As Small and Medium Enterprises (SMEs) are impacted by Coronavirus, many are turning to CPAs for advice as they navigate through these complex and fast-changing business conditions. Below are some suggestions from CPAs across the province to help SMEs understand government wage subsidies and tax relief.
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WAGE SUBSIDY STRATEGY
Most SMEs are looking to benefit from tax relief and financial measures. Noah Jensen, CPA, CA, in Cambridge, is advising all his eligible clients to claim the federal government’s 10 per cent Temporary Wage Subsidy for Employers for immediate cash flow relief. But, he explains, the benefits of doing so will be felt in the months to come.
“Applying for the Temporary Wage Subsidy first, will likely be less money than the Canada Emergency Wage Subsidy, but will be a more immediate cash flow relief,” says Jensen. Employers who experience the specified decline in revenue will be eligible for the additional Canada Emergency Wage Subsidy of 75 per cent of wages for 12 weeks. “Yet there is so much uncertainty, employers don’t know if their revenue will fall to the eligible levels in the coming months,” says Jensen. “So, employers should get as much funding behind them as possible right now.” Even those with sufficient cash flows to cope today, don’t know how long these conditions will last and when they’re going to need more.
UNCERTAINTY ABOUT ELIGIBILITY
CPAs are having to act quickly to assist SMEs as new rules and programs are continually being introduced. Ken Bell, CPA, CA, in Brampton, says this has meant his clients are looking for more clarity. “One professional services firm I have been speaking to could see the downturn coming and so billed heavily in March to ensure there was no lag in billing and collecting receivables. They’re regretting that now since the government’s subsidies only apply to firms with a specific drop in revenue. They won’t be eligible for March but will likely see that drop in later months. That’s a real source of concern.”
THE IMPORTANCE OF KEEPING UP-TO-DATE
A tip for SMEs from Celia Meikle, CPA, at GMS Professional Corporation in Mississauga, is to make sure that companies’ books are up to date. “My clients who are on top of their financials and have all their documentation and financial information up to date are in a good position to act quickly and take advantage of the loans and programs being announced.”
Below is a summary of government announcements on tax and financial relief measures, some of which have been discussed above.
Further information regarding new Federal and Ontario deadlines can be found here.
* Penalties (including late-filing penalties) and interest will not be applied if returns are filed and payments are made by September 1, 2020.
NOTE: Taxpayers are encouraged to file tax returns as early as possible to ensure benefits and credits are not interrupted.
We thank the CPAs who shared their experiences with us and encourage our members to contact Advisory Services at 416 204.3106 or 1 800 387.0735 x4456 or by email at email@example.com for further guidance.
CORONAVIRUS IMPACT: RESOURCE GUIDE
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