Archive for the ‘Uncategorized’ Category

Tax Season is Here

February 22 marks the official launch of tax season 2021, and individuals are now able to file their 2020 tax returns.

The last tax season faced unprecedented challenges with the start of the COVID-19 pandemic, and the CRA had extended tax deadlines for 2019 returns to accommodate such uncertainties.

However, no such extensions have been announced for 2020 returns. Instead, the CRA has taken steps to accommodate those who need extra assistance when filing their taxes this year. This includes adding more call centre agents, extending call centre hours, providing a targeted interest relief for Canadians, expanding payment arrangement parameters, simplifying the deduction for home office expenses, and supporting community organizations who offer free virtual tax help.

Visit the CRA’s website to learn more about the resources available to you this upcoming tax season.

https://www.canada.ca/en/revenue-agency/news/2021/02/the-canada-revenue-agency-is-here-to-help-canadians-through-a-tax-season-like-no-other.html

Critical Worker Benefit

The Government of Alberta has opened applications for the Critical Worker Benefit. The Critical Worker Benefit will provide a one-time payment of $1,200 to eligible Albertans in recognition of their hard work to provide Albertans with the care and critical services they need.

The benefit will be distributed to up to 380,000 workers in the health-care, social services, education and private sectors. The Government of Alberta is working directly with health-care, social service, and education sector employers to distribute the benefit to eligible workers.

The Private sector industries eligible include retail (grocery, pharmacy, and gas), food manufacturing, truck transportation of food and medical supplies, and private health clinics. Private sector employers and employers with eligible workers in First Nations communities must apply on behalf of their eligible employees by March 19, 2021.

https://www.alberta.ca/critical-worker-benefit.aspx#jumplinks-3

How Much do you Need to Retire in Canada?

The Blunt Bean Counter dives into a study conducted by Michael Kitces, who is known as a retirement expert in the United States.

There’s a famous rule created by William Bengen that says you should be able to withdraw 4% of your retirement savings each year, adjusted for inflation, and those savings will last for 30 years. So if you need $100,000 a year to live in retirement, you will need a nest egg of $2.5 million ($100,000/.04).

Many experts feel that there are several deficiencies to this rule because it does not account for income tax, management fees, interest rates and other financial considerations. However, in his study Michael Kitces analyzes other factors that may make the 4% rule a more reputable “rule of thumb”. Learn more here:

http://www.thebluntbeancounter.com/

Government of Alberta Relaunch Grant

The Government of Alberta is offering up to $20,000 per eligible application through the Small and Medium Enterprise Relaunch Grant.

To be eligible for the grant, your business must have been ordered to close or curtail operations due to COVID 19 and experienced a revenue reduction of at least 30% as a result. Businesses can use these funds as they see fit to help offset a portion of the impact of new public health measures or their relaunch costs, such as implementing measures to minimize the risk of virus transmission.

Starting February 4, 20201, new businesses can apply if they began operations between March 1 and October 31, 2020 and meet the updated 30% threshold, and unregistered sole proprietors can also apply.

Applications for the first and second payment are open until March 31, 202021. Learn more here:

https://www.alberta.ca/sme-relaunch-grant.aspx

Highly Affected Sectors Credit Availability Program

Has your business been hit especially hard by COVID 19?

The federal government has opened a new program called Highly Affected Sectors Credit Availability Program (HASCAP) Guarantee. One of the main eligibility requirements for HASCAP is that your business has seen revenues decrease by 50% or more because of COVID-19. These low interest loans range from $25,000 – $1 million and are meant to help cover operational cash flow needs.

Learn more here:

https://www.bdc.ca/en/special-support/hascap

Hire a Youth this Summer

Canada Summer Jobs 2021 is a wage subsidy program that can help your business create summer jobs for youth between the ages of 15 and 30, focusing on those who face barriers to employment. 

With COVID-19 still wreaking havoc, the government is specifically prioritizing small businesses affected by the pandemic – so take advantage of the funding available to you!

The subsidy covers up to 75% of your provincial minimum wage, and it can be used for both full and part-time work. Employers may also amend their project/job activities if the proposed project is impacted by COVID-19.

Some of the eligibility requirements include:

  • You must have 50 or fewer full-time (30 hours or more/week) employees across Canada;
  • You must provide full-time or part-time work experience in Canada for a minimum of 6 weeks between April 26, 2021 and February 26, 2022
  • The job must provide meaningful work experience for the youth, supporting skills acquisition and development
  • You must provide an inclusive, non-discriminatory work environment that respects the rights of all Canadians.

Applications will be accepted until January 29, 2021. Learn more here:

https://www.cfib-fcei.ca/en/tools-resources/canada-summer-jobs-youth

CEWS Deadlines

The first hard deadline for CEWS is just around the corner… January 31, 2021. 
And, it is more important than many realize!  Why?

1. Multiple periods covered
CEWS applications are due by: the later of 180 days after the end of the period, and January 31, 2021. This means that the final deadline for periods 1-5 (ending August 1, 2020) is January 31, 2021.

2.  Restriction on past elections
January 31, 2021 is also the final deadline to amend or revoke elections related to the revenue decline computation for those periods.
 
3. Restriction on future elections
As some elections affect multiple periods (such as the cash basis revenue decline method selection, and the use of January and February’s average monthly revenue as a prior period reference), the choice used in period 5 will lock in the remaining periods after this deadline passes.

4. Effect on CERS
The base CERS subsidy is largely based on the revenue decline computation of the CEWS program.  Therefore, if an election is made for CEWS, and it binds all periods, then future CERS claims will be impacted.

Tip! Review all potential claim applications, as well as adjustments to prior claims, before January 31, 2021.

The CRA has Started to Mail T4A Slips

The CRA has started mailing T4A slips for the various COVID-19 support programs received by Canadians during 2020. This includes the Canada Emergency Response Benefit (CERB), the Canada Emergency Student Benefit (CESB), the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB), and the Canada Recovery Caregiving Benefit (CRCB).

Don’t forget to provide your accountant with these additional slips during tax time; if you don’t receive yours by March 10th, the form should be accessible using CRA’s “My Account”.

https://www.canada.ca/en/revenue-agency/news/2021/01/canada-revenue-agency-to-begin-issuing-t4as-to-covid-19-emergency-and-recovery-benefit-recipients.html

CEBA Update

The Canada Emergency Business Account (CEBA) was previously a loan of up to $40,000 with a $10,000 forgivable portion (if repaid by December 31, 2022).

As of December 4, 2020, this has been increased to a total loan of $60,000 with a forgivable portion of $20,000 (if repaid by December 31, 2022).

Those who have previously received the $40,000 loan can apply for the CEBA expansion to increase their loan by an additional $20,000.

Applicants have until March 31, 2021 to apply for the $60,000 CEBA loan or the $20,000 expansion.

Get all the details here https://ceba-cuec.ca/ and here https://www.cfib-fcei.ca/en/canada-emergency-business-account-ceba

Differences between RRSP and TFSA

TFSA

  • Money is easy to access and withdrawals are tax free.
  • Contributions to a TFSA are not tax deductible.
  • Monies earned by the TFSA (dividends, capital gains, interest earned etc.) are tax free.
  • The contribution limit is fixed and does not depend on your income. This can be beneficial for lower income earners because they will not be restricted by their income.

RRSP

  • Contributions are tax deductible.
  • With a few exceptions, money typically stays in an RRSP until retirement. It is more difficult to access than a TFSA.
  • Withdrawing from an RRSP needs to be strategic; too much income during retirement could make you ineligible for old age pension.
  • RRSPs provide tax deferral, so you will pay tax on amounts withdrawn from the RRSP.
  • Your RRSP contribution limit is based on a percentage of your income

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Padgett Business Services

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Phone: (403) 220-1570

Email: Padgett Calgary

Daniela H. Barber Professional Corporation

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