Support for Small Business

This week we provided an update to clients on the measures in place and being proposed by various levels of government to assist businesses during this evolving COVID-19 situation. While not all of these proposed measures have taken affect, we want you to be aware of what is available and what may be coming so that you can plan and be proactive in applying for any of these that may benefit your business.

To support businesses, the Federal government is proposing:

  • A wage subsidy of 10% up to $1,375 per employee and $25,000 per employer
    • Limited details on how this will be applied, however CRA has released a FAQ section here.
  • Any tax that becomes due on or after March 18, 2020 and before September 1, 2020 will have no interest accrue. This includes installments as well as actual balances.
    • May be applicable if your business has a December through May year-end and income is derived from active operations (operating companies).
    • May be applicable if your business has a January through June year-end and income is derived from passive operations (holding companies).
  • Business Credit Availability Program that will allow BDC, EDC and FCC to provide credit to small businesses.
    • Consider reaching out to your lender early as there is expected to be a large number of requests for this financing, and lenders may be overwhelmed.
  • A number of supports for you personally and your employees.
    • Waiving the EI one-week waiting period if individuals quarantined.
    • Waiving the requirement to provide a medical certificate to access EI sickness benefits.
    • Emergency Care Benefit providing $900 bi-weekly for up to 15 weeks for workers directly effected by COVID-19 but do not otherwise qualify for EI sickness benefits.
    • A number of other measures, some of which are yet to be clarified.

The Alberta government is also proposing a number of measures to support business:

  • Deferral of corporate income tax balances from March 19, 2020 until August 31, 2020.
    • May be applicable if your business has a December through May year-end and income is derived from active operations (operating companies).
    • May be applicable if your business has a January through June year-end and income is derived from passive operations (holding companies).
  • Residential, farm and small commercial customers can defer electricity and natural gas bill payments for the next 90 days to ensure no one will be cut off, regardless of the service provider.
  • Specifically, for small business customers with ATB financials, a deferral on loans and lines of credits up to 6 months and access to additional working capital.
    • Consider reaching out to your ATB banker in order to see what may be done for your situation.
  • Support for your employees.
    • Job-protected leave if required to self isolate or are caring for a child or dependent adult that is required to self-isolate.

We understand these are difficult times for some businesses, and we are here to support you where we can. As we are now in our busiest time of year, and with the increased uncertainty, our response time may be slower than you are accustomed to, however, we are committed to providing you information and advise as quickly as possible.

We wish you and your families all the best during this time. Stay healthy.

Best Regards,

Eric, Peter & Cascade

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Investing in Canadian Art – A Tax Perspective

The Income Tax Act allows very few opportunities to purchase an appreciating asset while simultaneously receiving a deduction for that asset. The purchase of Canadian Artwork may be one such opportunity.

As we near year-end for many corporations, companies with profits are looking for ways to reduce their tax burden. This is especially so given the Accelerated Investment Incentive introduced in late 2018.

For qualifying artwork, companies can deduct for tax purposes an amount annually for depreciation. This amount is normally equal to a 20% declining deduction. To qualify, the artwork must meet the following criteria:

  • The artwork cost $200 or more,
  • is not held for resale, or otherwise included in inventory,
  • is acquired for the purpose of gaining or producing income from an arm’s length individual, and
  • was created by an individual who was at the time a Canadian.

As an example – in 2013 a Toronto based law firm acquires a piece of art from a local art gallery for $20,000 to display in their lobby. The artist who originally produced the work was a permanent resident of Québec at time of creation. Since the artwork was created by a Canadian artist, costs over $200, and is used as a beautifying fixture in their office, the $20,000 acquisition would be considered a Class 8 capital asset for tax purposes and would be eligible for deduction at a declining rate of 20% per year. Due to CRA’s half-year rule, the deduction in year 1 would be equal to $2,000, or half of the normal 20%.

With the new Accelerated Investment Incentive rules, the year 1 deduction in the above example would be increased to $6,000 if the artwork were purchased in 2019. This offers a way for companies to reinvest inside their business, reduce tax, and participate in any appreciation in the value of the artwork.

So, what happens in the event that the artwork does in fact appreciate and is subsequently re-sold? Investors should be mindful that any sale of a depreciated art asset will result in recapture, up to the amount originally paid for the artwork. This recapture will be included as business income, and any amounts received over and above the original cost would be considered a capital gain. Given the tax deferral in this scenario, purchasing Canadian artwork could be considered as a viable tax planning opportunity.

If you’re looking to scope out some Canadian artwork, we encourage you to check out a local gallery like the Herringer Kiss Gallery’s beautiful location in Sunalta, whose current exhibits run until December 21.

The above is for general information purposes only and should not be considered tax advice. The Income Tax Act has many nuances and exceptions; we strongly encourage you reach out to a Chartered Professional Accountant regarding the specifics of your purchase to determine if it will qualify for a deduction.

Update and Giving Back

It’s been a busy few months at Cascade!

We successfully made it through our first “busy season” under our new brand. Our clients have provided positive feedback on our new business model, which reaffirms that our model is adding value to our clients and their businesses.

We ran our first annual Tax Clinic in conjunction with Norfolk Housing. Cascade volunteered early in April to provide personal tax services to those who may not have the ability or expertise to navigate their own tax returns. This can effect real change for these individuals, as 50% of Norfolk’s tenants are low-income and may be eligible for income supplements if they file their tax returns.

We’ve added a fantastic new staff member to our team.

After a great busy season, we found some time to enjoy a few Stampede events, meet some great people, and volunteer at Norfolk Housing’s annual Stampede breakfast, which had over 400 residents and community members stop by.

And most recently, the firm participated in and volunteered at the 6th annual Kenn Borek Air charity golf tournament, which was raising money for the Quinterra Legacy Garden. Cascade was able to contribute as a minor sponsor as well. In total, over $14,000 was raised for a memorial garden to provide a peaceful, contemplative and vibrant outdoor space for Calgarians to reflect, heal and remember.

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New Office Finalized

If you’d like to stop by for a visit, you can find us above the Sunterra in Britannia Plaza…

After a couple of months of renovations and finishing touches, we’re happy to share a few before and after pictures of our space. If you’d to like stop by to see in person, you can find us on the second floor of Britannia Plaza. Otherwise, take a look below and let us know what you think!

 

 

 

 

 

A special thanks to Starwall West for the glasswork, and Magda Gawlik for help with our design!

We’re open 8am to 5pm – stop by and say hi!

-Cascade