Category Archives for "Covid-19"

Which Government Benefits do I Need to Report on my 2020 Tax Return?

By Randall Orser | Covid-19 , Home Based Business , Personal Finances , Personal Income Tax

Filing their 2020 Tax returns is going to be different and more complicated for many Canadians this year due to the way that Covid-19 has affected their lives.   Fluctuations in employment income, subsidies and credits from the government and the shift to working from home mean that there are different types of income that have to be reported on tax returns for 2020.  The tax filing deadline for personal taxes is has reverted back to April 30th after the extension given last year.

The CRA expects and encourages the majority of Canadians will file their taxes electronically which will allow refunds to be processed quicker.  If you are signed up for direct deposit you could get your refund in as little as 8 days. In 2019 90% of Canadians filed their returns electronically.  

Government Benefits Received in 2020 that you must report on your return include:

  1. Any covid related government benefits you received in 2020, including the Canada Emergency Response Benefit (CERB), Canada Emergency Student Benefit (CESB), the Canada Recovery Benefit (CRB), the Canada Recovery Sickness Benefit (CRSB) and the Canada Recovery Caregiving Benefit (CRCB) all of which are considered to be taxable income.  A T4A or a T4E will be sent to you with the information that you need for your tax return.  
  2. You need to be aware that depending on your total income for 2020 you may owe some tax on your Covid benefits, especially the CERB or CESB as no tax was withheld when the payments were issued.  For the CRB, CRSB, or CRCB 10% tax was withheld at source but this may not cover your tax bill for all your income in 2020.
  3. If your total income for 2020 was over $38,000 you may have to repay 50% of the CRB you received for every dollar in net income you earned above $38,000 to a maximum of the CRB received in the year.

Government Benefits in 2020 that are not taxable include a one time GST/HST payment, the one time OAS pension payment of $300, GIS payments ($200) and the one time payment to people with disabilities up to $600.  These amounts are all tax free and should not be reported on your return.

Reporting income from your side hustle

A recent survey from H & R Block found that 25% of gig economy workers joined the gig workforce in 2020 working for companies such as Door Dash and 51% of these people will be filing as self-employed for the first time. If you are filing yourself using a tax software it is important to make sure you are filling out the correct section on your return.

Working from home in 2020

If you worked from home in 2020 and were not reimbursed by your employer for expenses including those for a home office you may be able to claim on your 2020 return for these expenses.   There are two ways in which you can claim your expenses, the new "temporary flat-rate" and the "detailed method". You can use the flat rate method if you worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020.  You can claim $2 a day for each day you worked from home up to a maximum of $400.  The benefit of this method is that you do not have to produce receipts to prove your expenses and you do not have to allocate any expenses between employment and personal use, and you will not require a signed for T2200 from your employer.

If you choose the detailed method to claim your expenses you must have worked from home more than 50% of the time for a period of at least four consecutive weeks in 2020. Using this method you can deduct expenses including rent, electricity, home internet etc.  Your expenses have to be allocated on a reasonable basis by dividing your workspace into the total finished area of your home and calculating your expenses based on how much of a percentage of your home you are using as a workspace.  If you use your workspace for both personal and work then you also need to allocate your expenses based on the number of hours per week that you work.

If you have any doubts about how to complete your tax return for 2020 it might be to your advantage to have a professional prepare it.

Working from Home – How do the New Rules for Office Expenses Work?

By Randall Orser | Business , Covid-19 , Employees , Personal Income Tax

There is good news for those of us working from home, due to the pandemic and under new CRA guidelines we will be able to choose between using a new temporary flat rate (only for 2020) or using the detailed method to claim expenses.  This will simplify the process for both employers and employees and will reduce the compliance burden for employers who usually provide T2200 forms to their employees.  However these new rules only apply to employees, nothing has changed for those who are self employed working at home.  Here are some of the highlights:

Eligibility - to claim this temporary flat rate you must meet all the following conditions:

  • You worked from home in 2020 due to the pandemic (this applies even if you chose to work from home).
  • You worked from home more than 50% of the time for at least four consecutive weeks in 2020.
  • You are claiming home office expenses only and no other employment expenses.
  • You were not fully reimbursed by your employer for all of  your home office expenses.

How it works: You can claim $2 for each day you worked from home during the four consecutive weeks mentioned above, plus any additional days you worked at home in 2020 because of the pandemic.  The maximum you can claim is $400.

Why it is simpler: You don't need to calculate the size of your workspace, keep receipts or ask your employer to complete and sign Form T2200 or Form T2200S a shorter version that can be used if you opt for the detailed method calculate your home office expenses.

How to make the claim: First count the number of days you worked from home in 2020 due to the pandemic including part days and multiply that by $2 per day up to a maximum of $400.  You will then use form T777S - Statement of Employment Expenses for Working at Home Due to COVID-19 to enter these amounts and attach it to your 2020 income tax return. 

The detailed method to claim expenses is much more complicated.  

  • You have to have chosen to work from home or your employer required you to work at home. 
  • You were required to pay for expenses related to your home workspace and directly in your work.
  • You must have worked in your home workspace more than 50% of the time or for at least four consecutive weeks, or you used the workspace only to earn employment income.
  • You received a signed T2200 or T2200S from your employer.
  • You can claim office expenses as well as office supplies but they must be separated between employment and personal use.
  • Eligible expenses include rent, electricity, heating, home internet access fees, water, maintenance and minor repairs.
  • No eligible expenses include mortgage interest, principal mortgage payments, internet connection fees, furniture and capital expenses.
  • To claim utilities, rent and other expenses you need to allocate them reasonably by taking the area of your workspace and divide it by the total finished area of your home.  The CRA provides extensive guidance on calculating workspace use.  They also provide a comprehensive list of office supplies that are deductible or non deductible.

Should you choose the flat rate or the detailed method? - this will depend on your own personal circumstances.  It might make sense to go for the detailed method if you rent your home because included in your rent are expenses such as insurance and property taxes which you cannot claim if you own your own home.  For homeowners your eligible expenses may only be utilities so the fixed method may provide a deductions similar to that under the detailed method. 

The CRA website or income tax preparer will be able to provide you with more information to help you to decide which method you should use to claim your workspace expenses.

From an article by Margaret Craig-Bourdin

How to Prepare for your Taxes in 2021

By Randall Orser | Covid-19 , Investments , Personal Finances , Personal Income Tax , Retirement

For Canadians preparation for our 2020 tax return is going to look a little different this year.  Many of us take a closer look at our financial situations at the beginning of a new year with a view to reducing our tax bill and boosting our tax refund.  However this new year the two biggest changes we have to take into account are any emergency benefits and relief measures we may have received due to the pandemic and the amount that we can claim if we worked from home in 2020 due to Covid. 

Covid-19 Benefits

The CERB benefits you received are taxable - when you first received these benefits the government did not withhold the tax at source so you will have to include 100% of this money in your income for the year and you will have to pay tax on it.  The government will send you a T4A tax reporting slip for 2020 showing the amount that you will have to report.

The amount of tax that you will have to pay will depend on your total income for the year.  For example if your work income was $27,000 and you received $8000 in CERB benefits your taxable income for the year will be $35,000 and both your earnings and the CERB amount will be taxed the same way.  If your income is less than $12,000 for the year you will not have to pay any tax on your income. 

If you received the Canada Recovery Benefit, Canada Recovery Sickness Benefit or Canada Recovery Caregiving Benefit that became available in September the government withheld 10% in taxes at source.  However this may be insufficient to cover your tax due for 2020.  In addition if your additional income for 2020 is more than $38,000 then you may have to pay back the CRB at a rate of $0.50 for each dollar you received, so you should set aside some funds to cover the tax you may owe.  

If you received Covid-19 benefits that you were not entitled to, you were asked to return the funds by the end of 2020.  You were not obligated to do so but it would have been the best scenario for most people.  If you did not pay the money back then the amount will show up on your T4A for 2020 and you may have to pay taxes on it.  Any repayments will be shown on a T4A slip for 2021 which will allow you to claim a deduction on your 2021 income and benefit return.  This process is based on general rules in the Income Tax Act that apply to repayment of taxable income.  

The Simplified Home Office Deduction

2.4 million Canadians worked from home because of Covid-19 this year and may be able to claim some home office costs on their 2020 tax return without providing receipts or asking employers to fill out a T2200 form.  If you have been working from home for more than 50% of the time over at least four consecutive weeks in 2020 due to Covid-19 you will be able to claim a deduction of $2 for every day up to a maximum of $400.  The CRA calls this a temporary flat rate method of calculating the home office deduction.

For those who have more significant home expenses you will need to use the more detailed method to calculate the home office break.  You need to gather together all your home expenses including utilities, internet, heating, hydro etc to decide which method you want to use to claim your home office expenses.  For more help use the CRA's new online calculator.  

From an article by Erica Alini

What can we do to Revive the Economy?

By Randall Orser | Business , Covid-19 , Investments , Personal Finances

Canada's financial experts are looking into their crystal balls and predicting what the future might hold for the Canadian economy and how it could rebound post-covid.  Until March 2020 our economy seemed stable and secure despite other world events and trade wars we had reliable growth, strong employment, steady interest rates and cities were booming.  Then the pandemic hit and the world closed down.  

The government issued massive wage and unemployment subsidies and our deficit ballooned.  One million jobs were lost resulting in 13.7% unemployment the highest that Canada has seen since the Great Depression.  The pandemic also brought to light many problems in our society that we had been largely ignoring such as massive inequality, gaps in social assistance and vulnerable supply chains.  

Vaccinations have now arrived and we can see some light at the end of the tunnel and the question is now, what will our economy look like when the dust has settled?  Here are some predictions from financial experts.

1.  "Wage subsidies will help to save retail businesses" - until most people are vaccinated there will be sporadic shut downs so continuing with wage subsidies will help to keep businesses from going under. Pedro Antunes - chief economist, Conference Board of Canada

2.  "Small businesses will need more than government loans to survive and workers will need more support." Werner Antweiler - associate professor, Sauder School of Business

3.  "Businesses will need better access to rent relief, the current government has been a failure so more help is needed."  Laura Jones - executive vice president and chief strategic officer, Canadian Federation of Independent Business

4.  "Employers need to adopt flexibility for their workers to encourage them to grow resulting in better productivity and morale."  Jean McClellan, national consulting people and organization leader, PwC Canada

5.  "Automation will replace millions of jobs - and that's not necessarily a bad thing".  Companies investing in training for their existing workforces will help to sustain livelihoods without major disruption. Linda Nazareth, senior fellow for economics and population change, the Macdonald-Laurier Institute.

6.  " Business travel will come back safer though it will probably take three years or more to return to normal levels of business travel."  Nancy Tudorache, regional vice-president, Canada, at the Global Business Travel Association.

From an article by Ali Amad

How to be a Smarter Online Shopper

By Randall Orser | Covid-19 , holiday season , online shopping , Scams

Due to the pandemic many of us have moved our shopping online. Sales online have soared in 2020 and they are expected to beat previous records during the holiday season. Most of us are buying from reputable sources that we are familiar with for groceries, electronics, clothing and much more. But as Christmas comes around we might be searching a little wider afield for that perfect gift and buying from vendors that we are not familiar with. You need to be smart when placing that online order to make it a safe experience and avoid potential issue. Here are some suggestions to keep in mind:

1. Read Reviews - Do your research and make sure that your vendor has a good reputation and has reviews that are genuine and are from verified buyers. Check for negative reviews especially from multiple people and how the company responds to them. Be careful to trust reviews that seem over exaggerated they may be fake.

2.  Beware of Red Flags

  • If the site looks unprofessional or is missing important information you could be dealing with a sketchy company which could put you at risk. Important things to look for are contact information, an actual address, phone number and email address.  
  • If the site is poorly designed with many spelling mistakes, bad grammar or broken links.  
  • If the back button does not work and you are stuck on a page, this could be a sign that the site is not legitimate.  
  • The site asks for your credit card information early on, you should not be asked for this until you are ready to finalize the purchase.

3.  Read the Fine Print about returns and refunds.  In BC there are not laws that deal directly with refund, exchange and return policies so retailers can set their own policies for customer returns and they can differ widely. This is especially true during the pandemic where some stores have changed their policies to reduce the risk of infection for customers and staff.  Make sure you read the fine print and know what you are agreeing up.

4.  Confirming your purchase - Before you confirm your purchase, make sure you see the following things:

  • A detailed description of the goods or services
  • The currency
  • The delivery details, including the shipping method and details of delivery
  • The cancellation, return, exchange and refund policies if any.

5. Know your rights should your purchase not arrive - Again due to the pandemic receiving orders can take longer than normal especially if buying from overseas. It is annoying when your purchase does not arrive, you may be able to get some help under BC law, check out How to get a refund if your online order never arrives

6.  Know what you can do when there is an issue with quality -  There are many funny posts on the internet about products bought on line not being exactly as advertised but it might not be amusing when it happens to you.  It is difficult to define a quality issue as everyone has different ideas of what they consider to be poor quality.  However if you are dissatisfied with a product you can read more about what your options are here.

Trust your gut, if a site appears dodgy then it probably is, look for a more reputable vendor and remember it is always good to support your local retailers as much as possible, during this pandemic they really need your help to survive.

From an article by Consumer Protection BC

Surviving the Pink Slip During the Pandemic

By Randall Orser | Covid-19 , Employees , Personal Finances

The Covid-19 pandemic has devastated the Canadian labour market. According to Statistics Canada more than three million jobs were lost in March and April alone due to the economic shutdown. For those affected by job loss the impact goes beyond the statistics, and with all the uncertainty around us being out of work can be very scary.  The usual recommendations for when you have lost your job are no longer totally relevant today but here are some tips that will help you to deal with a sudden job loss during the pandemic.

1.  Understand the emotional toll that job loss is taking on you.  When you lose your job you lose your personal work relationships, daily structures and your self of self-purpose causing you to feel the same stresses which come with other forms of loss.  Asking "why me" does not have an answer any more because we have no control over a global pandemic.  You can expect to have feelings of anger, sadness and denial but it is important to try to cope and live with your new circumstances.   Look up free online programs and counselling that can help you deal with these mental health issues.  It is important to find some benefit out of your loss, so think about reinventing yourself maybe by taking some business classes on-line to help you in your job search.

2.  Review your finances and spending, not having enough cash to pay the bills is a major stress for everyone.  Financial experts recommend having an emergency fund with three to six months of expenses in it but for many people this is not possible. What you can do is track your spending to see where your money is going.  If you need money to buy groceries make sure that you are aware of all the financial and economic support available from the government.  You may also need to withdraw from your RRSP or TFSA to tide you over.  For those with no savings it is important to work on restructuring your debts contact your credit card provider or mortgage lender for assistance and think about using an unused line of credit with a lower interest rate to pay off credit cards with a much higher rate of interest.  

3.  Look for future employment, it is important to boost your LinkedIn profile, update your resume and network as much as you can. Being adaptable to change might be your best asset at this time.  Think about expanding your skills into areas that are in demand or are going to be in demand in the future.  For older workers experience is their best asset so think about offering your assistance to smaller companies that need help but can't afford a full time employee.

From an article by Ethan Rotberg

Will Wage Subsidies Help Retail Businesses?

By Randall Orser | Budget , Covid-19 , Employees , Retail , Small Business

Though the lockdown of last Spring was the right thing to do to keep people safe and flatten the curve, but it did a huge amount of damage to the economy.  Canadian retailers saw a 26% fall in sales during quarantine and 40% of retailers had to close their doors.  

Stores offering non-essential products and services such as clothing stores were the hardest hit, along with gas stations as people were no longer travelling.  However those selling essential goods found themselves thriving and even experiencing surging sales such as in groceries, home renovations, alcohol and cannabis.

Canadian retailers have been slow to transition to on-line sales but the pandemic has forced them to adopt e-commerce techologies to try and keep themselves in business and as a result e-commerce sales have more than doubled year over year.  Although it means that Canadian retailers face competition from others worldwide it also gives them the opportunity to expand their market share at home, especially if they sell niche products.  

In 2021 it is likely that retail business will still suffer a bumpy ride.  As we are seeing now there will probably be sporadic shut downs due to minor outbreaks but these are likely to be more regional.  During this time retailers can expect sales to fall and they will have to deal with high labour costs and the costs of having to comply with health regulations but it is hoped that on-line sales will be a stop-gap solution to keep them in business.

The federal government is continuing to support businesses by extending the Canada Emergency Wage Subsidy program into 2021, coving 75% of employees wages for those that are eligible.  This will help retailers to avoid bankruptcy and will give employees more disposable income to spend.  

Even with these new ways of doing business and federal help it is unlikely that many in the retail sector will survive another major lockdown.  However localized shutdowns will allow the majority of retailers to stay open and keep some revenue coming in until a vaccine arrives.

From an article by Ali Amad

The Inevitable Second Wave – How to Prepare your Business

By Randall Orser | Business , Covid-19 , Employees

Experts tell us that a second wave of Covid-19 is inevitable and in some places it is already here.  Now is the time for your business to review the lessons you have learned in the past few months, and prepare for future disruptions.  More people have safely returned to work but even though it seems more like normal there is still the threat of a second wave.  It is a tough prospect for businesses already suffering from the impact of the first wave but making plans for further disruptions are necessary if they are to survive at all.  Here are some things that companies should consider.

  • Make sure that all members of the response team who have been working non stop take some downtime to rest.
  • Make an honest assessment of the weaknesses experienced in the first wave.  Everyone was learning so use what was learned and plan what could be done differently and more successfully the second time around.  Areas of concern should be logistics and distribution of equipment for people working remotely.
  • The response team needs to continue to compile best practices for a return to work so that employees can do so safely.  Regular meetings and communications with employees is important so everyone stays in the loop.
  • Plan for the financial impact of reduced hours or closure.  The past few months have been devastating for many businesses even though they have been helped by government subsidies. The decline in business could be even greater the second time around so it is important to be aware of programs still in place to help.  Revenue may not be the same as it was before the pandemic so business plans should be made with this in mind, reducing unnecessary spending and creating a financial cushion are most important. 
  • Creating a phasing out plan so that non-essential employees who have returned to work can quickly pivot to working remotely again and plans can be made for more essential workers to phase out of the office if needed to minimize interaction.  The phase out plan should also include how the organization will continue to operate including supply chains and communications to clients or customers.  It also may be necessary for your company to stockpile supplies.
  • Probably the hardest part of planning for a second wave is preparing mentally.  Employees at all levels will suffer anxiety over a loss of wages in event of a partial or full shutdown while they are still trying to adapt to the new normal.  It is important to create a healthy work environment for employees and if possible the company should consider providing counselling for its workers to help them come to terms with the changes.

From an article by Ethan Rotberg

Business Continuity in a Crisis

By Randall Orser | Business , Covid-19 , Retail

Unplanned events can have a devastating effect on businesses and the beginning of the pandemic was definitely no exception.  As consumers stockpiled goods, stores and their supply chains struggled to keep up and keep shelves stocked.  What came out of this situation is the need for senior decision makers to have risk-management and crisis planning strategies in place.

If a business is to survive in a crisis it is important to have:

  • A well tested business continuity plan already in place 
  • Strong leadership to ensure swift and decisive action in response to a crisis
  • Quick and honest communications with employees, shareholders and other stakeholders and where appropriate the media
  • Compassion for employees and customers impacted by the crisis
  • Being prepared to adopt alternative working, technological or communication systems, including changes to company operations, providing personal protective equipment, continuous sanitizing of workspaces and equipment, training staff in new protocols, and where appropriate facilitating remote working for employees.
  • Having access to financial and other resources to help absorb the costs of the crisis, an early and aggressive review of cash flow and the development of a cash management plan

Unfortunately the Covid-19 crisis unfolded without much warning so it was difficult for businesses to make preparations beforehand. It was and is important for businesses to take advantage of all the help available from governments and other organizations.  There the operations of the business should be continuously reviewed and changes made when necessary.  Everyone involved with the business should be kept fully apprised of all changes to business operations.  Managers must be given the resources to be able to act quickly, decisively and effectively and they should know how to access external help and advice.

From an article by CPA Canada

How Covid-19 has Impacted Offices

By Randall Orser | Business , Covid-19 , Employees

The pandemic left many employers scrambling to provide a safe working environment for office workers returning to work.  Offices had to make physical changes to keep employees apart and personal protective equipment had to be provided for those office employees that needed it.  Workers now had to wear visors or masks, shared workspaces had to be shielded with plexiglass dividers and narrow corridors had to be converted into one way aisles indicated by arrows and if possible it was necessary to have more open doors into the office.

Washrooms had to be refigured, every other stall closed off and the number of employees allowed in the washroom at one time to be reduced.  In-office meetings would have to change format, they would be smaller and had to be held in larger boardrooms or in common areas with better air circulation.  Some companies invested in anti-microbial spray to coat surfaces and desks to protect from bacteria build-ups.  With all these changes offices would definitely look and feel very different.

The biggest change was the number of employees that returned to the office.  The two metre physical distance rule mean't that there had to be fewer bodies in the office at any one time.  Most offices had only had 20-25% of their employees return to work in the first phase of the return to work and Samantha Sanella from Cushman and Wakefield believes that up to 30% of employees will never return to the office without a vaccine.  

Sanella believes that there will be a return to the private walled in offices instead of the open concept style of office. Although these type of offices take up more space and are more expensive to build many companies will make the changes to keep their critical workers safer. As the overall office space will be smaller they will have some workers continue to work from home.

These changes in office format will result in prospective tenants changing their criteria when looking for new office space.  They are going to be more focused on the health certifications of the space and new office spaces may have a new look with more open windows and outdoor space.   

Despite these necessary changes experts believe that offices will survive.   Even though people are working from home they want to return to the office and have a connection other employees.  

From an article by Adrienne Tanner

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