Expert tells WP advisors can help businesses adapt to pandemic in the short and long term
Advisors need to be proactive in assessing a client’s tax situation after a year in which many people were affected by job losses, reduced hours and government subsidies.
That’s the view of Dino Infanti, Partner, National Leader, Enterprise Tax, KPMG, who told WP it’s incumbent on finance professional to communicate all they know about the government benefits to help people, and small- and medium-sized businesses, through these tough economic times.
He suggested getting ahead of the game and that, as we approach the end of the calendar year, advisors and tax professionals should undertake early calculations to see how clients are shaping up ahead of the spring tax season, especially after the government provides its economic update on Monday.
For many small businesses, currently dealing with restrictions put in place to combat a second lockdown, this is of critical importance.
Infanti said: “It comes down to short-term and long-term thinking. The short term is finding ways for small business to navigate through this difficult time, and to take every opportunity to access the various government programs to the extent they're available to them. This helps them see their way through this next short-term period and to ultimately manage their cash flow and business.
“Then there is the longer term, which is adapting to the ‘new normal’, and helping small businesses rethink their business model in the context of what this might look like, in particular, with an emphasis on technology and retooling your business."
From a financial perspective, this may involve helping a business owner - of an enterprise structured within a corporation - look at wages and dividends, or ensuring they have maximised and strategized RRSP contributions.
Infanti said individuals who can access the Canada Emergency Response Benefit (CERB) should be doing so, while for businesses, advisors can help them obtain subsidies as it relates to a drop in revenue that corresponds to employees’ pay.
Another lifeline is the rental assistance program, which was recently modified and is now called the Canada Emergency Rent Subsidy (CERS). The CRA opened a new online application portal this week and successful applicants may receive support payments as early as December 4.
More organizations may now be eligible to apply for the subsidy, since businesses are no longer required to pay eligible expenses before they can receive it, as long as they pay the amount within 60 days of receiving the related support.
“This new program is available to both landlords and tenants that have multiple types of expenses,” Infanti added.
Whether you are accessing CERS, CERB, the Canada Recovery Benefit (CRB) or the Canada Emergency Student Benefit (CESB), it’s important to remind clients that they are all taxable. It’s important, therefore, to set aside money to pay for any income tax owing.
Infanti added: “It’s a very challenging time. The focus on these individuals and business owners to navigate through these difficult times is very stressful, let alone the ability to then think about, ‘okay, what's my tax obligation as a result of accessing some of these programs?’
“An advisor can help a business owner or an individual be as proactive as possible. It just helps ease the stress and provides visibility to one's tax obligations.”
