On December 31, 2019, the Standard & Poor’s 500-Stock index closed at 3,230.78. This past New Year’s Eve, it closed at 3,756.07. With reinvested dividends, the total return of the S&P 500 was about 18%.

The equity market had, in 2020, quite a good year. What should be so phenomenally instructive to the long-term investor is how it got there.

From a new all-time high on February 19, the market reacted to the onset of the greatest public health crisis in a century by going down roughly a third in five weeks. The Federal Reserve and Con­gress responded with massive intervention, the economy learned to work around the lockdowns—and the result was that the S&P 500 regained its February high by mid-August.

The lifetime lesson here: At their most dramatic turning points, the economy can’t be forecast, and the market cannot be timed.

This is not meant to dismiss any fears or concerns you may have had last year. Being fearful in the face of a global pandemic and a shutting down of a global economy is quite normal.

Two lessons are worth noting in this regard:

1. The velocity and upward trajectory of the equity market recovery essentially mir­rored the violence of the February/March decline.

2. The market went into new high ground in midsummer, even as the pandemic and its economic devastations were still raging. Both outcomes were consistent with historical norms. “Waiting for the pullback” once a market recovery gets under way, and/or waiting for the economic picture to clear before investing, turned out to be formulas for sig­nificant underperformance, as is often the case.

The American economy – and its leading technology companies – contin­ued to demonstrate their fundamental resilience through the bal­ance of the year, such that all three major stock indexes made mul­tiple new highs. Even cash dividends appear on track to exceed those paid in 2019, which was the previous record year.

Meanwhile, several vaccines were developed and approved in record time, and were going into distribution as the year ended. The hope is the most vulnerable segments of the pop­ulation could get the vaccines by spring, and that everyone who wants to be vaccinated can do so by the end of the year, if not sooner.

The second great lifetime lesson of this hugely educational year had to do with the presidential election cycle. To say that it was the most hyper-partisan in living memory wouldn’t adequately express it.

In this event, everyone who exited the market in anticipation of the election sacrificed investment returns. The enduring historical lesson: never get your politics mixed up with your investment policy.

As we look ahead to 2021, there remains far more than enough uncertainty to go around. Is it possible that the economic recovery – and that of corporate earnings – have been largely discounted in soar­ing stock prices, particularly those of the largest growth companies?

Yes, of course it’s possible. Now, how do you and I – as long-term, goal-focused investors – make investment policy out of that possibility? My answer: we don’t, because one can’t. Our strategy, as 2021 dawns, is entirely driven by the same steadfast principles as it was a year ago and will be a year from now: buy quality and diversify. (credit: Odette Morin & Terry Broaders)

We have been assured by the Federal Reserve that it is prepared to hold interest rates near current levels until such time as the economy is functioning at something close to full capacity – per­haps as long as two or three more years.

For investors like us, this makes it difficult to see how we can pursue our long-term goals with fixed income investments. Equi­ties, with their potential for long-term growth of capital – and especially their long-term growth of dividends – seem to us the more rational approach. We therefore tune out “volatility.” We act; we do not react. This was the most effective investment approach in 2020. I believe it always will be.

I look forward to discussing this further with you in our annual review session. Until then, let me thank you again for being my clients. It is a privilege to serve you.

The post 2020 Recap: lessons in long-term investing appeared first on Smof Investment Manager, LLC.

Please click here to view the full CRA details on employment expenses.

Many people, especially renters, will be better off using the detailed method.  For example, if your rent is $2,000 a month, you worked from home for 10 months, and your home-office percentage is 10%, that’s already a $2,000 deduction.

The “Flat-Rate” Method

The Canada Revenue Agency (CRA) has introduced a temporary “flat-rate” method to calculate your home office expenses for 2020 for employees who worked from home in 2020 due to COVID-19 and paid home office expenses for which they were not reimbursed. If you use this method, your employer is not required to complete form T2200 or T2200S.

The “flat-rate” option will allow you to deduct $2 per day you worked from home, to a maximum $400.  If you worked from home since March and work five days a week, you’ll be able to claim the full $400.

The Detailed Method

The detailed method is the standard method for claiming employment expenses. To use the detailed method, you need your employer to complete Form T2200 or the simplified T2200S. You must also itemize your various expenses.

Eligible expenses:

• rent paid for a house or apartment where you live
• electricity, heat, water or the utilities portion of your condominium fees
• home internet access fees
• maintenance (minor repairs, cleaning supplies, light bulbs, paint, etc.)
• supplies (stationery items, pens, folders, sticky notes, postage, toner, ink cartridge, etc.)
• employment use of a basic cell phone service plan
• long distance calls for employment purposes

If you are a commission employee, you can also claim expenses that reasonably relate to earning commission income for the following:

• property taxes
• home insurance
• lease of a cell phone, computer, laptop, tablet, fax machine, etc.

Non-eligible expenses.  You cannot claim any of the following:

• capital cost allowance
• mortgage interest
• principal mortgage payments
• home internet connection fees or the portion of fees related to the lease of a modem/router
• capital expenses (replacing windows, flooring, furnace, etc.)
• office equipment (printer, fax machine, briefcase, laptop case, or bag, calculator, etc.)
• monthly basic rate for a landline telephone
• cell phone connection, or license fees
• purchase of a cell phone, computer, laptop, tablet, fax machine, etc.
• computer accessories, (monitor, mouse, keyboard headset, microphone, speakers, webcam, router, etc.)
• other electronics (television, smart speaker, voice assistant, etc.)
• furniture (desk, chair, etc.)

Remember that whether you are salaried or commissioned, there is always the possibility that the CRA will request verification of your expense claims, so you will need to keep your receipts for 7 years, just in case. Failure to verify a claim could mean tax owing and interest charges.

Conclusion

Again, please note that we will have a specific tax checklist you’ll be able to complete for work-from-home expenses at tax time.

If you are unsure which work-from-home option is best for you, talk to us. We can help you determine how best to proceed.

Source: Canada Revenue Agency

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We all had to adapt to a new reality this year. We came together to face these difficult times both personally and professionally. We did everything in our power to maintain our service model and optimize your finances during a challenging market environment. We thank you for your patience, cooperation, and ongoing support.

With good news on the horizon thanks to a new vaccine, we are looking forward to 2021 being a year of renewal and opportunity.

In our final blog entry of 2020, we provide you with an “everything update”, a list of recent headlines in the areas of financial aid, investments, and taxation.

Please note that due to the holidays, our office will be closed on December 25 and January 1. Our team will have reduced service between December 21 and January 3, processing only urgent requests (contributions, withdrawals) during this time. We will be back to full service on Monday, January 4 to begin the new year together.

Anthony, Sandrine, Frank, & JoAnne

Financial Aid

Online application for the BC Recovery Benefit begins on December 18

Investments

From Myles Zyblock, setting the stage for 2021

Worried about investing near all time-highs?  All-time highs are not unusual

BlackRock’s current positioning: Upgrade U.S. equities

Brexit: What you need to know about the UK leaving the EU

How does Gold fit in a portfolio?

The Canada Pension Plan Investment boards commits $200M to a renewal energy projects

Taxes

It’s official: CRA allows simplified home office deduction process (max $400 deduction):

Year-end tax tips

Pandemic spending has budget watchers once again fretting about capital gains tax hikes

New York Property taxes will increase 5% next year

ICBC to drop rates by 15%

Retirement / Registered Accounts

The 2021 TFSA limit will remain $6,000

CPP premium increase to cover program enhancements will continue in 2021

Deferring CPP payments is the surest way to secure lifelong income (two articles on this topic)
Article 1
Article 2

COVID-19

Health care worker becomes first person to receive vaccine in B.C.

All Canadians who want a shot will be vaccinated by September 2021, public health agency says

Province confirms 1,215 British Columbians vaccinated so far

Canada expected to receive 168,000 doses of Moderna vaccine by month’s end, Trudeau says

The post The Everything Update appeared first on Smof Investment Manager, LLC.

Applications for the Canada Recovery Benefit open on Monday

The Canada.ca website has now been updated with all application details for the Canada Recovery Benefit.

How to Apply
Through CRA My Account

Amount & eligibility periods
If you are eligible for the CRB, you can receive $1,000 ($900 after taxes withheld) for a 2-week period. The first period is September 27 – October 10. Applications will open on Monday, October 12.

If your situation continues past 2 weeks, you will need to apply again
You may apply up to a total of 13 eligibility periods (26 weeks) between September 27, 2020 and September 25, 2021. You can apply for a maximum of 13 periods out of the total 26 periods available. The 13 periods do not have to be taken consecutively.

Who can apply?
During the period you are applying for:

• You were not working for reasons related to COVID-19 or you had a 50% reduction in your average weekly income compared to the previous year due to COVID-19
• You were not eligible for EI benefits
• You were present in Canada
• You earned at least $5,000 in 2019, 2020, or in the 12 months before the date you apply from any of the following sources:
  • employment income (total or gross pay)
  • Net self-employment income (after deducting expenses)
  • Maternity and parental benefits from EI or similar QPIP benefits
• You were seeking work during the period, either as an employee or in self-employment
• You have not turned down reasonable work during the 2-week period you’re applying for
• You have not quit your job or reduced your hours voluntarily on or after September 27, 2020, unless it was reasonable to do so

How to calculate the 50% reduction
The 50% reduction is based on your average weekly employment or self-employment income from either 2019, 2020, or the previous 12 months. You will need to check that you meet this criteria for every period you apply for.

Example:

2019 or the last 12 months (first item of comparison)
$26,000 (employment and self-employment income in 2019 or the last 12 months)

÷ 52

= $500 (average weekly income in 2019 or the last 12 months)

÷ 2

= $250 (50% of the average weekly income in 2019 or the last 12 months)

CRB 2-week period (second item of comparison)
$100 (employment and self-employment income for the CRB period)

÷ 2

= $50 (average weekly income for the CRB period)

The average weekly income for the CRB period must be less than 50% of the average weekly income in 2019, 2020, or the last 12 months. In this example, since $50 (average weekly income for the CRB period) is less than $250 (50% of the average weekly income in 2019 or the last 12 months), the individual would meet this criteria.

How your income affects what you keep
You may earn employment or self-employment income while you receive the CRB. But to make sure the benefit reaches those who need it most, there is a difference in how much you can keep if you earn more than $38,000 in the calendar year. This amount excludes CRB payments.

You will have to reimburse $0.50 of the CRB for every dollar of net income you earned above $38,000 on your income tax return. You will not have to pay back more than your benefit amount for that year. This will be due at the same time as your income tax return for the year. Late payments will be charged interest.

Source: Canada.ca

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The first quarter of 2020 was a period of unprecedented volatility as COVID-19 took hold and lockdowns caused global economic havoc. Risk assets rallied aggressively from their March lows as many countries learned to better manage virus spread and economies gradually started to re-open.

Naturally, COVID-related uncertainty and the lasting effects of the pandemic on the economy are common issues highlighted from the economists and strategists below.  Their viewpoints differ, but overall, a common thread is the notion that the rapid recovery we have seen since late March is not sustainable, but investors should be cautiously optimistic for the remainder of 2020.

BlackRock Outlook: BlackRock advocated for taking advantage of risk assets in strategic portfolios in late-March. The firm has since turned neutral on equities in its strategic framework after the significant rally but keep an overweight in credit. Higher spread levels make up for increased default risk. The team has downgraded U.S. equities to neutral amid risks of fading fiscal stimulus and election uncertainty, and have turned cautious on emerging markets. The team has upgraded European equities as it offers the most attractive exposure to a cyclical upswing. The team is keeping credit overweight because of a global hunt for yield and central bank purchases.

BMO Outlook: BMO MAST expects the whatever-it-takes monetary and fiscal policy actions to remain significant tailwinds for risk assets in 2020, although it does expect market volatility to remain above normal. The team downplays the fear of a second wave and does not expect another round of massive economic shutdowns. The team thinks the loonie has little upside potential as it sees Canadian growth lagging the U.S. in the next 12-18 months. The synchronized policy response of governments and central banks is unprecedented by its speed and size. 0% interest rates could push stock valuations to cyclical highs as investors are forced into riskier assets to generate yield.

Capital Group Outlook: Because this economic decline is policy driven, the team believes a solid recovery is likely as lockdowns end. Easy monetary policy, aggressive fiscal policy and zero-bound interest rates should continue to support equity markets. The recent investor stampede into cash is understandable, but investors should consider the risks of holding excessive cash and trying to find the right time to re-enter the market.

CIBC Outlook: In de la Durantaye’s baseline projection, a vaccine is expected to come in the spring of 2021. If this forecast materializes, the global economy may very well recover faster than generally expected because of the colossal efforts deployed by governments and central banks around the world, with global growth accelerating to +3.4%. This assumes that the global pandemic doesn’t take a turn for the worse. He believes the U.S. economy will recover more rapidly than generally expected. U.S. real GDP growth is projected to average +1.0% over the forecast horizon. With inflation projected to run well below target, the Fed will keep its ultra-accommodative policy stance in place over the whole forecast horizon.

Dynamic Funds Outlook: The team feels the rapid pace of recovery that has taken hold over the past few months is unlikely to be sustained. The spread, particularly in the U.S., will begin to place some downward pressure on mobility patterns and economic activity. It is too early to suggest the risk of a renewed downturn, but the team’s focus has switched to looking for pockets of economic vulnerability. Income support, depressed capital costs, and better economic momentum are working together to help raise the floor under global equity prices. Investors willing to take significant off-benchmark equity positions can reduce the valuation risk in their portfolio.

Fidelity Outlook: Timmer feels the direction the stock market may take from here is not as clear as it was at the end of March. There are some things working in favour of stocks going up—and also against them. On the plus side, earnings look better than expected so far and monetary policy has provided liquidity and support for the recovery. Indicators of internal strength in the market and investor sentiment are also holding up. And, last but not least, there is some optimism around treatments and vaccines for COVID-19. Some of the negatives include the increasing spread of the virus in parts of the U.S. and the potential damper that could put on the recovery as businesses continue to struggle; finally, there may be uncertainty with an election coming up. Overall, Timmer thinks the positives continue to outweigh the negatives.

IA Outlook: As the global economy is showing signs of re-acceleration and the main geopolitical tail risks look poised to take a turn for the better, a structural but careful risk-on strategy should perform well in 2020, according to Gignac. He advocates not overreaching for returns, carefully monitoring and managing risks and, finally, being prepared to be active, as markets should give more opportunities to add value to portfolios.

Manulife Outlook: Petursson sees an economic recovery that is enjoyed globally but perhaps at a different pace market-to-market. In general, equity market gains are unlikely to reflect the full earnings growth as P/E multiples adjust lower (as they typically do in a strong earnings recovery). He believes the trailing S&P 500 Index 12-month P/E ratio falls one or two points through to the end of 2021 to 20x-21x earnings. Despite higher inflationary pressure into 2021, he feels central banks will remain accommodative through the entire period, not looking to raise rates until well into 2022. Yield curves steepen as the recovery combined with the inflationary forces of fiscal and monetary stimulus push longer-term yields higher. Overall, Petursson believes it is a good opportunity to continue to gradually increase the equity weight in his model portfolio by 5% to 60%, bringing his asset allocation back to neutral.

PIMCO Outlook: The team believes that risk assets valuations (equity and credit) are approximately fair, after adjusting for easy financial conditions and assuming a gradual economic recovery. Nonetheless, the distribution of potential economic scenarios over the next 12 months is unusually wide. As such, the team believes investors should maintain a moderate risk-on posture in multi-asset portfolios with a focus on companies with strong secular or thematic growth drivers that are positioned to deliver robust earnings in a tepid macro environment. As always, robust portfolio diversification is critical, but achieving this requires a multi-faceted approach. Duration, real assets, and currencies all can play an important role. The team believes the next few quarters will present a great backdrop for active management as the nature and the pace of the recovery will create many winners and losers. That should provide a plethora of opportunities to add value through sector selection and tactical asset allocation.

RBC Outlook: RBC GAM’s scenario analysis suggests further upside for stocks is possible as long as investor confidence stays elevated, inflation and interest rates remain low, and earnings rebound toward their long-term trend. The base case outlook for the U.S. is for a 7.1% decline in 2020 GDP. There is evidence that the US dollar bull market has come to an end and the team believes the Euro and Yen are to benefit, while the Loonie and British Pound will lag. If faster inflation does eventually materialize, the long-established style trend of quality and growth outperforming value may finally reverse. The team has adjusted the strategic neutral weights in its multi-asset and balanced portfolios in favour of stocks at the expense of bonds. For a balanced, global investor, the team currently recommends an asset mix of 61 percent equities and 38 percent fixed income, with the balance in cash.

TD Outlook: The team has an overall neutral outlook for equities and continues to prefer equities over fixed income. It maintains a modest bias toward U.S. stocks versus Canadian. While there is no definitive way to estimate the degree of damage COVID-19 will cause to corporate and global growth, the team believes in the resiliency of the U.S. economy which should get a much needed boost from accommodative monetary policy and fiscal stimulus measures. Significant downgrades to economic forecasts have increased the probability of a short and sharp recession. The team remains defensively positioned with a neutral view to emerging markets debt while seeking attractive opportunities should they arise.

Source: IA Wealth

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The most common question I have received this year, one that I have asked myself many times, is “how can markets be up amidst the pandemic and economic backdrop?”. On May 29th, we wrote a blog titled “Markets vs. Economy, why markets are only 10-15% off their highs”, which summarized articles by The Globe & Mail and the New York Times on this very issue.

This week, I received a related release from Myles Zyblock, Chief Investment Strategist at Dynamic Funds, which aims to explain the perceived misalignment between the “fair value” of stock prices and current stock prices.

I will try to summarize his article.   Markets go up for two reasons: rising earnings (EPS) or price/earnings expansion.  The former is a very logical reason based on company fundamentals, but the latter is investor sentiment, a more psychological phenomenon.  The table below shows that rising earnings (the fundamental reason), accounts for 41% or less of market performance for time periods under one year:

Thus, when someone asks, “what’s going to happen to markets in the next 3 months?”, a psychologist is apparently better able to answer the question than a financial analyst. Even in a 5-year investment window, “sentiment” still accounts for 44% of market performance. It is not until the 10-year investment horizon mark that fundamental reasons take hold.

I will simply cite Mr. Zyblock for the conclusion:

“So, let’s return to the present day. Stocks have come off the bottom hard since the March low. It sure hasn’t been because earnings were on a tear. It was because P/E multiples expanded; that something has happened to make investors either much more optimistic about future earnings or much more willing to accept equity market risk.  Epic policy stimulus is just an educated guess about what that “something” might be. Fiscal policy makers have injected trillions of dollars into the global economy in the form of income support, loan backstops, and tax breaks. Monetary policy makers have driven interest rates into the floor, provided liquidity backstops, and have bought trillions of dollars of bonds in the primary and secondary markets. G4 central bank balance sheets have grown to more than 50% of their GDP, and the promise is to do even more.  With this much liquidity hitting the system, is it really any wonder why the stock market’s P/E multiple has responded so positively? A simple “excess liquidity” indicator, measured as money supply growth relative to GDP growth, has exploded upwards. Over time, excess liquidity has shown a strong and reasonably stable positive correlation with stock market valuations. It is hard to see a sustained or significant period of valuation compression when the policy authorities are in full panic mode. As the old Wall Street investment adage goes, ‘markets stop panicking when policy makers start panicking’.”

Please reach out to us with any questions or comments. We wish everyone a healthy and happy fall.

Source: Dynamic Funds

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CERB: Self-employed workers who make up to $1,000 a month are now eligible to apply for the CERB.

https://www.canada.ca/en/services/benefits/ei/cerb-application/questions.html

Canada Emergency Business Account (CEBA): The CEBA has been expanded to businesses that paid between $20,000 and $1.5 million in total payroll in 2019. This new range will replace the previous one of between $50,000 and $1 million and will help address the challenges faced by small businesses to cover non-deferrable operating costs.  Since the launch of the CEBA on April 9, 2020, more than 195,000 loans have been approved by financial institutions, extending more than $7.5 billion in credit to small businesses.

https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses

BC Temporary Rental Supplement Program: You can now apply for this program which gives $300 per month for eligible households with no dependents, and $500 per month for eligible households with dependents.

Households need to meet each of the following criteria to qualify for the BC Temporary Rental Supplement:

1. Have a 2019 gross household income of less than:
   • $74,150 for singles and couples without dependents
   • $113,040 for households with dependents
2. As a result of COVID-19:
   • Be receiving or eligible for Employment Insurance; or
   • Be receiving or eligible for the Canada Emergency Response Benefit offered by the federal government; or
   • Have experienced, and be able to provide evidence of, a drop of 25% or more in monthly household employment income
3. Be paying more than 30% of current household income towards rent
   

Canada Emergency Commercial Rent Assistance (CECRA): The program will seek to provide loans, including forgivable loans, to commercial property owners who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May, and June. Implementation of the program will require a partnership between the federal government and provincial and territorial governments, which are responsible for property owner-tenant relationships. The federal government is working with the provinces and territories to increase rent support for businesses that are most impacted by the pandemic and they will have more details to share soon.

Market Highlights (from Myles Zyblock, Chief Investment Officer, Dynamic Funds)

COVID-19

The number of confirmed global COVID-19 cases topped 2 million this week while the tally for deaths is now just under 140k. Thankfully, these curves appear to be bending. Countries that were the hardest-hit, such as Italy and Spain, have joined China and South Korea in stabilizing their daily new cases and death tolls.

Closer to home, the number of daily deaths continue to climb in the U.S. and Canada. However, the Trump administration has been more optimistic around their recent numbers and has laid out guidelines to state Governors for “opening up America again”. Ultimately, the decision of when to re-open will be made by the Governors as different states are experiencing different levels of infection. This will likely result in the economy re-starting in phases with the less-impacted areas coming back sooner. Included in the information package’s list of criteria (before opening up) is the need for a 14-day downtrend in the number of patients with influenza-like symptoms as well as confirmed coronavirus cases, the ability for broad testing for everyone, and a consideration for the ability of hospitals to treat patients.

In Europe, Germany’s numbers surrounding the coronavirus have been relatively less severe than its regional counterparts. For example, its case fatality rate is at 2.8% compared with 4.8% for Switzerland and 13% for both Italy and the U.K. Perhaps this is why Chancellor Merkel is planning on slowly re-opening the German economy in phases, starting on April 20 with factories followed by schools and small shops in early May

Gilead’s coronavirus drug, Remdesivir, is showing promise as a treatment for Coronavirus. However, this is still an early result and we hope to hear about more successes from them soon.

ECONOMY

The IMF released its economic outlook this week, after accounting for the coronavirus outbreak, and the forecast was chilling. Global GDP for 2020 is expected to come in at -3% while US and Canada are expected to deliver -5.9% and -6.2%, respectively.

Early signs point to a severe economic downturn. In the U.S., monthly retail sales came in at -8.7%, which is the biggest decline in the data series’ history going back to 1967. Similarly, industrial production was reported at -5.4% which is the largest fall in output since 1946. Keep in mind that these data releases are for March which captures roughly half a month of shutdown. We imagine that April and May’s data incorporating a full month of shutdown could look even worse.

Some other data points that caught our attention from around the world include Hong Kong’s average daily visitor arrivals holding at zero, reflecting the continued troubles in tourism and leisure related industries. As well, China’s GDP was reported at -6.8% on a year-over-year basis for Q1. In Canada, we saw home sales decline by 14.3% for March.

(end of Myles Zyblog commentary)

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For both individuals and self-employed workers who have a balance owing after filing their return, the payment deadline has been moved from April 30 to August 31.   This means you can file on June 1 (or June 15 if you’re self-employed) and remit your payment on August 31 without incurring late-payment interest.

Our office remains open for you to drop off your tax documents.  However, we encourage you to consider the electronic alternatives discussed in an earlier post.

Normally, our office transitions towards taxes in March, but due to the high volume of inquiries related to investments, we have not yet done so.  Since the government has extended the filing deadline by one month, we will move our season accordingly and start returns in April.

As mentioned previously, our standard two-week turnaround will also be affected because of these extraordinary events.  It may take a little longer than usual completing your return, but we’ll do everything in our power to ensure a reasonable turnaround time.

Although we are accepting tax documents in-person, we are only taking annual reviews by phone or Skype.  We are continuing to provide services while abiding by the restrictions imposed by BC’s Provincial Health Officer.  Of course, the situation remains highly fluid and we’ll continue to update you on any changes as they happen.

Our most important priority is the prosperity, health and safety of our clients. We are here for you and will work tirelessly to help you during these uncertain times.

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The $82B is broken down as $27B in direct support (1% of GDP) and $55B through tax deferrals (3% of GDP).

The package is positioned as a Phase 1 announcement, with promises of further aid to follow later.

Below is a list of measures announced:

Tax Returns:  Extension of filing deadline for individuals to June 1 and a payment deadline of August 31.  The payment deadline is one month longer than previously reported.

The self-employment filing deadline of June 15 does not appear to be impacted.  Self-employed individuals will have to file by June 15, but will now have until August 31 to make their payment without incurring any interest.

Emergency Care Benefit:  Income security of $450 a week for those employees or self-employed workers under quarantine, self-isolation or taking care of family members sick with COVID-19.

The program will require a simple attestation, no lengthy application. The benefit will be available in early April and paid via direct deposit.

Emergency Support Benefit ($5B):   Workers who lose their job due to COVID-19 and that would not have been eligible for EI will receive a comparable benefit of up to 14 weeks.

GST Payments.  For the next GST payment in May, government will provide a GST credit averaging $400 for single adults, and $600 couples.  There are 12 million Canadians who receive the GST credit.

Canada Child Benefit (CCB):  $300 top-up to the CCB to assist parents.

Mortgage Deferral: The Canada Mortgage and Housing Corporation (CMHC) will reintroduce the insured mortgage protection program, so that banks and lenders can offer mortgage and loan deferral to those impacted by COVID-19.

Banks will work with individuals and businesses on a case-by-case basis to provide a 6-month deferral on mortgage and other loan products.

Retirement Benefit: Temporarily lowering the RRIF minimum payment by 25%, which results in less taxable money coming out of RRIF accounts, and more money remaining invested to recover from the market decline.

Business Credit Availability Program: The Business Development Bank of Canada (BDC) will provide additional financing to help provide credit to businesses.

Bank of Canada: Rate cut of 0.50% (already announced).

Wage Subsidy for Small Businesses: 10% wage subsidy for the next 3 months, up to $25,000 per employer, effective immediately.

To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.

Air Transportation and Oil / Gas Sectors:  Additional support for these industries.

Student Loans:  Six-month moratorium on student loan payments.

Indigenous Communities:  Distinctions based, indigenous community support fund.

Shelters: Additional funding of $200M to support homeless, domestic assault shelters, half-way homes, and transition homes.

We’ll send out additional briefs as more information becomes available on the mechanics of these programs.

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The filing deadline has been moved from April 30 to June 1 and the interest-free payment deadline will be August 31.

Last week, we posted an article on the electronic options you have for submitting, filing and paying for your return with us:

https://www.you-first.com/electronic-alternatives-during-tax-season/

This tax season will be a unique one.   Generally, we quote a two-week turnaround time to finalize your return.  Because of the current reality we live in, that turnaround time will likely be affected this year.  We might take a little longer than two weeks, but we’ll ensure that all deadline sensitive returns will be filed by June 1^st.

Our office remains open and you can drop off your documents anytime Monday to Friday, 8am to 5pm.

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