Canada Emergency Response Benefit to help workers and businesses

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$2,000/month for 4 months – Canada Emergency Response Benefit to help workers and businesses

To support workers and help businesses keep their employees, the government has proposed legislation to establish the Canada Emergency Response Benefit (CERB). This taxable benefit would provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19 pandemic. The CERB would be a simpler and more accessible combination of the previously announced Emergency Care Benefit and Emergency Support Benefit.

The CERB would cover Canadians who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19, as well as working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures. The CERB would apply to wage earners, as well as contract workers and self-employed individuals who would not otherwise be eligible for Employment Insurance (EI).

Additionally, workers who are still employed, but are not receiving income because of disruptions to their work situation due to COVID-19, would also qualify for the CERB. This would help businesses keep their employees as they navigate these difficult times, while ensuring they preserve the ability to quickly resume operations as soon as it becomes possible.

The EI system was not designed to process the unprecedented high volume of applications received in the past week. Given this situation, all Canadians who have ceased working due to COVID-19, whether they are EI-eligible or not, would be able to receive the CERB to ensure they have timely access to the income support they need.

Canadians who are already receiving EI regular and sickness benefits as of today would continue to receive their benefits and should not apply to the CERB. If their EI benefits end before October 3, 2020, they could apply for the CERB once their EI benefits cease, if they are unable to return to work due to COVID-19. Canadians who have already applied for EI and whose application has not yet been processed would not need to reapply. Canadians who are eligible for EI regular and sickness benefits would still be able to access their normal EI benefits, if still unemployed, after the 16-week period covered by the CERB.

The portal for accessing the CERB would be available in early April.

Canadians would begin to receive their CERB payments within 10 days of application. The CERB would be paid every four weeks and be available from March 15, 2020 until October 3, 2020.

Canada Emergency Response Benefit

2020 BC Budget

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BC’s Finance Minister Carole James delivered the province’s 2020 budget on
February 18, 2020. The budget projects:

  • For 2020, a surplus of $227 million

  • For 2021, a surplus of $179 million

  • For 2022, a surplus of $374 million

Personal Tax Changes

Personal income tax rates

Effective January 1, 2020, a new top British Columbia personal income tax rate of 20.5% (up from 16.8%) that will apply to individuals with taxable income exceeding $220,000. As a result, the charitable donation tax credit will also increase to 20.5% for charitable donations over $200 for taxpayers in the new bracket.

Home Owner Grant

BC will decrease the threshold for the phase-out of the home owner grant from $1.65 million to $1.525 million. For properties above the threshold, the grant is reduced by $5 for every $1,000 of assessed value in excess of the threshold.

Real property contractors

Effective February 19, 2020, the budget allows real property contractors who perform value-added work to goods and then install those goods into real property outside the province to apply for refunds of PST paid on those goods.

Training Tax Credit

Extended to the end of 2022

Farmers’ Food Donation Tax Credit

Extended to the end of 2023

Corporate Tax Changes

Film Incentive BC and production services tax credit

Effective February 19, 2020, the budget increases the accreditation certificate fee for the Production Services Tax Credit from $5,500 to $10,000.

Production Services Tax Credit Pre-Certification Notification Introduced

Effective July 1, 2020, corporations intending to claim the production services tax credit
must notify the certifying authority of their intent within 60 days of first incurring an
expenditure eligible for the tax credit.

Training Tax Credit

Extended to the end of 2022

Farmers’ Food Donation Tax Credit

Extended to the end of 2023

New Mine Allowance

Effective date to be specified, extended to the end of 2025

PST Registration Requirement

Effective July 1, 2020, Canadian sellers of goods, along with Canadian and foreign sellers of software and telecommunication services will be required to register as tax collectors if specified B.C. revenues exceed $10,000. Additionally, all Canadian sellers of vapour products will be required to register if they
cause vapour products to be delivered to B.C. consumers.

Sales Tax Changes

Carbonated Beverages

Effective July 1, 2020, carbonated beverages that contain sugar, natural sweeteners or artificial sweeteners will no longer qualify for the PST exemption for food products. PST will also apply to beverages that are dispensed through soda fountains, soda guns or similar equipment, along with
all beverages dispensed through vending machines (except vending machines wholly
dedicated to dispensing beverages other than sweetened carbonated beverages, e.g., coffee
or water machines)

Carbon Tax Rates Aligned with Federal Carbon Pricing Backstop Rates

Effective April 1, 2020, the B.C. carbon tax rates for 2020 and 2021 are aligned with
the federal carbon pricing backstop methodology, where applicable. As part of this
alignment, the current B.C. rates for shredded and whole tires are also being replaced
with a new category for “combustible waste”. Combustible waste includes tires in
any form, asphalt shingles as a new taxable combustible and any prescribed material,
substance or thing.
B.C. carbon tax rates are being updated to ensure they are in line with the latest science
on emissions. The previous rates were set in 2008 and are today considered to be based
on old science. For some fuel types, the rates are lower than their original scheduled rates.
For example, the tax rate for gasoline will be 9.96 cents per litre on April 1, 2020, rather
than 10.01 cents per litre. For some fuel types, the rates are higher than their original
scheduled rates. For example, the tax rate for natural gas will be 8.82 cents per cubic
metre on April 1, 2020, rather than 8.55 cents per cubic metre. The new rates will be
available on the Ministry of Finance’s website.
The B.C. carbon tax rates will be reviewed as part of the federal government’s review of
the Pan-Canadian Framework on Clean Growth and Climate Change in 2022.

Tax Rate for Heated Tobacco Products Introduced

Effective April 1, 2020, a default tax of 29.5 cents per heated tobacco product is
introduced. For specific heated tobacco products, this default can be changed by
regulation. A heated tobacco product is a product that contains tobacco and is designed
to be heated, but not combusted, in a tobacco heating unit to produce a vapour for
inhalation.

Property Transfer Tax

Exemption from Additional Property Transfer Tax for Certain Canadian-Controlled
Limited Partnerships Introduced

Effective on a date to be specified by regulation, a new exemption from additional
property transfer tax will be introduced for qualifying Canadian-controlled limited
partnerships. This exemption will treat Canadian-controlled limited partnerships in a
manner more consistent with Canadian-controlled corporations. It will ensure that new
housing developments are treated similarly irrespective of whether the development is
being undertaken by a Canadian-controlled corporation or Canadian-controlled limited
partnership.

The entire BC Budget can be found at https://www.bcbudget.gov.bc.ca/2020/downloads.htm#gotoNewsReleases

Salary vs Dividend

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As a business owner, you have the ability to pay yourself a salary or dividend or a combination of both. In this article and infographic, we will examine the difference between salary and dividends and review the advantages and disadvantages of each.

When deciding to pay yourself as a business owner, please review these factors:

  • How much do you need?

  • How much tax?

  • Other considerations including retirement and employment insurance.

How much do you need?

Determine your cash flow on a personal and corporate level.

  • What’s your personal after-tax cash flow need?

  • What’s your corporate cash flow need?

How much tax?

Figure out how much you will pay in tax. Business owners understand that tax is a sizeable expense.

  • What’s your personal income tax rate?

Depending on the province you reside in and your income, make sure you also include income from other sources to determine your tax rate. (Example: old age security, pension, rental, investment income etc.)

If you decide to pay out in dividends, check if you will be paying out eligible or ineligible dividends. The taxation of eligible dividends is more favorable than ineligible dividends from an individual income tax standpoint.

  • What’s your corporation’s income tax rate?

For taxation year 2020, the small business federal tax rate is 9% . Please also remember, if you pay out salary, salary is considered a tax-deductible expense, therefore this will lower the corporation’s taxable income versus paying out dividends will not lower the corporation’s taxable income.

Other considerations

If you pay yourself a salary, these options are available.

  • Do you need RRSP contribution room?

As part of this, it’s worth considering ensuring that you receive a salary high enough to take full advantage of the maximum RRSP annual contribution that you can make.

  • Are you interested in contributing to the Canada Pension Plan?

This is unique to your circumstances and a cost-benefit analysis to determine the amount of contributions makes sense.

  • Do you need employment insurance (EI)?

For shareholders owning more than 40% of voting shares, EI is optional . There are situations worth careful thought such as maternity benefit, parental benefit, sickness benefit, compassionate care benefit, family caregiver benefit for children or family caregiver benefit for adults.

The infographic below summarizes the difference between Salary vs. Dividend.

We would also advise that you get in touch with your accountant to help you determine the best mix for your unique situation.

Contact Us

Saving for Education

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Post-secondary education can be expensive, however having the opportunity to plan for it helps with making sure that you’re capable to meet the costs of education. In addition, when you have a plan, it’s easier to make financial decisions that align with your goals and provide peace of mind. In the infographic checklist, we outline 6 factors to consider when paying for education: 

For parents:

  • How much to save and when will your child start school?

  • Registered Education Savings Plan- have you a family RESP plan and received the Canadian Education Savings Grant? If your income is low enough, you could qualify for the Canada Learning Bond.

  • Savings- are you saving separately for your child’s education? Cash Value Life Insurance- have you considered using this as a savings vehicle for your child’s education. What happens if your child decides not to go to school? These alternative savings vehicles provide flexibility so that you can use the funds for something else such as a down payment for a future home.

For children:

  • Will the child be working part time and have their own savings for school?

  • Can the child apply for scholarships, bursaries or grants?

  • Will they need to apply for government student loan, personal loan or personal line of credit?

If you need help planning to save for your child’s post-secondary education, contact us!

Defined Contribution vs. Benefit Pension Plan for Employees

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Defined Benefit vs. Contribution Pension Plan. Understanding the difference.

Read more

Estate Planning for Young Families

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Having a family is a blessing and can also bring a lot of worry. A lot of this worry can stem from not being prepared for a disaster like if something were to happen to you or your spouse.

We’ve put together an infographic checklist that can help you get started on this. We know this can be a difficult conversation so we’re here to help and provide guidance.

The Children

  • What will happen to the children if both parents were to pass away?

  • Who would take care of them and until what age?

  • What would happen if only parent were to pass away?

Make sure you have a will that:

  • Assigns a guardian for your children

  • If there’s an inheritance for the children, who will take care of this? Make sure you assign a trustee for the inheritance.

  • Always choose 2 qualified people for each position and communicate your intentions with them to ensure they’re up for the responsibility.

Assets and Liabilities

  • What are your assets? Create a detailed list of your assets such as: Home, Family Business Interest, Investments- Non registered, TFSA, RRSP, RDSP, RESP, Company Pension Plan, Insurance Policy, Property, Additional revenue sources, etc…

  • What are your liabilities? Create a detailed list of your liabilities such as: Mortgage, Loans (personal, student, car), Line of Credit, Credit card, Other loans (payday, store credit card, utility etc.)

  • Understand your assets-the ownership type (joint, tenants in common, sole etc.), list who are the beneficiaries are for your assets

  • Understand your liabilities- who’s on the hook for paying back the loan?

Make sure you have a will that:

  • Assigns an executor

  • Provide specific instructions for distribution of assets

  • Always choose 2 qualified people for each position and communicate your intentions with them to ensure they’re up for the responsibility. 

Ongoing Needs

What are your family’s ongoing needs?

  • List out the living expenses

  • List out income needs

  • Do you still need to pay for school?

  • Determine if you have enough (assets minus liabilities) to take care of the family.

Make sure you review your insurance.

  • Once you determine how much need there is, review your life insurance coverage to see if it meets your needs or if there’s a shortfall.

Execution: It’s good to go through this but you need to do this. Besides doing it yourself, here’s a list of the individuals that can help:

  • Financial Planner/Advisor (CFP)

  • Estate Planning Specialist

  • Insurance Specialist

  • Lawyer

  • Accountant/Tax Specialist

  • Chartered Life Underwriter (CLU)

  • Chartered Executor Advisor (CEA)

There are definitely unique situations in many families and things can get complicated so please use this when you feel it’s applicable.

Next steps…

  • Contact us about helping you get your estate planning in order so you can gain peace of mind that your family is taken care of.