Ontario’s Workplace Safety and Insurance Board (WSIB) has been a hot topic of discussion lately in the SheDo Tax office. This is especially due to the fact that our office and business clients are mainly located in the province of Ontario. Many businesses are unsure if they need to register for WSIB. For some businesses, we are finding they aren’t registered, when they should be.

Although WSIB coverage isn’t mandatory for everyone in Ontario, by law, MOST businesses NEED to register with the WSIB within 10 calendar days of hiring their first employee. Most will have to register, but some exemptions apply. The Government of Ontario decides which industries and which types of employees have to have WSIB coverage, and lists them in the Workplace Safety and Insurance Act (WSIA).

The WSIB is funded by premiums received from Ontario businesses and the rate is based on a) the shared risk of all the businesses that do the same type of work in a particular class and b) the individual claims history compared to the rest of the businesses in the same class. This approach ensures that businesses are paying a rate that is reflective of their industry and experience.

The WSIB premiums paid go toward helping people who experienced a workplace illness or injury by providing:
1. Funds to replace lost wages
2. Payment of health care costs
3. A support team of caring professionals who aim to get your employee back to work
4. Benefits to the family or dependents of people who suffered a work-related death

It is important to note that WSIB may take administrative action when non-compliance occurs. Actions that may be taken include, but not limited to: levying administrative non-compliance interest and charges.

Unsure if your business needs to register for WSIB?

The SheDo Squad highly recommends reaching out to WSIB Ontario at 1-800-387-0750 to confirm your registration obligations.

Tax season is in the air and the ladies of SheDo Tax Company are preparing for a busy season! Now is the time to focus on gathering and organizing all your documents, slips and receipts in order to prepare and be aware of all the information you need to reduce your 2022 taxable income as much as possible.

This year, because April 30th falls on a weekend, the deadline to file your T1 personal income tax return is Monday, May 1, 2023. If you or your spouse are self-employed, the tax filing deadline is June 15th, 2023. Although, if you predict a balance owing, payment is due May 1, 2023 for all individuals.

We have compiled some new and existing income tax credits and deductions to review and help you maximize your 2022 income tax refund. Get ready and hold on tight, there is a lot to cover!

Maximizing Your Registered Retirement Savings Plan (RRSP) Contributions
We always like to remind our clients in the new year to top up those RRSPS by March 1st! One of the most efficient ways to decrease your 2022 tax liability is contributing to a RRSP. Any new money you deposit into an RRSP account during the first 60 days of 2023, can be used as a tax deduction for your 2022 T1 income tax return IF you have available RRSP Deduction Limit room. If you expect to owe, RRSPs could assist in lowering the amount you need to pay to the Canada Revenue Agency (CRA), and in return also help save for your retirement.

Work From Home Employment Expenses
If a condition of your employment is to work remotely in 2022, you may be able to claim employment expenses. To claim the detailed method you will require a T777 – Statement of Employment Expenses Form to calculated your expenses and a T2200 – Conditions of Employment form signed by your employer to validate your claim. It is important to note that salaried employees and commission employees have different eligible criteria when claiming employment expenses. You can not claim a deduction for expenses reimbursed by your employer.

For the 2020, 2021 and still for the 2022 tax year, there is the simplified credit of $2/day to a maximum deduction of $500 that you may claim on a T777s – Statement of Employment Expenses for Working at Home Due to Covid-19 that may apply to you.

First Time Home Buyers Credit
Attention all first time home buyers! The First Time Home Buyers Credit has increased to $10,000 for the 2022 tax year. This would provide first time home buyers with a refundable credit of $1,500, up from $750. You are eligible for this credit if you have purchased your first home in 2022.

Charitable Donations
Don’t forget your donation receipts! Donations are flexible in the way that if they are not needed to lower your taxable income in 2022, they can be carried forward for up to 5 years. Donations can also be optimized by either yourself or spouse.

Medical Expenses
Now is the time to start gathering your medical and dental receipts from the pharmacist, dentist, chiropractor, optometrist, massage therapist, or any other eligible medical practitioner. In order for your expenses to be deductible, the total of your expenses must exceed 3% of your net income or be more than $2,479. Medical expenses for children and spouses can be combined together and claimed under one taxpayer. You may claim eligible medical expenses paid in ANY 12 month period ending in 2022 and not claimed in 2021.

Tuition Fees and Tuition Carry Forward
Tuition fees for 2022 and tuition carry forward amounts from previous years are available to students who have incurred tuition at a post-secondary education institution. This will be a deduction available to the student if they have taxable income. They are also eligible to transfer up to $5,000 in the year the tuition was paid to a supporting parent or spouse. However, If any tuition is carried forward, the carry forward amount is no longer eligible for transfer. All tuition carry forward amounts should be found on your previous year Notice of Assessment, or you can locate on your CRA myaccount.

Child Care Expenses
If your child was in a home or public day care setting while you attended work, ensure that you gather and apply all your child care receipts for 2022. Remember this may also includes amounts paid to day camps, summer camps, sleepaway camps and before and after school care. Child care expenses are applied to the lower net income spouse.

Moving Expenses
Individuals who move due to specific job relocation, run a business or move to study courses as a full time student in a post secondary program, may be able to claim expenses related to the move IF their new home is 40 kilometers closer to the new work location or school. These expenses may include but not limited to: travel costs, real estate and legal fees associated with buying or selling a home, temporary accommodations, and packing/moving expenses. Ensure you meet CRA’s outlined eligibility before considering this deduction.

Designated Immediate Expensing Property (DIEP) for Small Business Owners
To assist small and medium-sized businesses across Canada in recovering from the pandemic, the federal government introduced new CCA measures with respect to certain newly acquired capital assets. The immediate expensing rules allow eligible businesses and partnerships to acquire capital assets and immediately expense them in the year they are ready for use, up to the $1.5 million limit. Eligible property consists of all depreciable capital property other than property in CCA classes 1 to 6, 14.1, 17, 47, 49, and 51. Longer-lived assets such as buildings or goodwill are excluded from the immediate expensing rules.

Ontario Staycation Tax Credit
The Ontario Staycation Tax Credit is a one-time offer for Ontario residents to spend money in Ontario on tourism and hospitality. This credit is available to ALL Ontario residents, regardless of age or income and may can claim 20% of their 2022 accommodations, ranging from hotels to vacation rentals and campgrounds. The maximum claim for this tax credit is $1,000 for an individual, or $2,000 for a family, which means a maximum of money back in your pocket of up to $200 or $400. Only one family member can make this claim. Ensure to have your receipts/invoices on stand by in case CRA ever asks to see them.

These credits, expenses and deductions are not limited to all that may be claimed. Be sure to also claim any eligible Disability Tax Credit, Professional-Union-and Other Type Dues, Eligible Support Payments Paid, repayment of Covid-19 …to list a few more.

It is important to note that if you qualify for the Canada Workers Benefit (CWB) for 2022 (formerly known as the Working Income Tax Benefit (WIB)) and just like the Climate Action Incentive Payment (CAIP), it should start to be an advanced quarterly payment throughout the year as of July 2023 (still pending as of the date of this post) . In order to receive this benefit and payment as well as any Goods and Services/Harmonized Sales Tax (GST/HST) Credit, Child Tax Benefit (CCB) and the Ontario Trillium Benefit (OTB) you MUST file your 2022 T1 income tax return.

If you have any questions regarding any of the tax deductions and credits listed above, please feel free to give us a call at 289-758-9501 or email hello@shedotax.ca.

We look forward to serving our clients again this tax season!!

The sun is shining. The heat is on. Summer is here! …as well as a possible new government payment deposited into your account by tomorrow!

Over the past few weeks, we have had countless inquiries regarding the first quarterly Federal Climate Action Incentive Payment (CAIP) set to deposit on July 15th and we are here to give you the scoop…

The Climate Action Incentive Payment (CAIP) is a tax-free quarterly benefit for Canadians residing in Ontario, Alberta, Manitoba, and Saskatchewan. It was created to help Canadian residents counter the cost of increased pricing for federal pollution.

The quarterly payout is new this tax season and is paid directly to your household via cheque or direct deposit. Prior to 2021 taxation year, the Climate Action was a refundable tax credit you could claim on your annual income tax return.

The payment is calculated per household and is determined by a base amount for the first individual, then an additional amount for spouse and dependants. A supplement is added of 10% for residents of small and rural communities.

As an example… if you lived in Ontario as a couple with two dependents under the age of 19 living in a non-rural community – you would be entitled to receive $745.00 annually ($373.00 for an individual, $186.00 for a spouse and $93.00 for each child under 19). This amount will be divided into 4 equal quarterly amounts of $186.25 starting on July 15th. If the rural supplement applies, this family of 4 would receive $819.00, or $204.75 per quarterly payment.

If you have access to your Canada Revenue Agency (CRA) My Account and are receiving this benefit, you will note the payment amount and date under the Benefits & Credits section of your main overview page.

To be eligible for CAIP you MUST file your 2021 income tax return. Filing a return is the only way to ensure you will receive the quarterly payments. If you have not yet filed your income tax return, you will not receive this benefit.

CAIP is available to each household and is not relative to your income. If you have a spouse or common-law partner, only one person in the household will receive the payment throughout the year. The spouse or common-law partner whose 2021 income tax return is assessed FIRST by CRA is scheduled to be the spouse who should receive the payments.

The first payment on July 15th, 2022 is a double payment and includes the quarterly amount for both April and July. The following payments will be received October 15, 2022, and January 15, 2023.

If you have yet to file your 2021 income tax return, you can at any time! You will be eligible for the Climate Action payments upon doing so. If you have any questions about the CAIP or need assistance, the team at SheDo Tax is ready to help!

Hope you and your family have a safe and enjoyable summer!

The Canada Revenue Agency’s (CRA) Annual Processing Review Program is in full swing and SheDo Tax wants to ensure you are prepared and ready if you happen to get selected.

CRA has started their annual post-assessment review of T1 individual income tax and benefit returns and began sending letters out on May 26th 2022. Here are a few tips to ensure that your review is completed efficiently and in a timely manner…

1) Our very first tip is simple: Don’t panic! Many taxpayers get reviewed on an annual basis. It is a completely normal process and many get selected for all sorts of reasons. If you are uncertain of how to respond, you can always reach out to us for assistance or questions.

2) Most letters give you a 30 day deadline to respond. All of us have many different events happening in our lives, especially as summer approaches. If you are unable to make the deadline, ensure you call to notify CRA. They may not grant an extension; however, they can place a note on file to indicate the delay, in which the agent/auditor that is handling your file should take into consideration.

3) When responding to the CRA letter, ensure everything is organized in a format that would make sense and clear to understand for the agent/auditor. If the agent/auditor can not make heads or tails of the information you submit, they may disallow some or all of your response given.

4) If you are unsure of all what to provide in your response – always give as much documentation/information as possible. IF you are unsure of what to provide as documentation – send anything and everything that relates to your claim to fully support the amount claimed. The more documentation and support – the better.

5) This particular year – you may receive letters from National Verification and Collections Centres other than those you have dealt with in the past. Always make sure to send the requested information to the tax centre indicated in your review letter to avoid any delay.

6) If you haven’t already signed up for CRA’s my account service, we highly recommend! Generally, your review letter should come with a reference number where you can easily submit your supporting documentation to them electronically. This would also speed up the process of the review as opposed to mailing in your support. You can register for a my account service at: www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals

As always, the squad at SheDo Tax is always happy to assist from answering a question or two to helping you submit your documentation and support in response to a review letter that you may have received. It is not favourable of course in having to deal with the CRA, but we are happy to assist to make it as smooth of a process for you as possible.

We hope you all have a fantastic weekend and bring on summer!!

The most wonderful time of year has come! Gift giving, holiday cheer, sleigh bells ringing! While the focus these days are on holiday celebrations and new year’s resolutions… for many small businesses, focus is getting bookkeeping up to date for their year end filing deadlines.

At SheDo Tax we realize it’s not always easy for our clients to keep up with their bookkeeping requirements. If you are a sole proprietorship, partnership, or corporation, and have fallen behind or feeling overwhelmed with bookkeeping, filing deadlines and everything tax…we are always here to help.

Below is a list of our top 10 tips and tasks that we have compiled to assist in wrapping up your calendar year end bookkeeping obligations. Our goal is to ensure your books and records and business requirements are up to date and you are ready to transition into a successful new year on the right foot.

1. Gather and Organize All Business Documentation
The first and most important task is to collect and review all income and expenses. This will include all invoices from sales made throughout the year and slips and receipts made on business purchases. Don’t forget to include documents that are business related but may not have run through your business bank accounts. Make sure to include all bills and invoices, even if they have not been paid yet. Be sure to manage all your documentation in an organized format in case the Canada Revenue Agency were ever to do a review.

2. Record All Transactions
This task may seem obvious but is imperative for having accurate financial reports and records for year end. You will want to ensure all business related transactions are properly and accurately recorded in the accounting software or spreadsheet of your choosing. We recommend also reviewing bank statements for any deposits or expenses to ensure no transactions are missed.

3. Reconcile Business Bank and Credit Accounts
After you have recorded all business related transactions, the next step is to complete any outstanding periods requiring reconciliation. Reconciliation is important because this is how you ensure that the income and expenses recorded in your bookkeeping software are accurate to what has gone through your bank. This task will also help you assess and rectify any discrepancies.

4. Review Accounts Receivable
A great business practice is to review your accounts receivables regularly to make sure you are getting paid when you should be. Review your list of all outstanding invoices and decide if any of these will need to be marked as bad debt.

5. Review All Payable Accounts
You will want to make sure the balances are accurate and up to date on all your payable accounts. This will also give you the opportunity to pay any late bills or record any payables that were missed during the year. If you are registered for GST/HST, WSIB or have payroll obligations, it is important to make sure all filing and reporting requirements are up to date to reflect these payable accounts. You will also want to review any business loans, credit card and other balances of liabilities to ensure accuracy.

6. Review Assets
Ensure any assets made in the year have been recorded correctly. Also ensure that any disposal of assets have been recorded correctly. Prepare for any amortization you may want to expense on your assets in the fiscal year.

7. Account for Inventory
If your business has inventory on hand, you must get an accurate count of the raw materials and products you have on hand at year-end. Tracking inventory will help you know how much you spent on inventory during the year, and its year end value.

8. Review Financial Statements
Once you have completed your bookkeeping, if you are using bookkeeping software like Quickbooks, it’s a good idea to review your Profit and Loss statement and the Balance Sheet to make sure your accounts and balances appear correct. These are your main financial statements, so we suggest that you review line by line, looking for dollar amounts or negative amounts that don’t make sense, or seem to convey inaccurate balances.

9. Year End Tax Planning
Most people think about taxes just once a year. As a result, they often lose the chance to make any meaningful changes to improve their tax balances owing until after the year ends. Tax planning near the end of the financial year gives you that advanced opportunity to determine, after all income and expenses have been entered, if it will benefit the company to make any large purchases, spend some additional funds on supplies, or contribute to ones personal RRSP.

10. Shop Around for a GREAT Accountant
Before the end of this year, if you are thinking about getting a new accountant (or maybe thinking of using one for the first time) it may just be the perfect time to reach out before the busy tax season is amount us! Be sure to review last years tax filing if you set up a meeting or call with an accountant. Express your needs and financial/business goals and to ensure any carry forward amounts are recorded. Having a great relationship with your accountant will strive for business success!

If you are still finding yourself overwhelmed with tasks after following these 10 tips, us ladies at SheDo are always here to lend a helping hand. Our goal is to make year-end as simple and painless as possible and allowing you and your small business to enter a new year organized and up to date!

Merry Christmas, and Happy New Year!

Rachel

Happy Fall Y’all! The SheDo Squad hopes your 2021 year has been a prosperous one and for our business clients – we hope your businesses are thriving while entering the first few weeks of the fourth quarter of 2021. Quarter four is a time for many of our clients with new businesses to reach out and enquire about their Goods and Services Tax/Harmonized Sales Tax (GST/HST) obligations and if they haven’t already done so, asking… ”When should I be registering for a GST/HST number with the Canada Revenue Agency (CRA) and when should I be charging GST/HST on sales?”

IF you are a small business owner who has been pondering similar questions regarding GST/HST, I hope to provide you with some answers below…

The CRA expects that once sales meet and exceed $30,000 from worldwide taxable supplies in a given period, then the business is no longer a small supplier and it is mandatory to register for a GST/HST number.

This includes sole proprietors, partnerships and/or corporations with gross worldwide taxable supplies over $30,000, before any expense deductions.

Once you meet and exceed the $30,000 threshold, you must register and begin charging GST/HST on sales. The CRA expects that you register within 30 days after you have exceeded $30,000 of sales within a single calendar quarter OR over four consecutive calendar quarters. Once this occurs, you will now be collecting GST/HST on sales from the date of GST/HST registration going forward.

If you are just starting your business, but offer high-value services or products, and expect to exceed $30,000 quickly, you can voluntarily register in advance. It is also a good idea to voluntarily register if you will be incurring many costly expenses to start your business. This is because you can claim the GST/HST paid and get them back as Input Tax Credits (ITC’s) through the GST/HST return.

Being registered for GST/HST as a business means you need to acquire a CRA GST/HST Number and need to determine a reporting frequency. A business will be provided this number once registering over the phone or online.

The CRA GST/HST business line is 1-800-959-5525; or, more conveniently, you can register online through the CRA My Business Account using this link:

Register for a GST/HST Number with CRA

Once registered you will be required to complete a GST/HST Return (form GST34) based on your reporting frequency. GST/HST reporting is monthly, quarterly, or annually, and is determined by your gross annual sales. A chart is enclosed below to help you determine your frequency. Most sole proprietors and corporations filing their first GST/HST return will be annual filers, but they may file on a quarterly or monthly basis if they choose to do so. If wanting to be a quarterly or monthly reporter (and is not mandatory), this can be requested at time of registration.

Assigned and Optional Reporting Periods

Annual Sales: $1,500,000 or less
ASSIGNED Reporting Period: Annual
OPTIONAL Reporting Period: Quarterly/Monthly

Annual Sales: More than $6,000,000
ASSIGNED Reporting Period: Monthly
OPTIONAL Reporting Period: NIL

For most business owners, their GST/HST return will be filed online through their CRA My Business Account or through the Represent a Client portal with their authorized representatives. You are also still able to file your GST/HST returns through the mail with the GST34-2 personalized GST/HST Return.

For most businesses, the most common entries on each GST/HST return for any given period include: worldwide sales and other revenue (line 101), sales tax collected or became collectable (total on line 105 with adjustments) and GST/HST paid or became payable on qualifying expenses (total on line 108 with adjustments) which is know as Input Tax Credits (ITC’s).

If you have sales both inside and outside of Canada, all worldwide sales are to be reported on your GST/HST return, regardless if some of your sales are applicable to GST/HST or not. It is important to review your GST/HST requirements on sales and determine which sales may be taxable, exempt or zero-rated. It is also important to review GST/HST requirements between each province and territory and tax requirements of sales out of country.

You can remit your GST/HST payment electronically through your business financial institution online, telephone banking service, in person at a bank with a remittance voucher OR by cheque through the mail. You can also remit electronically using the CRA’s My Payment option, which I have linked here for you:

CRA My Payment

If you find any of this information overwhelming or still have questions regarding registering for GST/HST, the ladies here at SheDo Tax would be more than happy to set up a time to chat. If you have not been tracking your sales this year but expect that you may be nearing the $30,000 threshold, it is important to have your books in order, and we can also help with that. Feel free to reach out to us at info@shedotax.ca or call 289-758-9501.

Take care, and stay safe,

Rachel

We are well into the 3rd (and hopefully) final wave of the pandemic. Over the past 14 months, millions of Canadians have been struggling and navigating through their “new normal”. Whether you have been transitioning into working from home, having reduced hours with your career, unfortunately lost your job or business all together or even having to take a leave to assist with online learning for your children – many of us have incurred drastic life adjustments as a result of the big C word… COVID-19!

While individuals continue to get reduced pay, or no work all together, one question the ladies at SheDo Tax consistently receive is, “What are the COVID-19 pandemic benefits that are currently still available to me?”

Since March 2020, there have been different versions of pandemic benefits. Below, I want to give you an update on what is CURRENTLY available and open for applications today.

In October 2020, the federal government replaced CERB with CRB.

Canada Recovery Benefit (CRB) provides income support to employed and self-employed Canadians who are directly affected by the COVID-19 pandemic who are ineligible for EI benefits.

Canadians who are eligible will receive $1000 for a two-week period – with 10% tax withheld at source ($100 per two-week period) – resulting in a $900 deposit. Each application is for a two-week period.

To become eligible for CRB, Canadians must have stopped working and are ineligible to receive EI OR have had reduced employment income by at least 50 percent due to the COVID-19 pandemic. These conditions must be met for the ENTIRE two-week period for which Canadians are applying to receive the CRB benefit payment.

In addition, he or she did not quit their job or have not reduced their hours voluntarily on or after September 27, 2020 and did not turn down reasonable work during the two week period for which the applicant is applying.

The next benefit currently available is the Canada Recovery Caregiving Benefit (CRCB)

The CRCB provides income support to employed and self-employed Canadians who are unable to work because they are caregivers to their children who are under the age of 12 years old or a family member who requires supervised care.

CRCB is a week-to-week application. Canadians who are eligible for CRCB will receive $500 for a one-week period. Similarly, to CRB 10% of tax with withheld at source, resulting in a $450 weekly deposit.

To become eligible for the CRCB, Canadians must be employed or self-employed on the day BEFORE their first application period. They must be unable to work for at least 50% of their scheduled work week because he or she is caring for a family member under the age of 12 years old or a family member who requires supervised care due to one of the following reasons (1) daycare, day program or care facility is closed due to COVID-19; (2) regular care services are unavailable due to COVID-19; and, (3) the dependent person is (a) sick with COVID-19; (b) considered to be a high risk of being infected with COVID-19; or, (c) self-isolating due to COVID-19.

In addition, he or she must be the ONLY individual, in the applicant’s household, applying to receive the CRCB for that week and must not be receiving paid leave from an employer for the same period.

What differs between CRB and CRCB is the first eligibility requirement; CRB you must have had your employment income reduced up to 50% due to COVID-19. This could be your workplace has shut down, you have had your hours cut, you must quarantine for work related instances. Whereas the CRCB is your inability to attend your scheduled employment hours, have your employment income cut by 50% due to one of the eligibilities listed above relating to caregiving.

Lastly, the Canadian government created the Canada Recovery Sickness Benefit (CRSB) for people who do not have paid sick leave and get COVID-19 or must isolate or miss work because of COVID-19.

After contracting Covid-19 or being required to isolate, you must wait to apply until after you have missed work for one week. Your application must be received within 60 days of missing work.

To become eligible for CRSB, Canadians must have a job or are self-employed on the day before they would get a CRSB payment. They must also have lost at least 50% of their time at work for the weeks that they are applying for because:

• He/she have COVID-19 or might have COVID-19,
• a medical professional has told them that you are more vulnerable to COVID-19 than the average person, or
• their employer, medical professional, or public health authority told you to isolate because of COVID-19.

It is EXTREMELY IMPORTANT to note that for all COVID Related Benefit Programs you also:
• Must be presently in Canada.
• Must be at least 15 years old.
• Must have a social insurance number.
• Did not apply for or will receive any of the following benefits during the period which the applicant is receiving:
o Any other Covid-19 benefit related income
o Short-term disability benefit
o Employment Insurance (EI) benefits
o Québec Paternal insurance Plan (QPIP) benefits
• earned at least $5000 in 2019, 2020 or in the 12 months prior to submitting the CRB application from employment income, self-employment income or parental benefits.

Aside from this article on pandemic benefits for individuals as shown above (CRB vs. CRCB vs. CRSB), there are other pandemic programs still active to support businesses. In addition, there may be also the eligibility of retroactively applying for some of these pandemic benefits.

Whether you are seeking information on pandemic benefits as an individual or a business, the SheDo Tax ladies are always here to help and answer your questions.

Here’s hoping this is the last HURRAH of the pandemic and the new normal returns back to the old normal soon.
We hope everyone is staying happy and healthy!
Cheers to All! – Rachel Whitlock and The SheDo Squad

As 2021 begins – and we enter into likely one of the busiest tax seasons we have encountered – with various new government income streams to declare and many new income tax deductions that are still being rolled out… Our main priority is to ensure all of our clients are prepared, organized and ready!

Below, we have put together a few lists – both for individuals and businesses – to help you prepare for an effortless tax filing season:

For Businesses – We recommend to get all your 2020 slips filed to CRA to avoid any penalties by end of February 2021, here are a list of examples:

• T4 slip preparation for your employees
• T5 slip preparation for any dividends received for your corporation
• T4A slip preparation for management fees/fees for services
• T5018 slip preparation for any subcontractors you hired throughout the year

For Businesses – Work at getting your bookkeeping and filing requirements up to date.  Ensure you are filing on time to avoid any penalties/interest.  Here is a list of things to work on now:

• Accounts Receivable Review – Determination of any invoices to be written as bad debt in 2020
• Getting up to date with Monthly/Quarterly/Year End HST preparation and filing
• Getting up to date with any necessary WSIB filing requirements
• Assistance with any overdue payroll requirements
• Make year end adjusting entries now if you are able
• Remember T2 Corporate Tax Return Filing deadline (6 months to file after year end, 3 months to pay after year end)
• Remember T1 Income Tax Return Filing deadline (if you or your spouse have sole proprietor/partnership income to declare – due date to file is June 15, 2021 but payment is due April 30, 2021)
• For Individuals – End of February will be here before you know it.  Here are some things to prepare for

• Do some number crunching with your 2020 income.  Determine your RRSP contributions that you may want/need to make in the first 60 days of 2021 to apply to the 2020 tax return
• Gather and organize all receipts for deductions:  medical expenses, child care expenses, donations, rent receipts..to name a few
• Remember T1 Personal Income Tax Filing deadline (deadline to file and payment due by April 30 2021)

As always, all of us here at SheDo Tax are more than able to assist with any of the above items and more.

We ask that when you do file with us this year to disclose ALL government Co-Vid related programs that you participated in throughout the 2020 taxation year (both business and individual programs) so that we can ensure all income is reported correctly.

We understand it is going to be a difficult filing season for most…rest assure…SheDo Tax has your back for the 2020 filing season!

2020 has been a difficult year for many Canadians with COVID-19 affecting most of us in one-way shape or form.  With the year winding down, it is time to start thinking about the next tax filing season.   As new information has become available from the Canada Revenue Agency (CRA) in recent weeks, we are hoping this blog post will help outline some of the steps that must be taken by individuals and business owners from income received through the 2020 programs that were put in place due to the pandemic.

As most of us are aware, the federal government quickly implemented income replacement programs to help those businesses and individuals who were affected by COVID-19.  As to be expected, this upcoming tax season is gearing up to be even more complicated than usual for Canadians who took advantage of these programs. Although tax season is still a few months away, the ladies at SheDo Tax are recommending that taxpayers ensure they were eligible for each COVID benefit they applied for and gather as much income source information as they can to determine if money needs to be set aside for potential tax balances due.

The programs that became available through Canada’s COVID-19 Economic Response Plan have been helpful to many, but what taxpayers need to remember is that most of the subsidies and benefits ARE taxable.

What does this mean?  It means that monies received from these programs that were marked “taxable” will have tax implications. For individual’s who received income from CERB, CRB, CESB etc., you will be expected to report the full amount you received and it will be added together with any other sources of income that were earned during the tax year.

One important thing to note is unlike your employment income where income tax is deducted at source (calculated by the income you made from that source only) and will be reported on your T4 slip at the end of the year, any income received through the economic response plan did not withhold any income tax at source.

For 2020, the basic personal exemption amount is set at $13,229.  This is the amount of income you can make before income tax applies to your income.  For those Canadians who claimed all 7 periods of CERB, they will have exceeded the basic personal amount.  Likely, most individuals will have other sources of income to declare.  However, you should see if you only received CERB alone in 2020, and have no other deductions to declare, you may owe income tax since no tax was deducted at source.  This is a simple example to show how easily a tax balance can occur in the 2020 tax year if no income tax was set aside.

On the bright side, benefits such as the increased one -time payout for HST, increased one -time CCB payout are not taxable, and you will not be required to report that income, nor will you receive a tax slip.

All business owners who received subsidy and relief monies through business COVID related programs will also be required to add these amounts to business income when filing their 2020 income tax returns.

Three of the available programs for businesses that we would like to focus primarily on include: Canada Emergency Wage Subsidy (CEWS), Canada Emergency Business Account (CEBA) and the Temporary Wage Subsidy (TWS).

The Canada Wage Subsidy program (CEWS) provided employers an option to help prevent lay off but rather encourage rehiring. If an employer is eligible in any of the 12 qualifying periods, they can receive up to 75% of remuneration paid to employers as a subsidy reimbursement. The amount of CEWS an employer receives in each period, will be considered as government assistance, and will need to be included in the employer’s income for the taxation year.

Similarly, the Temporary Wage Subsidy (TWS) was a three-month subsidy that allowed eligible employers to reduce their payroll source deductions by 10% when remitting to the CRA. The amount that was deducted is to be marked as taxable income.   It is important to note that any employer that participated in this program, a PD27 form must be filled out and uploaded or mailed to CRA.  Although currently there is no stated due date, it is highly advised to submit by the end of the calendar year.

The Canada Emergency Business Account (CEBA) is a $40,000 interest free loan for employers. The program was meant to help employers pay for non-deferred expenses. If the maximum was applied for and used, then $10,000 of this loan may be forgivable.  To elaborate, if the loan is repaid by December 31, 2022 then only $30,000 is due to be paid back.  There are no terms during this two-year period and no interest applied. If the loan is not paid by this time, it will convert into a 3-year installment payment at 5% interest due by Dec 31, 2025.  The eligibility and criteria of this program has changed multiple times since the beginning of the loan’s launch.  One thing is certain that for the 2020 tax filing, the forgivable portion of the loan of $10,000 (maximum) IS to be reported as income for the business in the current year.  If any of the forgivable portion is repaid in a future year, this can be a deduction for the year it is repaid.

We understand the 2020 tax filing season is going to be confusing and likely frustrating.  Hopefully, you can put your mind at ease as SheDo Tax is here to help along the way! As more information becomes available to us, we will do our best to keep our clients updated and in the know with new tax implications.

As always, if you have any questions or need some guidance and advice please email info@shedotax.ca or give us a call at 289-758-9501.

After providing millions of Canadians with financial relief since the beginning of this pandemic, the Canadian Emergency Response Benefit (CERB) payments have come to an end.

As a second wave of the pandemic is upon us, Canadians still collecting CERB and remain without employment will be forced to transition to a recently updated Employment Insurance (EI) program or apply for three additional temporary pandemic benefits.

Those who have collected CERB through Service Canada and are eligible for EI will be automatically transferred to this new EI program. Those who have been applying for CERB through the Canada Revenue Agency (CRA) My Account, will have to apply for EI which will now all be administered by Service Canada.

One of the biggest differences between CERB and the new EI is that claimants will be required to self-report on their employment status and apply every two weeks to continue to receive benefits. This EI will be available to regular claimants as well as special claimants.

What makes this new transitioned EI different?

Claimants applying for regular benefits will apply to individuals who involuntarily lost their jobs and are actively looking for work while claimants applying for special benefits are for those who have been unable to work due to the special life circumstances such as sickness, maternity/parental leave and compassion leave.

In both cases, Canadians with 120 insurable hours – which works out to roughly 3.5 weeks of work in the last 52 weeks can apply for and receive the taxable EI benefit at a rate of $500/ week, for up to 26 weeks. This is in comparison to the 420 to 700 hours usually required. To meet the minimum hours to qualify for transitioned EI, claimants will receive 300-hour credits for regular benefits (to add to the 120 hours to meet eligibility) and 480 hours for special benefits. These insurable hours are available to EI claims made within the next year.

For those who do not qualify for EI, 3 new temporary benefits may apply to you. The CRA guesstimates this situation will apply to roughly 1 million Canadians.

          The Canada Recovery Benefit (CRB) began September 27th. This is designed for workers who are self employed and are not “employees” and find themselves in need of support and ineligible for EI. It will provide $500 a week for up to 26 weeks. Similarly, to CERB, it is taxable, and you must have been unable to work.  One requirement is that business hours must have been reduced by 50% due to Covid-19 and pandemic restrictions. You will also be required to have earned at least $5000 from employment/self employment in 2019 or 2020. Those who apply for CRB will be actively seeking employment and accepting work where it is reasonable to do so.  This benefit must be applied for every two weeks.

It is important to note the CRA has stated that there will be a claw back from The Canada Recovery Benefit. Upon filing next years tax return, any with a net income over $38,000 in the year they claimed the CRB benefit, the claw back will be 50 cents on the dollar over $38,000 – this excludes income from the benefit itself. For example:  If you make $40,000 in employment income outside of the CRB you will be required to pay back $2,000 as a claw back, due after filing next years income tax.

          The Canada Recovery Sickness Benefit (CRSB) is a new taxable initiative providing $500 a week for up to 14 days for employees, or the self employed, who must self isolate due to Covid-19. Its qualifications are $5,000 of earned employment income in 2019 or 2020. Workers who miss a minimum of 60% of their scheduled work week due to self isolating are eligible. No medical certificate will be required, but workers will not be able to claim the CRSB and other paid sick leave for the same benefit period. Eligible workers will be required to apply separately for each one week period up to two weeks.

         The Canada Recovery Caregiver Benefit (CRCB) will also be effective September 27^th, 2020 for one year and will pay a $500/ week taxable benefit for up to 26 weeks per household. This benefit is for Canadian residents who are employed, or self employed the day preceding their application. They must have earned $5000 in employment or self employment income in 2019 or 2020, and have been unable to work at least 60% of their normally scheduled work week because of either – caring for a child 12 and under due to covid related school closures, the child cannot attend school due to being high risk at the advice of a medical professional, or their caregiver who usually provides care cannot do so due to the pandemic. Similarly, caring for a disabled family member or dependant because their day programs are unavailable or closed, they are at high-risk of contracting covid at the advice of a medical professional, or the caregiver who normally provides care is no longer due to the pandemic.

In addition, to claim the CRCB you must not be in receipt of any paid leave during the period you are applying for, and are not receiving CRB, EI, CSRB, short term disability benefits or workers compensation payments in the same week. Individuals must apply after each week they are seeking income support for.

For small businesses, the CEBA – Canada Emergency Business Account, which is a $40,000 interest free business loan, has been extended until Oct 31, 2020

It is important to note that the eligibility of these programs is subject to change as a second wave is upon us.

If you have any questions regarding the information above or possible eligibility, please feel free to reach out to us here info@shedotax.ca, or 289-758-9501.

To close, many Canadians who have collected all periods of CERB payments and are now relying on these new taxable benefits, have transitioned to EI, or have returned to work full time must be aware that they have likely exceeded the basic personal income amount of $13,229 for the 2020 income tax year. It is our recommendation here at SheDo Tax that you consider paying into involuntary T1 installments or have money set aside for tax season, when income tax will inevitably be owing. If you have not yet filed your taxes for the 2019 income tax year, we are also more than happy to help!

Have a wonderful day friends and be safe!

Rachel