White & Company Professional Accountants
Box 598, 401 Main Street T0M 2A0 Three Hills, AB, Canada

https://www.bakertilly.ca//taxflash-canada-emergency-wage-

Some information regarding the 75% wage subsidy.

If you are an individual impacted by this emergency through a loss in income and need some financial assistance, please contact your local bank branch as soon as possible. They will inform you of the alternatives available to you; however, the alternatives are determined on a case by case basis. Depending on the financial institution’s policy, a 3-month or 6-month payment deferral may be available; however, interest will still be charged and either a lump-sum payment or addi...tional payments will be required at the end of the term. If you are eligible for a payment deferral on your mortgage, here is an example of the impact this alternative will have: If you have a $200,000 mortgage at a 3% interest rate amortized over 25 years, your monthly payments would be $948.42 and the total interest cost over the life of the mortgage will be $84,526.00. For simplicity, it is assumed you have had the loan for at least one year prior to this emergency to qualify for a deferral, only regular payments will be made, and the lump-sum payment or additional payments are payments after the 300th regular term payment. Based on these terms and assumptions, a 3-month loan deferral will result in an immediate cash flow savings of $2,845.26 ($948.42 x 3) and a 6-month loan deferral will result in an immediate cash flow savings of $5,690.52 ($948.42 x 6). Under a 3-month deferral with a lump-sum payment, your total interest cost over the life of the mortgage will increase to $87,537.07, a total increase interest cost of $3,011.07 ($87,537.07 84,526.00) and you will have a lump sum payment for the additional interest at the end of the mortgage. Under a 3-month deferral with additional payments, your total interest cost over the life of the mortgage will increase to $87,545.31, a total increase interest cost of $3,019.31 ($87,545.31 84,526.00) and you will have 3 additional regular payment and one additional of $174.05, totaling the increased interest cost. Under a 6-month deferral with a lump-sum payment, your total interest cost over the life of the mortgage will increase to $90,569.60, a total increase interest cost of $6,043.60 ($90,569.60 84,526.00) and you will have a lump sum payment for the additional interest at the end of the mortgage. Under a 6-month deferral with additional payments, your total interest cost over the life of the mortgage will increase to $90,610.81, a total increase interest cost of $6,084,81 ($90,610.81 84,526.00) and you will have 6 additional regular payment and one additional of $394.29, totaling the increased interest cost. Based on the increased interest costs, this is not a recommended financial policy; however, if the immediate cash flow savings is needed to feed your family and keep your home, it may be the only alternative available.

If you are a small business owner attempting to access the wage subsidy available to employers, here is a simple example of how it works: If you had 5 employee’s each earning a monthly gross salary of $2,000 per month, this would result in the payroll withholding for tax of $127.34, CPP deductions of $89.69, and EI deductions of $31.60. The each employee would be paid a net wage of $1,751.37. As an employer, the per employee remittance would be tax of $127.34, CPP of $179.38 ...($89.69 + $89.69), and EI of $75.84 [$31.30 + ($31.30 x 1.4)], a total of $382.56. The employer would pay a total net wage of $8,756.85 ($1,751.37 x 5) to all employees and remit $1,912.80 ($382.56 x 5) to the Canada Revenue Agency each month. Under the wage subsidy, the remittance is to be reduced by the lesser of 10% of the gross wages paid and the remittances of federal, provincial, or territorial income tax between March 18, 2020 and June 20, 2020 to a maximum of $1,375 per employee and $25,000 per employer. In the example above, the remittances for the March, April and May payroll will each be reduced by the lesser of $200 ($2,000 x 10%) per employee and the tax of $127.34, or $636.70 ($127.34 x 5) in total. This results in a net remittance of only $1,276.10 ($1,912.80 636.70) due in April, May, and June. As the total subsidy per employee will only be $382.02 ($127.34 x 3) and total subsidy for the employer will only be $1,910.10 ($636.70 x 3), the maximum limits will not be applicable in this example. It should be noted that this subsidy will be taxable income to the employer and is to be reported as income in the year in which the subsidy is received. Please also note that this example may differ from the actual wage subsidy legislation passed yesterday, March 24, 2020. We will update this example an new information is released and reviewed.

If you are an employee laid off during this emergency or you are unable to work due to self-quarantine, you can apply for regular employment insurance (EI) benefits online at the following link: https://www.canada.ca/en/services/benefits/ei.html If you are self-employed and ineligible for EI, you can apply for Emergency Support Benefits. If you are unable to work due to school closures or if you are unable to work due to self-quarantine and you are ineligible for EI, you can... apply for Emergency Care Benefits. Both applications can be filed in April at the following links: https://www.canada.ca//employment/services/my-account.html https://www.canada.ca//e-services/account-individuals.html If you are a small business owner with employees, the following links are resources on support through this emergency: https://www.canada.ca//canadas-covid-19-economic-response- https://www.canada.ca//resources-for-canadian-businesses.h https://www.who.int//getting-workplace-ready-for-covid-19. https://www.cfib-fcei.ca//small-business-resources-dealing