COVID-19 is beginning to have a profound impact on how people conduct business. The following is a summary of our present recommendations and recent government announcements to help you proactively manage your business during this uncertain time.
Steps to help protect your business from the fallout of COVID-19
- Preserve your cash and working capital—spend only what is required to operate your business.
- Consider a temporary layoff of workers with the immediate issue of Records of Employment (ROEs) so these workers can apply for EI benefits and your business can preserve capital.
- Reach out to a BDC account manager, or visit the BDC website, and apply online for a small business loan up to $100,000. If you require a referral to an account manager, we can help.
- Pause your corporate tax payments—certain payment due dates have been extended until after August 31, 2020.
- Communicate frequently with your key suppliers and landlords and attempt to work out payment arrangements as necessary.
Recent Federal announcements affecting small business and medium-sized businesses
- Businesses may defer payment of any income tax balances or instalments due on or after today and before September 2020, until after August 31, 2020.
- The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) have been allocated a further $10 billion in funds to support small and medium-sized businesses. While the details are still being finalized, there is a short form online application on the BDC website for a business loan up to $100,000. They also have support for businesses in the form of working capital loans and purchase order financing. https://www.bdc.ca/en/pages/special-support.aspx?special-initiative=covid19
- The government will be providing eligible small businesses a temporary wage subsidy for a period of three months equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. This benefits employers eligible for the small business deduction, as well as non-profit organizations and charities.
- The federal government has introduced special measures under the Work-Sharing program to help companies and employees avoid layoffs where there is a temporary reduction to normal levels of business activity.
Canadian personal tax considerations
The personal tax deadline has been extended to June 1st and the deadline to pay any related tax debt has been extended to August 31st.
If you are entitled to a tax refund, it is beneficial to file your personal tax returns as early as possible. If you have a balance owing, it can be paid by the extended due date, regardless of when your return is filed.
U.S. personal tax considerations
For individuals whose tax home is in the United States, both the tax filing and tax payment due date is normally April 15th. On March 17thU.S. Secretary of the Treasury, Steven Mnuchin, announced that the Department of the Treasury will be deferring the April 15thtax payment deadline. Individuals—and many businesses—will have an additional 90 days to make their payments to the IRS. Individual taxpayers may be able to defer up to $1 million of tax liability.
For individuals with a U.S. tax liability whose tax home is considered outside of the United States (including residents of Canada), the normal filing due date is June 15th. Taxpayers have always been able to obtain additional time to file their U.S. individual income tax return by filing Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return”. The timely filing of this form will extend the due date until October 15th, 2020.
S+C Partners is OPEN FOR BUSINESS
S+C Partners is committed to helping our clients, our staff, and our community during this difficult time and our team is ready to assist you with navigating the challenges posed by this crisis.
Please call us at 905-821-9215 or email us at tax@scpllp.com with any questions.