Grants and Tax Benefits You Should Know About
With all of the previous talk around subsidies (CEWS, CERS, CEBA, CERB/CRB, etc), we thought we’d highlight a few items you may not have been aware of and items to watch for as we prepare to file your 2020 tax returns.
Here are 4 Grants and Tax Benefits you should know about:
1. Restart/Recovery Grants
We all want to get back to business, but there may be changes required in order to safely operate. Some of the provinces have offered “restart grants” with specific eligibility criteria. Here is the information for Alberta.
And of course, we can’t forget about our BC friends – BC Business Resources.
The Federal government has recently announced a new program that you might be interested in – Highly Affected Sectors Credit Availability Program (HASCAP).
2. Corporate Tax Rates
Effective July 1, 2020, the Alberta Corporate tax rate decreased from 10% to 8% (18 months ahead of schedule). This means that the combined tax rate for active income above the $500,000 Small Business Limit will decrease from 25% to 23%.
3. Employer-Provided Benefits
Have you been working from home? Maybe you gave your home office an upgrade? CRA has adopted a few new positions regarding commuting, employer-provided parking, computer and home office equipment, meals costs and cell phone/internet plans. Here’s the scoop on what is changing.
In the past, your employer was required to sign a T2200 in order for you to deduct any employment expenses. For 2020, CRA has developed a simplified approach for those individuals with smaller claims. A new temporary flat rate method will allow eligible employees to claim a deduction for $2/day that they worked at home up to a maximum of $400. No T2200 form is required for this deduction. If you normally have a larger claim, you can still choose to use the existing detailed method, with the standard T2200 form. Here is a comparison tool that CRA has put together.
There may have been a lot of change in your world. Please share the updates with us so we can make sure we are implementing any deductions/credits that may be available to you.
4. Prescribed Rate Loans (or Spousal Loans)
Prescribed rate loans are typically used to allow for a higher-income spouse to lend money to a lower-income spouse. It is one of the few methods still remaining to have investment income taxed at a lower effective tax rate by the lower-income spouse. For more detailed information, please refer to our earlier article.
Any prescribed rate loans created after June 30, 2020, will have an interest rate of 1% (reduced from 2%).