How will COVID-19 Affect Filing Your Small Business Tax Return in Canada?
Did your business take advantage of pandemic relief programs from the government last year? Here’s what you need to know about COVID-19 related tax changes for 2020.
The Government of Canada deployed numerous COVID-19 response programs to cushion businesses from hardships resulting from the pandemic in 2020. If your business is among those who benefited from these programs, you’re probably wondering about the tax implications of COVID-19 response programs and benefits for your small business.
Read on to learn more as we double down on everything you need to know before filing your small business tax return.
Canada Emergency Wage Subsidy (CEWS)
Employers who have experienced a decline in revenue due to the pandemic are eligible to CEWS to cater for part of their employee wages going back to 15th March 2020. It is taxable, and the amount received should be filled as taxable income on your corporate income tax return.
Canada Emergency Rent Subsidy (CERS)
The subsidy caters for eligible fixed property expenses such as mortgage support and rent. It is also taxable, and the amount your business receives must be declared as such on your corporate tax return.
Temporary Wage Subsidy
Businesses that took advantage of this subsidy must report the total subsidy amount as income on their tax return in the same year they slashed the remittances. You should also fill out form PD27.
Canada Emergency Business Account (CEBA)
You can get up to $60,000 of CEBA loan to cover your business’s operational costs if it’s not doing too well. This loan is very attractive as it’s interest-free up to 31st December 2022, and up to $20,000 can be pardoned if you repay it by then.
You should however, note that you’ll be taxed the forgivable amount of this loan, and therefore, should file that amount as income in the year you received the loan.
Reporting Employment Income
Below are the new information codes and specific periods that all Canadian employers must report employment and retroactive payments on T4 slips for the 2020 tax year.
Code 57: Employment income – 15th March to 9th May
Code 58: Employment income – 10th May to 4th July
Code 59: Employment income – 5th July to 29th August
Code 60: Employment income – 30th August to 26th September
Seek Expert Assistance
Filling a small business tax return during these unprecedented times can be a complex task. But not when you have an expert to help you meet your tax obligations without any stress. Are you looking for an experienced accounting partner who will help propel your business a notch higher? Contact us today for more information.