exemption permanent.

In addition, employers with annual Ontario payroll over $600,000 are required to pay EHT by way of monthly installments. The government is proposing to double this threshold to $1.2 million, beginning in 2021. Private-sector employers who claim the full exemption will be required to remit EHT installments when they owe more than $3,900 in EHT for the year.

Ontario Research and Development Tax Credit (ORDTC)

The Budget proposes to extend the reporting period to claim an ORDTC. Corporations with tax year-ends from September 13, 2018 to December 31, 2018 would have an additional six months to file a claim; corporations with tax year-ends from January 1, 2019 to June 29, 2019 would have until December 31, 2020 to file an ORDTC claim.

The proposed change parallels the extension of the reporting deadlines for federal scientific research and experimental development claims.

Changes to film, television, media and publishing tax credits were also announced.

Personal Tax:

Personal Tax Rates

No new personal income tax rate changes were announced in the Budget.

As a result, the current top combined federal and Ontario marginal tax rates for 2020 will continue as outlined below:

Seniors’ Home Safety Tax Credit

The 2020 Budget proposes a new temporary Seniors’ Home Safety Tax Credit, which is a refundable tax credit for eligible claimants.
The proposed credit would not be dependent on income and could be claimed for eligible expenses by senior homeowners, renters or people who live with relatives who are seniors.

The Seniors’ Home Safety Tax Credit will be equal to 25 percent of up to $10,000 in eligible expenses for a senior’s principal residence in Ontario.

The maximum credit would be $2,500; the $10,000 maximum would be shared by the people who live together, including spouses and common-law partners.

To be eligible, expenses must be paid or become payable in 2021 and must relate to renovations that improve safety and accessibility or help a senior be more functional or mobile at home. Eligible expenses would include:

  • Renovations to permit a first-floor occupancy or secondary suite for a senior;
  • Grab bars and related reinforcements around the toilet, tub and shower;
  • Wheelchair ramps, stair / wheelchair lifts and elevators;
  • Non-slip flooring;
  • Additional light fixtures throughout the home and exterior entrances;
  • Automatic garage door openers; and
  • Modular or removable versions of a permanent fixture, such as modular ramps and non-fixed bath lifts.

Individuals would be able to claim the credit if the improvement was made to their principal residence, or to a residence that is reasonably expected to become their principal residence within 24 months after the end of 2021.

Other Measures:

Business Education Tax (BET)

To reduce regional tax inequities and improve business competitiveness, the government proposes to reduce all high BET rates to a rate of 0.88 percent for both commercial and industrial properties beginning in 2021, a reduction of 30 percent for businesses currently subject to the highest BET rate.

Property Tax Relief for Small Businesses

Beginning in 2021, municipalities would be able to adopt a new optional property subclass for small business properties. The small business property subclass will allow municipalities to target tax relief by reducing property taxes to eligible small business properties. The Province will also consider matching municipal property tax reductions to provide further support to small businesses.

For more information, please contact your Lipton advisor.

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Canada Emergency Wage Subsidy (CEWS) – Extension

The government introduced the Canada Emergency Wage Subsidy to protect Canadian jobs, encourage employers to quickly rehire workers previously laid off because of COVID-19, and help bridge the Canadian economy to the other side of this unprecedented crisis. The wage subsidy program was put in place for an initial 12 week period from March 15 to June 6, 2020, providing a 75 per cent wage subsidy to eligible employers. On May 15, 2020, the government announced a 12 week extension, to August 29, 2020. On July 17, 2020, the government unveiled a redesign allowing more employers to access wage subsidy support while ensuring that support is better targeted to their needs, and proposed a further extension to December 19, 2020.

The government is proposing to further extend the wage subsidy program until June 2021 and implement other enhancements to the program to better respond to the evolving economic and health situation. These proposed changes will make the program more flexible and more generous, and ensure that the program provides continued support to employers.

To learn more about this extension and other proposed changes, click here.

For more information, please contact your Lipton advisor.

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Rent Subsidy Programs – Update

The Government of Canada has now introduced draft legislation that includes the new Canada Emergency Rent Subsidy (CERS) and the Lockdown Support Subsidy. The application process for these new subsidies is not yet available.

Under these proposed provisions, businesses, eligible charities and non-profits that experience a revenue drop will be eligible to claim a subsidy on eligible expenses, on a sliding scale up to a maximum of 65% of eligible expenses, including rent and interest on commercial mortgages, from September 27, 2020 until June 2021. The government has now provided details of the first stage of this new relief until December 19, 2020. Certain elements of this new subsidy mirror the Canada Emergency Wage Subsidy (CEWS), including a sliding rate scale and certain eligibility considerations. In addition to this new subsidy, organizations affected by a public health lockdown may also be eligible for a 25% Lockdown Support Subsidy.

To learn more about these proposed provisions, click here.

For more information, please contact your Lipton advisor.

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Covid-19 – Recent Government Announcement

On October 9, 2020 the Government of Canada announced that it will be extending the Canada Emergency Wage Subsidy, creating a new Canada Emergency Rent Subsidy program, and expanding the Canada Emergency Business Account. 

Canada Emergency Wage Subsidy 

The government has now indicated that it will extend the CEWS until June 2021. It will maintain the current subsidy rate until December 19, 2020. The government intends to introduce legislation on this change shortly.

Canada Emergency Rent Subsidy 

The government also announced a new Canada Emergency Rent Subsidy which will be provided directly to qualifying tenants, while also providing support to property owners affected by COVID-19. This subsidy will be available until June 2021 and subsidizes a percentage of expenses incurred by businesses, charities and non-profits that have suffered a revenue drop, on a sliding scale, to a maximum of 65% of eligible expenses, including rent and interest on commercial mortgages, until December 19, 2020. The government has not announced any details of the program after December 19, 2020. Eligible organizations can retroactively claim the subsidy for the period that began September 27, 2020 and ends October 24, 2020. 

In addition to the 65% subsidy, the government is also instituting a top-up Canada Emergency Rent Subsidy of 25% for organizations temporarily shut down due to a mandatory public health order issued by a qualifying public health authority. The government will introduce legislation to implement the new Canada Emergency Rent Subsidy shortly. 

Canada Emergency Business Account 

The government will also expand the CEBA to provide eligible businesses and NPOs with an interest-free loan of up to $20,000, in addition to the original CEBA loan of $40,000. The government notes that 50% of this additional financing will be forgivable if the balance is repaid by December 31, 2022. Further, the government will extend the CEBA’s application deadline to December 31, 2020. Businesses will have to provide an attestation on how they have been affected by COVID-19 to access the additional financing. More details on this change, including its launch date and the application process are also expected to be announced shortly. 

For further information, please contact your Lipton advisor.

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Tax Planning – Prescribed Rate Loans

On July 1, 2020 the government’s prescribed interest rate will decrease from its current two percent to one percent. In some cases, this can provide a tax planning opportunity to split income with a spouse or common-law partner, children, grandchildren or other family members.

Income splitting results when income from a higher-income family member is transferred to a lower-income family member. Due to Canada’s tax system of graduated tax rates, having the income tax paid by the lower income earner can reduce the overall tax to the family unit.

The income attribution rules contained in the Income Tax Act (the Act) are intended to prevent certain types of income from being split by “attributing” income or gains earned on money transferred or gifted to a family member back to the original transferor. However, the Act does provide an exception to this rule if the funds are loaned at the prescribed interest rate in effect at the time the loan was made and the interest is paid annually by January 30th of the following year.

For example, if the loan was made when the prescribed interest rate is one percent, any realized investment return above that rate will be taxed in the hands of the particular lower income family member. Although the prescribed rate can vary by quarter, it is the prescribed rate in effect at the time the loan was made that is used in the calculation.

If an individual entered into a loan with a family member or family trust when the prescribed interest rate was higher than one percent, the family member or family trust should consider selling its investments and repaying the loan. A new loan agreement can then be entered into using the new one percent prescribed interest rate. With respect to the loan repayment required to put this into place, any accrued capital gains or losses on the borrower’s existing investments must also be considered.

For further information, please contact your Lipton advisor.

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