Year End Newsletter – 2020
As 2020 draws to a close, I would like to wish you all a happy and safe holiday season.
Looking forward to 2021, I would like to highlight a few items of importance:
CPP Contribution Limits will be Increasing in 2021.
The maximum pensionable earnings under the CPP for 2021 will increase from $58,700 to $61,600 in 2021. The basic exemption amount for 2021 remains at $3,500.
The employee and employer contribution rates for 2021 will increase from 5.25% to 5.45%, and the self-employed contribution rate will increase from 10.5% to 10.9%. Learn more here.
Please ensure you budget appropriately for this cost increase.
Canada Emergency Wage Subsidy (CEWS)
The Canada Emergency Wage Subsidy helped many businesses afflicted by the pandemic, to cover salary and wage costs. It is important to note there is a filing deadline for the subsidy of January 31, 2021.
This program is proposed to be extended to June 2021. For any CEWs period, the deadline is proposed to be the later of January 31, 2021 or 180 days after the end of the qualifying period.
If you qualify for CEWS, be sure to get your filings up to date so you don’t miss the reporting deadline. Learn more here.
Canada Emergency Business Account (CEBA)
The CEBA loans have been increased from $40,000 to $60,000 with a maximum forgivable amount of $20,000 if repaid before December 31, 2022. Note: the loan increase is not automatic and requires an application. It is also now available to businesses operating from a personal bank account. Learn more here.
Note: The forgivable amount of the CEBA loan is taxable in the period in which it is received. For businesses with a December year-end that have already received the loan, the loan will be taxable in their 2020 year-end. There are some exceptions to this, but in general, businesses should ensure they have enough funds to cover the tax on this income inclusion in the short term.
Canada Emergency Rent Subsidy (CERS)
The rules have changed, allowing businesses to now claim this subsidy themselves instead of their landlords. The program is currently running from September 27, 2020, until June 2021 and is generally available to businesses that have suffered a decline in revenue. Learn more here.
Realize Gain/Losses in Share Portfolios
With stock markets surging in recent weeks, it may be a good idea to review your portfolio and determine whether you can capitalize on using up any capital loss carryforwards by realizing any accrued gains in your portfolio. Make sure to reach out to your investment advisor for guidance.
As the year nears to a close, individuals and businesses may consider donating to a registered charity and obtaining a charitable donation certificate to help offset some of their taxes.
Many charities have been suffering through COVID through closures and reduced funding availability. Donations of stocks/shares with accrued gains can be tax advantageous and provide much-needed capital to charities in need.
If you are looking for a charity to donate to, the YMCA of Southwestern Ontario is an example of a well-run charity and a great option for supporting the local community.
If you are interested in supporting the YMCA, or learning more about their programs, kindly follow the link below or reach out to us to be put in touch with a representative.
As a closing note to 2020, I want to thank you all for your continued support and for the trust you have placed in my firm. I hope 2021 is a much more positive year for everyone and look forward to seeing you all in the near future!
Rob Ng, CPA
NG Chartered Professional Accountants Professional Corporation
201 King Street