Government of Ontario Benefits:

PC Government has announced a lock down for 28 days effective November 23, 2020 :
but to provide financial support to businesses suffering losses because of lock down, PC Government
under Premium Ford has announced multiple financial support to businesses.

Below are some of them that might help businesses:

1. PPE Support

• Government has announced $1,000 support to businesses for purchasing PPE equipment (such as gloves, masks, face shield, sanitizers etc.). Businesses have to have all receipts to claim this amount.
  Businesses must have between two and nine employees in one of the four sectors:
• Retail
• Accommodation and food services
• Repair and maintenance
• Personal and laundry services

2. Property Tax and energy bill rebates

Businesses that were required to be shut down or significantly restrict services due to lockdown
due to Provincial public health measures (mainly stage 2 lockdown) can apply for these fixed
costs to reduce financial burden. The money received will be considered a grant and does not
require repayment.

This support is available for businesses who were required to significantly reduce their services.

Type of businesses that will have this support are:

• Restaurants and bars
• Meeting or event places
• Performing arts and cinemas
• Personal care services (Oxygen bars are exempted)
• Bingo halls, casinos, conference centres and convention centres
• In-person teaching and instructions
• Community centres, multi-purpose facilities and museums
• Racing venues
• Gyms, facilities for indoor sports and recreational fitness activities

Eligible businesses could get
Municipal and education property taxes; and
Energy costs (including electricity and natural gas)

You can reach us on 905 815 8442 Ext 150 to get additional information or to receive assistance
with funding. Stay safe stay happy…

Canada Emergency Rent Subsidy (CERS)

While we are facing another lockdown…businesses have got some financial relief from Ontario government and Federal government as well.

Canada Emergency Rent Subsidy (CERS) program has begun effective November 23, 2020 where tenants can apply for rental rebate without having to. involve landlord.

Rent subsidy is available to any business with a drop in revenue that is more than 0%.  In fact, if you own a property even, you are eligible for CERS (with some conditions) on your interest cost as well.

Here are ALL the FOUR conditions for that are required to be eligible for the Rent subsidy:

1.One of the four must be met:

• –You had a CRA Business Number on September 27, 2020; or
• –You had payroll account on March 15, 2020; or;
• –You purchased the business assets of another person or partnership who meets condition 2 above and have made an election under the special asset acquisition rules.                                                                                                                                                        These special asset acquisition rules are the same for the Canada Emergency Wage Subsidy (CEWS)
• –You will meet other prescribed conditions that might be introduced.

2. You are an eligible business, charity, or non-profit

3. Experienced a drop in revenue

4. Have eligible expenses.

Please call us on 905 815 8442 Ext 150 or email us to discuss if you qualify for the CERS.  Our office will be happy to assist you in receiving this benefit during this tough financial time.

Capital Gains or Income?

Many people constantly wonder whether to have earned income for tax purpose or realize a Capital Gain!!!  Distinction between Capital Gain and Income is very important because Capital Gain is only half taxed.

Capital property is where gain is only half taxed (referred to as “Taxable Capital Gain”) at one’s regular marginal income tax rate.  Not all gains are capital gains tax.  For example, if you buy and sell multiple properties during the year, your income will be considered business income where as if you sell one or two properties in a year, it might be considered a capital gain.  Business income is defined as “adventure in nature of trade”.  Considering the clarity (or lack thereof) in this definition, there has been numerous court cases.    Business losses are fully deductible for tax purpose whereas capital losses are only half deductible and only against capital gains.  When you sale items on a regular basis (adventure in nature or trade), its considered business income/losses.

The more confusion comes when it comes to real estate buy and sale.  One may buy a piece of land to build a home to live in (Capital), or may plan to sell it after being built (inventory).  If you purchase a land to build a commercial unit it may be considered Capital in nature or would be considered inventory if you buy the same piece of land to build homes and then sell them.   IT-218R “Profit – Sale of a real estate” provides guidance on CRA’s view on treatment of purchase of sale of a real estate – capital in nature or business profit.  Most important here would be the intention.  Courts have also developed “secondary intentions” as well.  First intention would be to stay in the house but if it does not work out, then sell it would be the secondary intention.  In this case, courts have determined the home to be an inventory and capital gains fully taxed.  (Refer to IT-459 for more detailed issue discussion).

Principal residence on the other hand has no tax consequences. It’s even better than 50% taxable income of capital gains.  However, if one flips home too quickly and intentions are proven that homes are built and stayed in for a short period of time, they are considered business income and taxed at a full amount of gain at the marginal tax rate.  This will be true even if you lived in the home and have changed your addresses including on driver’s license.   What’s worse is that you will be required to pay HST on the entire purchase price of the home. If you have not kept receipts during construction phase, chances are you will be disallowed the input tax credit on the HST and many builders have taken these things in the past to court have lost cases. In some cases, CRA has known to go after builders after as long as 20 years despite normal statute of limitations being 3 years.

Other well known area in capital gains vs. income is shares.  Most of the securities are held as capital property and CRA does not generally argue on the position unless one trades them very frequently.  When stocks are traded frequently, it’s considered a business income.  If you however have losses, you are in luck because you will be in a better position.  You can make an election by filing a form T123 (Subsection 39 (4) of the ITA) to hold all Canadian securities held as capital property forever. Be sure that you do not have losses because losses are considered capital losses and can only be used against capital gains.  However, these exclusion does not apply to all shares.

Exclusions include:

•  Exploration and development shares
•  Shares or debt you acquired from a person you do not deal at arm’s length with
•  Debt to a person or corporation with whom you do not deal at arm’s length
•  Private corporation shares whose value is primarily attributable to real property or resource property

Please call our office to see whether you may qualify for an income or capital gain on your venture. We serve Mississauga, Oakville, Brampton and Toronto GTA.