Tax Tip Thursday

I have a few items that are hot off the press for this week!

CERB Repayments

Have you made yours? The CRA is still chasing down people who took CERB money when they were not entitled. If you get one of the letters and you believe it to be erroneous, you will need to dig out the appropriate documentation supporting your claim. Unfortunately just because you think you were entitled to the money, does not make it so. You needed to be compliant with the rules that were in place at the time which include being out of work and having earned $5,000 in income in the previous 12 months or previous tax year. If you know that you will likely owe the money, I suggest you start saving and be prepared for when they ask for it. They will make payment arrangements to some degree, but it is never a long period. It is not a matter of if, but a matter of when!

CEBA Loans

These were the loans provided to businesses during COVID, and they are coming due at the end of this year. How much you owe depends on how much you took:

• If you took $40,000, you will be owing $30,000 as of December 31, 2023.
• If you took $60,000, you will be owing $40,000 as of December 31, 2023.

The Canadian Federation of Independent Businesses (CFIB) has been rallying the government to try and get the deadline extended again. Needless to say, times are still tough for many businesses, and repayment of the loan will be a significant burden. If a business is unable to pay back the loan by the date, the whole amount that you borrowed will roll over into a 2-year term loan with a rate of 5%. While the rate of 5% might look pretty appealing right now, you are now on the hook for an additional $20,000, compared to if you pay out the loan on the deadline of December 31, 2023.

Some sample math for you, assuming you borrowed $60,000:

• If you can pay it by December 31, 2023, you will owe $40,000.
• If you cannot, you will owe about $63,000 by December 2025.

Save yourself $23,000 and pay up if you can!

Interac e-Transfers

I saw a story on the news recently about someone losing money due to a typo in an e-Transfer and wanted to remind people to be careful when sending money, and also offer a way to protect themselves.

The situation was that someone sent money to a mobile number through Interac e-Transfer. They mistyped the number and accidentally sent the money to someone else, and that someone else had auto-deposit turned on. The money was gone with no easy way of getting it back. This is a unique situation, but it applies to businesses as well. Most businesses these days seem to have auto-deposit set up for their email transfers. There are two fairly significant issues that come from this:

1. Not requiring a password when someone is paying you means that it could potentially not make it to you or could be hijacked since you have no security on the transaction.
2. It makes bookkeeping more difficult if you use QuickBooks. For whatever reason the information that automatically goes to QuickBooks when there is a password (who sent it, invoice #, etc.) does not come through when auto-deposit is on. This makes for a lot more work in your bookkeeping!

Need to repay CERB or CEBA? Unsure? Let us help.

The best time to fix a problem was always right when it happened. But the second best? Today. If you have a CEBA loan or received a letter about CERB payments that you think you were entitled to, book an appointment today and we can help you navigate the waters.

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.