You can deduct the fees you incurred for external professional advice or services, including consulting fees. Note that CERB should be included as taxable income on 2020 returns. The financial institution will then direct applicants to Step 2 of the application process. Choose a location below, and we'll tailor our site with content that's relevant to you. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. (JavaScript must be enabled to view this email address), Scientific Research & Experimental Development, Operational Performance Reviews and Process Improvement, Capital Management for Resource Companies, Indigenous Communities and Not-For-Profits, other Baker Tilly publications on COVID-19, Indigenous Communities and Not-for-profits, Further expansion of the CEBA – applications open June 26, Home office expense deductions during the pandemic, “Show me your papers, please”: zero-rated supplies of exported goods. Learn more about life at Baker Tilly Canada, browse our opportunities and apply today. Additional documents required will include: The name of the financial institution where you submitted your application; and, Your 9-digit business number (same number you used in your application with your financial institution); and. For more information, read "Interest" in guide T4002. For corporations, the $1,000 monthly income limit is based on wages or dividends paid each month. Two types of rental and lease payments are identified in the CEBA rules which are eligible as non-deferrable expenses: Real estate used for business purposes, for example, office rent and lease. To deduct a business expense, you need to have carried on the related business in the fiscal period in which the expense was incurred. Certain restrictions apply to the amount of the expense you can deduct for advertising in a periodical. Second, farms must have had a business bank account opened as of March 1, 2020. However, specifics about whether farmers can qualify for these programs have not been readily available. Eligible non-deferrable expenses may include costs such as rent, property taxes, utilities, and insurance. You can deduct the interest you pay on money you borrow to run your business. If I’m applying through the Payroll Stream, what do I do if I have more than one Canada Revenue Agency (CRA) Payroll Program Account? Expenses will be subject to verification and audit by the Government of Canada. Farms that do meet the criteria are eligible and may apply for the CEBA by contacting their banks. You can deduct expenses for advertising, which include ads in Canadian newspapers, on Canadian television and radio stations. The primary source for determining the Allowable CEBA Expenses should be your agreement with the financial institution, and not the [rather limited] ENDE list on the CEBA Website. This article represents merely an overview of the many complex COVID-19 pandemic relief programs available. Applications may be submitted online through the CRA’s My Account system, or by calling 1-800-959-2019. The Borrower has eligible non-deferrable expenses between Cdn.$40,000 and Cdn.$1,500,000. On July 17, 2020, the federal government announced significant changes to the Canada Emergency Wage Subsidy (CEWS), which we will refer to as CEWS 2.0.

Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. The general rule is that you cannot deduct outlays or expenses that aren't related to earning business income. © Baker Tilly Canada Cooperative. In a separate announcement, the Prime Minister stated that applications under the expanded program would commence on Friday June 19, 2020. applications under the Payroll Stream (total employment income paid to employees in 2019 greater than $20,000 and less than $1,500,000) will be completed directly through the financial institution in which your business holds its primary business chequing / operating account.
For more information, see interpretation bulletin IT-417, Prepaid Expenses and Deferred Charges. You can deduct expenses you incur to run a motor vehicle that you use to earn business income. Capital equipment used for business purposes, for example, a … 4) Have a federal tax registration number. Further, those applying for the 75 per cent CEWS subsidy must also apply for the 10 per cent wage subsidy. However, if a business qualifies for one period (e.g., March) it would automatically qualify for the following period (e.g., April). Contact your local Baker Tilly farm advisor to review your specific situation and to determine your eligibility before applying. Cost of inventory (COGS) was not specifically included or excluded as an eligible or non-eligible in the announcements. You can also deduct annual dues or fees to keep your membership in a trade or commercial association. For more information, see guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income.

You cannot deduct costs you incur for capital repairs. If successful, the Government of Canada will notify your financial institution and provide funding for your CEBA loan. On the issue of self-employment income, the Canada Revenue Agency (CRA) has clarified that the $5,000 is “net” self-employment income and not “gross” income. For more information, see the section "Motor vehicle expenses" in guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income. On June 15, 2020, the CEBA website was updated to include additional FAQ questions. If you use the accrual method of accounting, claim any expense you prepay in the year or years in which you receive the related benefit. Many farmers will have difficulty meeting the above criteria if they are doing largely the same amount of work on the farm as they were prior to the pandemic. However, several factors can affect your deduction. Most agreements allow for CEBA funds to be used for a wide variety of non-deferrable operating expenses, including those that are excluded from ENDE, such as inventory. Baker Tilly Canada refers to the association of member firms of Baker Tilly Canada Cooperative, each of which is a separate and independent legal entity. The maximum part you can claim for food, beverages, and entertainment expenses is 50% of either the amount you incur or an amount that is reasonable in the circumstances, whichever is less. It is possible that some farms may qualify for the 75 per cent wage subsidy due to a drop in revenue not directly related to the pandemic (particularly if the cash basis is used to calculate revenue). For more information, see interpretation bulletin IT-99-CONSOLID, Legal and Accounting Fees.

partitions to comply with new anti-COVID safety regulations) or deferrable (ex. Originally, there were two qualification requirements that could create concerns for some farming businesses.

Privacy Policy | You can also deduct fees you incur for preparing and filing your income tax and GST/HST returns. Thus, a farmer who stops working due to the pandemic still might not qualify for the CERB because net income was below the $5,000 limit, even though gross income was above it. First, the business must have paid and issued T4 slips for wages totaling between $20,000 and $1,500,000 in 2019. Any type of farming business (corporation, proprietorship, partnership) may apply; the only restriction is that the loan proceeds must be used for non-deferrable operating expenses, such as crop inputs, fuel, repairs, wages, property taxes, etc. Applications are made online through the CRA’s My Business Account.

In addition to the $5,000 of earned income, applicants must have ceased working for reasons related to the pandemic for at least 14 consecutive days during the first four-week period, and must not expect to receive more than $1,000 from earned income during those 14 days. a Canada Revenue Agency business number, and to have filed a 2018 or 2019 tax return. Income that would not qualify as “earned” would include eligible dividends, rent, interest, CPP/OAS benefits, pension income, etc. You can deduct all the expense if your advertising is directed to a Canadian market and the original editorial content in the issue is 80% or more of its total non-advertising content. • The eligible non-deferrable expense categories are the following: • Wages and other employment expenses to independent (arm’s length) third parties; • Rent or lease payments for real estate used for business purposes; Information is current to April 28, 2020. Electronic or paper copies of Receipts / Invoices / Agreements to be uploaded as evidence of your 2020 Eligible Non-Deferrable Expenses.
If a family member qualifies for the CERB, they should not be earning more than $1,000 in wages or dividends from the company in each respective period.

However, there are some limits. Such family members may, for example, need to stop working to take care of someone with COVID-19 or to provide care for children who are no longer attending school due to the pandemic. Most farming businesses will have ample non-deferrable expenses, so this restriction should not be a concern. However, you may be able to claim capital cost allowance on repaired property. For more information about capital cost allowance, see guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income. To be eligible for this program, businesses must already have had a payroll account set up with the CRA as of March 18, 2020.

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