Year End 2020 Newsletter

Dec 10, 2020

Accounting

Human Resources Solutions

Wealth Management

Company News

Please Note Our Christmas Shutdown

The offices of Ward & Uptigrove will be closed from 3:00 pm on Thursday, December 24th and reopening in the New Year on Monday, January 4th.

COVID-19 Support Program Updates

We are carefully monitoring updates and are keeping clients informed of relevant COVID-19 announcements. We encourage you to regularly check for updates at wardanduptigrove.com/covid-19.

Canada Emergency Business Account (CEBA) has again been expanded to allow banks and credit unions to provide an additional loan of $20,000 (increased from $40,000 for up to $60,000) for non-deferrable operating expenses. To be eligible for the additional loan, business need to have met the requirements for the initial $40,000 loan and would need to attest that it is facing ongoing financial hardship, intends to continue operating and has made all reasonable efforts to reduce its costs. In addition the business would need to attest that they used the first $40,000 loan only for eligible non-deferrable expenses. CRA has noted that wages paid to non-arm’s length parties are not considered an eligible non-deferrable expense.

The additional loans will be guaranteed by the Government of Canada and $10,000 is forgivable if repaid before December 31, 2022.

Deadline for application has been extended until March 31, 2021.
If you’ve been operating your business out of a non-business account, you can now be eligible for CEBA if you open a business account at a participating financial institution.
There are two application streams for small businesses 1) Payroll Stream for those with a payroll between $20,000 and $1.5 million or 2) Non-Deferrable Expenses Stream for those with less than $20,000 in payroll and non-deferrable expenses between $40,000 and $1.5 million.

Canada Emergency Wage Subsidy (CEWS) reimburses eligible employers a portion of employee wages from March 15, 2020 until June 2021. For Periods 11 through 13 (between December 20 to March 13, 2021), the Federal government is proposing to increase the maximum subsidy rate to 75% for those employers with a revenue decline of 70% or more. The maximum base subsidy would remain at 40%, but the top-up wage subsidy rate will increase to 35% (from current 25%).

Canada Emergency Rent Subsidy (CERS) subsidizes a percentage of rent and property expenses from September 27, 2020 until June 2021 for qualifying organizations. The government is proposing to

Maintain the base subsidy rate up to a maximum of 65% and the Lockdown Support of an additional 25% top up until March 13, 2021.
Allow businesses to claim rent payable as eligible rent, allowing them to claim the subsidy without having first paid the expense.

Due to the complexity of these programs, we have a team focused on efficiently submitting client applications for CEWS and CERS through CRA’s Represent a Client. For inquiries, please contact your Accountant or COVID-19@w-u.on.ca.

It is an important reminder that almost all benefits and funding received are considered taxable income in the claim period they relate. This includes the forgivable portion of the CEBA loan i.e. you should expect an additional $10,000 added to your taxable income if you received the entire $40,000 loan in 2020 or an additional $20,000 of taxable income if your received the entire $60,000 loan. Non-profit organizations and charities may also qualify for funding, and the funding for these entities would be non-taxable.

Ontario Budget 2021

The November 5th introduction of Ontario's Action Plan: Protect, Support, Recover budget contained a few proposals we are watching.

Employer Health Tax Exemption was previously increased from $490,000 to $1 million for 2020. The Budget proposes to make this increase in the EHT exemption permanent.

Seniors’ Home Safety Tax Credit

For the 2021 taxation year, Ontario has proposed the new Seniors’ Home Safety Tax Credit to help seniors, and families who have seniors living with them, make their homes safer and more accessible. A personal tax credit would be worth 25% of up to $10,000 in eligible expenses, that are paid or become payable in 2021, for a senior’s principal residence in Ontario. The maximum credit would be $2,500. Eligible expenses would include grab bars and related reinforcements around the toilet, tub and shower, wheelchair ramps, stair lifts and elevators. They would also include renovations to permit first floor occupancy or a secondary suite for a senior.

Tax Deductions for Remote Employees

With many Canadians working from home during the COVID-19 pandemic, employees may be able to deduct home expenses against their employment income.

Typically to make a claim, the employee must have spent at least 50% of their time during the year at their home office and the employer is required to complete Form T2200 – Declaration of Conditions of Employment for each eligible employee for each year. This form does not need to be filed with the CRA but should be kept to be provided to the CRA if requested. After meeting both of these conditions, the employee would be entitled to deduct certain expenses that they paid relating to the home office space.

For the 2020 tax year, CRA is planning to allow employees who are working from home due to COVID-19 to deduct up to $400 using a simplified flat rate. The amount that can be claimed would be based only on the number of days the employee worked from home during the year. Under this approach, there is no need for the Employer to complete form T2200 for these employees.

Permanent Remote Employees

Many businesses and employees are making the permanent switch to facilitate remote working and it may benefit your employees now (to allow for a higher deduction than the temporary $400 flat rate) or in future tax years to provide a T2200 – Declaration of Condition of Employment.

The costs deducted should be calculated on a reasonable proportion based on the area of the work space and total finished area of the home. Based on the proportion, an employee can deduct part of their expenses, such as electricity, heating and maintenance. An employee cannot deduct mortgage interest, property tax, home insurance or capital cost allowance. If it is a rented house or apartment, the employee can deduct part of the rent and any maintenance cost paid for the work space.

The employee cannot expense or deduct more than the income earned in the workspace. CRA also allows an employer to reimburse an employee tax-free up to $500 for the purchase of home office equipment.

*On December 15th, CRA provided details on the temporary flat rate method and introduced an alternate T2200S (simplified) form for 2020, please visit CRA's Home Office Expenses for Employees page.

Whether remote working is temporary or permanent for your employees, communicating this potential tax savings is a way employers can support employees and help reduce their personal taxes.

New T4 Reporting Requirements

For the 2020 tax year, the Canada Revenue Agency (CRA) will be introducing additional reporting for the T4 slip. This will apply to all employers to validate the payments that have been issued under the Canada Emergency Wage Subsidy, Canada Emergency Response Benefit and the Canada Emergency Student Benefit.

In addition to reporting employment income in Box 14, new information codes for reporting employment income and retroactive payments to employees relate to the following time periods:

Code 57: Employment income – March 15 to May 9
Code 58: Employment income – May 10 to July 4
Code 59: Employment income – July 5 to August 29
Code 60: Employment income – August 30 to September 26

These time frames align with periods that each COVID benefit aligns to.

For more information, please contact your accountant and we may be able to assist you in the preparation of your T4s for the current year.

Meal Allowance Increase

Effective January 1, 2020, CRA has increased the flat rate meal allowance for medical travel and other travel from $17 to $23.

Employers

This meal allowance is the amount that employers can use to determine whether an overtime meal, allowance, or the meal portion of the travel allowance is taxable. If all of the conditions are met, the employer does not need to report the value of the meal or allowance on the employee’s T4 slip.

Individuals

This is the new flat rate when utilizing the simplified method for calculating meal deductions. This method is available for a) transport employees, b) individuals claiming moving expenses, medical expenses or c) the northern residents deduction. If eligible for this method, individuals do not have to keep receipts for their meals.

CRA Data Breach

In August 2020, approximately 500 CRA accounts were targeted through the GCKey, which allows Canadians to access various services such as My Account. If your account was compromised during the recent cyber incidents:

CRA disabled access to your account(s) and you would receive a letter by registered mail with instructions on how to validate your identity to regain access
You would be offered credit protection services free of charge
All benefit and credit payments would cease until your identity has been validated and access to your account is restored
CRA would work with you to restore personal information and ensure you are not held liable for fraudulent claims and payments made on your account

If your account is disabled, whether you received a letter or not, or you discover suspicious activity on your account, please contact CRA right away at 1-800-959-8281.

To prevent future incidents, CRA advises the following:

Changing your user IDs, passwords and security questions and answers
Use unique and complex passwords and do not reuse passwords from other logins
Create a personal identification number (PIN) in CRA MyAccount
Sign up for email notifications – however, please note, that once you are set up for email notifications, you will no longer receive a paper copy of items such as your Notice of Assessment.
Monitor your account for suspicious activity, such as unsolicited changes to your address, direct deposit information or benefit applications on your behalf

QuickBooks Online

Many clients find using QuickBooks Online a seamless way to complete their bookkeeping transactions and share information with us. By using a tool that offers your Accountant access to your information, we can also provide support answering questions in real time.

QuickBooks Online is an online cloud accounting software that is safe, accessible, and synced across all your devices. The companion mobile app allows you to work on-the-go and your financials are at your fingertips. Working in the cloud also enables you to connect to a wide variety of third-party apps and business services you may already be using.

If you are looking to update your bookkeeping software, our Accounting Software Support can help with implementation, training and support.

Temporary Layoffs and the Pandemic

Since the beginning of the COVID-19 pandemic, many employers have been required to close their doors and/or temporarily lay off employees. But without an employment agreement that allowed for a temporary layoff, it was unclear if the employer was at risk for a constructive dismissal claim.

To address this, the government created a regulation that changed certain Employment Standards Act, 2000 (ESA) rules during the “COVID-19 period” (Currently from March 1, 2020 to July 3, 2021*). * On December 17, Ontario extended the IDEL leave until July 3, 2021.

During this period, a non-unionized employee whose employer has temporarily reduced or eliminated their hours of work for reasons related to COVID-19 is deemed to be on a job-protected “Deemed Infectious Disease Emergency Leave”, not a temporary layoff.

This regulation drastically reduced the risk of a constructive dismissal claim. It also eliminated the automatic trigger of termination of employment at the end of a temporary layoff period (at 13 or 35 weeks). This allowed employers to maintain the employment relationship with their employees during these difficult and ever-changing times.

After the deadline, employees will no longer be on Deemed Infectious Disease Emergency Leave and the ESA’s regular rules around temporary layoff will resume (unless extended). Any employees on the deemed IDEL will need to be recalled by then, switched to a layoff of 13 weeks (or 35 weeks if benefits continued) or terminated.

The Pandemic has highlighted the importance of written employment agreements for employers in Ontario. Any employment contract drafted from March 2020 onwards should contain a provision allowing for temporary layoffs as well as a carefully worded termination clause. Employers should take great care and seek the advice of an HR Consultant or employment lawyer when contemplating the use of employment agreements for new or existing employees within their business. Employment law is ever evolving and the language used in your written agreements must incorporate those changes or risk legal enforceability issues.

Increasing Health & Safety Due to COVID-19

Business owners and employers face ongoing challenges as restrictions, directives, and information constantly change. The Provincial and Federal Governments and local health units and municipalities have developed strategies, guidelines, and toolkits to help businesses cope and remain viable.

On November 19, 2020, the Office of the Premier of Ontario announced a Workplace Education and Enforcement Campaign with the goal of educating businesses and enforcing the COVID-19 health and safety requirements.
Penalties and Fines for violations are some of the highest we have seen, including $750 for immediate ticketable offences. Prosecutions include personal fines ranging from $10,000 to $500,000 and corporate fines up to $10,000,000 as well as jail terms up to one year.
On November 3, 2020, the Ontario Government created the COVID-19 Response Framework: Keeping Ontario Safe and Open. to establish different colour coded levels as responses to regional outbreaks and rising or receding numbers of COVID-19 cases. It includes sector specific measures for workplaces, within the different levels of control.
This fall, The Ministry of Labour, Training, and Skills Development launched a campaign to recruit 98 more inspectors, specifically to help prevent the spread of COVID-19. This will result in more inspection officers now, than ever before in history.
As of September 26, 2020, all businesses are required to actively screen all workers before they enter the workplace using the COVID-19 Screening Tool for Workplace or equivalent. The screening must be documented, and the records must be retained for at least 15 days.
WSIB announced they will not increase employer premiums for 2021. The 2020 premium rates will remain the same for all of 2021.

So What Does This Mean for Business Owners?

The pandemic has highlighted the importance of risk management in the workplace. Employers, more than ever, have an obligation to take all reasonable precautions to protect workers from illness. Add to that the increased enforcement initiatives including fines for violating the new legislations. Managing workplace risks and staying compliant can be complex and there are several fundamental principles to follow.

There is no definitive line between safe and unsafe.

The goal is to manage risks and reduce them to the lowest level reasonably possible while still doing business and serving customers. There is risk in everything we do every day, but by using multiple controls and measures we can reduce that risk to a point that is reasonable for us.

Risk reduction measures must follow the Hierarchy of Control

In workplace health and safety, we look to the “hierarchy of controls” to guide the priority of actions to reduce risk. Always start by considering the most effective controls first, then when elimination and substitution is not possible, use multiple engineering and administrative measures.

Risk control measures

When implementing measures to control risk and reduce exposure to COVID-19, consider the implications of the new processes and procedures. Ensure that they don’t create any new or additional risks to worker health and safety. Review the controls and monitor their effectiveness to make sure no new hazards are created such as exposure to harsh disinfectants or heat stress from additional PPE.

To help manage risks of COVID-19 exposure businesses should consider developing a COVID-19 Workplace Safety Plan. Under the COVID-19 Response Framework, a written safety plan is mandatory for certain business sectors in the yellow, orange, and red zones.

Main factors for developing your COVID-19 Safety Plan:

Use information, data, and guidance from reliable and credible sources such as your local public health and the Government of Ontario:
Public Health Ontario
Public Health Unit Locator
Ontario Resources to prevent COVID-19 in the workplace
Keep up to date with current and changing information and requirements by regularly reviewing the above websites and by subscribing to government newsletters such as the Ministry of Labour, Training and Skills Development.
Identify the risks of exposure in your workplace and develop feasible and effective control measures. Consult the sector specific guides included in the Resources to prevent COVID-19 in the workplace webpage.
Communicate the plan to your workers, contractors, suppliers, and customers as applicable to their role and responsibilities in the plan. Think about what they need to know and do to keep themselves safe. Communication could include posters, safety memos, virtual meetings, etc.
Plan for a potential, suspected, or confirmed case of COVID-19 in your workplace. This includes your reporting obligations to Public Health, the Ministry of Labour, Training, and Skills Development, and the WSIB, as applicable.

COVID-19 has been difficult for many people and beyond these basics, there are other key considerations to manage the impacts of COVID-19 in the workplace and improve the wellbeing of your employees.

As with any plan or policy, it will likely evolve to reflect new information and developments. You should regularly review your plan and the control measures to ensure they continue to be effective in reducing risk and comply with changing requirements.

How Interest Rates Work

If there is ever a time to start understanding how interest rates work, now might be it! The Bank of Canada has been slashing interest rates since the beginning of the COVID-19 pandemic. Below is a simple explainer of what it means to cut rates and how it could affect you and your money.

What Is the Federal Fund Rate? And Why Does it Change?

The federal fund rate, also known as the overnight rate, target rate or nominal rate is one of the most important tools the federal government has. A central bank's ability to change the target rate is used to sway the economy in two major ways:

The first is inflation. The government can raise interest rates when inflation is becoming too high as a way to stabilize it. The idea is that the raised rates lessen the flow of credit into the financial system by increasing the cost of borrowing. These raised rates tend to discourage people from borrowing and spending, which in turn can stop the rise of inflation.
The second is to stimulate the economy when growth is too low and unemployment is too high. By lowering the rates and offering a lower cost of borrowing, the central banks hope to encourage borrowing and start a flow of money into the economy.

How Will Changes Affect You and Your Money?

Rate changes will affect anyone who has any debt. That means mortgages, lines of credit, credit cards…essentially anything you pay interest on! If you have a fixed rate mortgage, rates going down may be a good reason to refinance and take advantage of lower interest rate.

What Do Interest Rates Have to Do with Investing?

Lowered rates are meant to encourage people to start investing in assets such as stocks and bonds. This of course is part of the plan to stimulate the economy. By lowering interest rates, securities become more attractive than keeping your money in cash. The fact that the government takes steps such as this in an economic downturn is one of the reasons that securities typically will outperform cash in the long term.

The central banks have been using interest rate cuts to try to hedge against the economic impact of the COVID-19 pandemic. Lowered interest rates are designed to provide opportunity to businesses and investors. Be sure to talk to your advisor to find out how you could benefit.

Reviewing Financial Priorities

Depending on your household, COVID-19 may be providing financial challenges or opportunities. Whichever your situation, now is a good time to review your financial priorities.

Financial Planning

These unprecedented times may be a good time to review or establish your financial plan. Some key areas to consider are

Do you know your short and long term financial goals?
Do you have a budget?
Have you or do you have a plan to pay off high interest debt such as credit cards?
Do you have an emergency fund that could cover 3 to 6 months’ worth of expenses?

Emergency Funds

If you don’t have an emergency fund, here are a few things to consider

An Emergency Fund Should be Totally Separate From an Everyday Savings Account: The fund should provide you with money to use so that you do not have to tap into retirement savings, credit cards, or other expensive loans.
Predetermine What Will Constitute an Emergency: It can be a good idea to have some rules for your emergency fund so you aren’t tempted to dip into savings for unnecessary expenses. For example, an emergency fund could replace income in the event you lost your job, major repairs for your house, or major dental expenses.
Have a Savings Strategy: An emergency fund should be a top savings priority. As soon as you get paid, pay into your emergency savings account first before the money gets spent elsewhere.
Know What Account is Best: There are many options available for every type of savings, but when it come to an emergency fund the best accounts are ones that are easily accessible and have no tax penalty or withdrawal restrictions i.e. an RRSP should not be used for an emergency fund.
Don’t Take Risks: The stock market isn’t a good place for an emergency savings accounts due to market fluctuations which could deplete the account, ending up short of cash if you find yourself needing the money.

Donating Cash or Shares

In the coming weeks, many Canadians will be making a bulk of their charitable donations for the year. While most are aware of the benefit of the Donation Tax Credit when contributing cash to a registered charity, many aren't aware of the potential additional tax benefit that comes from donating investment securities, such as publicly traded shares, from non-registered investment accounts to registered charities. These donations in-kind and are still eligible for the Donation Tax Credit equal to the market value of the investment at the time it is transferred to the charitable organization. But there is an additional benefit - when gifting an investment security to a registered charitable organization CRA does not require the taxpayer to recognize any taxable gains associated with the donated investment securities. For more information, please see our previous Donating Shares newsletter article.

2020 has been a challenging year for many charitable organizations with more needs, lower revenues and many canceled fundraising events. We hear the needs and as a corporate citizen in Huron-Perth, Ward & Uptigrove supports organizations that provide a direct benefit in our communities including United Way Perth-Huron, Salvation Army Food Bank, Listowel-Wingham Hospital Foundation, Maitland Conservation Foundation and Stratford-Perth Community Foundation.

If you are not sure where or how to begin, a Financial Planner can help you build your financial health and confidence.

Phone Extension Changes

This Fall Ward & Uptigrove implemented new 4 digit extensions. We’ve updated all extensions on Our Team web page and in our email signatures. During business hours, a Receptionist answers and directs your call by name but if you do happen to get the auto attendant and don’t know the new extension, you may press 2 and then dial by last name.

Did you notice we’ve updated our online presence? Wardanduptigrove.com offers a clean and easier to navigate website. It also include a News section, where you can search by keyword for past article titles.

Staff Updates

As we reflect on 2020, our 62nd year, we recognize another year of growth and progression with our staff.

We are thrilled to welcome the following new staff members to our team:

Congratulations to the following staff members who achieved their Chartered Professional Accountant (CPA) designations

We are proud to congratulate the following staff members on their development and progression into new roles this coming year.

Partner & Principal Announcements

Staff Progressions

Congratulations to a few staff on their retirements!

This past year has been a challenging year, we want to thank our clients for their patience with our new remote working and paperless procedures.

Merry Christmas and Happy Holidays

from the Partners and Staff of Ward & Uptigrove

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2024 Federal Budget Commentary

17 Apr, 2024

On April 16, 2024, the Deputy Prime Minister and Finance Minister, the Honourable Chrystia Freeland, presented Budget 2024 – Fairness for Every Generation , to the House of Commons. No changes were made to personal or corporate tax rates. Some highlights include: A. Personal Measures Increase to the capital gains inclusion rate to 2/3, however individuals will retain the 1/2 inclusion rate on the first $250,000 of capital gains annually. Increase to the lifetime maximum capital gains exemption, and two new incentives on specific types of business sales. Modifications to the proposed amendments to focus the alternative minimum tax regime on high-income individuals. B. Business Measures Canada carbon rebate for small businesses that will begin by delivering payments to eligible CCPCs for five years of carbon tax. Accelerated capital cost allowance on purpose-built residential rental properties. Immediate expensing of certain productivity-enhancing assets, including computer hardware, acquired on or after April 16, 2024. C. International Measures Crypto-asset reporting framework that will require annual reporting by crypto-asset service providers on their clients’ activities using these assets.

Violation of Occupational Health & Safety Act Results in Unprecedented Fines

16 Apr, 2024

On April 5, 2024, an unprecedented fine was levied towards a corporation and its director for violation of the Occupational Health and Safety Act . The corporation was fined $600,000 and the director was fined $80,000, plus a 25% victim surcharge. These are highest fines levied both towards a corporation, and to an individual for a single charge in Canadian history, and is further evidence that governing bodies are serious about enforcing legislation to protect workers and prevent further fatalities and injuries. What can we learn from this? 1. Chemical handling protocols are critical for reducing risk in the workplace. In this case, diesel fuel and gasoline were unintentionally mixed, causing an increased flammable hazard. Ultimately, this mistake resulted in catastrophic explosions and fires that caused the death of 6 people and serious injury of another. 2. Directors are being held increasingly accountable for the workers under their care; specifically, for oversight of middle management/supervisors and ensuring hazards are identified and controlled. While consistent with their legislated duties under the Act, historically directors have not been the target of large fines and charges. Instead, the penalties were previously levied toward front line supervisors and staff. This reflects the growing understanding that senior directors have the most accountability for the workplace and workers, and that they have a duty to know what is happening in their organization. 3. Senior leaders need to have open communication and trust with their workforce to ensure candid and frequent flow of information. Leaders won’t know what is happening, and therefore cannot take action to address risk if the workforce is fearful or apprehensive about reporting their concerns. Consider who in your workplace provides this information and to whom. If you are a leader, what questions should you be asking and what to you need to know? Do you believe that staff are open and honest, without fear of repercussions when delivering bad news? Is there a clear and accessible process for reporting, tracking, and resolving issues? 4. Workplace culture is built from the top. Leaders are responsible for establishing systems and structures that support a culture that prioritizes worker safety. Blame-centered culture reinforces our natural instinct of self preservation over disclosure; silence and secrecy over candor and open communication. Also, actions mean more than words. Leaders need to ensure actions and directives echo policy statements, and vice versa. So, what can you do? Ensure that you have an environment where staff feel comfortable reporting issues, where supervisors and managers appreciate staff input and take action to address these concerns. Having little or no reported concerns is a red flag and is a prime indicator that staff do not understand or feel comfortable reporting issues. Ensure that staff are trained about the specific tasks and hazards in your workplace, not just general safety measures, and equip supervisors and managers with the tools and knowledge they need to be successful and manage the workers under their care. To read more about the incident, the Ministry of Labour, Labour, Immigration, Training and Skills Development has published a court bulletin: https://news.ontario.ca/mlitsd/en For any assistance or answers about how you can bolster your health and safety systems and due diligence, contact our resident safety expert Jennifer Goertzen, CRSP .

Office Hours Update

12 Apr, 2024

As we near the end of Tax Season, please note our office hours below: Hours until April 29th Monday – Friday 8:30am – 5:30pm Thursday evenings 6:30pm – 8:00pm (closed from 5:30pm- 6:30pm) Saturdays 9:00am – 12:00pm Hours on April 30th 8:30am – 5:00pm Hours May 1st – May 3rd Closed Hours beginning May 6th Monday – Thursday 8:30am – 5:00pm Friday 8:30am – 4:30pm

CONTACT US

P.O. Box 127

145 Main St E.

Listowel, ON N4W 3H2

(519) 291-3040

info@w-u.on.ca

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