Fall Economic Update Highlights

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The Minister of Finance and Deputy Prime Minister Chrystia Freeland delivered the 2020 Fall Economic Statement November 30, 2020.

Here are the highlights that could directly affect you and your business (paraphrased from Video Tax News – 2020 Fall Economic Statement):

DEFICIT:

The 2020 projected federal deficit is currently $381B.

RATE CHANGES:

There were no changes announced to personal or corporate income tax rates, the capital gains inclusion rate, wealth tax, or the rate of GST.

CEWS:

Furloughed CEWS

The Government proposed changes to the process for calculating furloughed employees. A furloughed employee is an employee that has been temporarily laid off but is still being paid. The proposed changes are as follows:

For the weeks from December 20, 2020 to March 13, 2021 the weekly wage should be the lesser of:

  1. the amount of eligible remuneration paid in respect of the week; and
  2. the greater of:
  • $500, and
  • 55% of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $595.

Employers will also continue to be entitled to claim their portion of contributions in respect of the Canada Pension Plan and EI under the wage subsidy.

EI AND CANADA RECOVERY BENEFITS

No changes were announced for the programs.

EMPLOYEE STOCK OPTIONS

Based on the 2019 Budget new stock option deduction limitations will be implemented. Further details have been released in respect of the $200,000 limit, tax treatment for employees and employers, and charitable donations.

Please reach out to us if you have any questions about these new limitations

GST/HST ON CROSS-BORDER DIGITAL PRODUCTS AND CROSS-BORDER SERVICES

The Government has proposed that non-residents supplying digital products or services to consumers in Canada should register for GST/HST to collect and remit the sales tax on their sales to Canadian Consumers. The purpose of this proposal is to level the playing field between resident and non-resident vendors.

OTHER GST

Other GST Proposals made include:

  • GST/HST Relief on Face Masks and Face Shields
  • Application of the GST/HST in Relation to E-commerce Supplies
  • GST/HST on Goods Supplied through Fulfillment Warehouses
  • Purchases by GST/HST Registered Businesses
  • GST/HST on Platform-based Short-Term Accommodation

CANADA CHILD BENEFIT

If your family is entitled to the Canada Child Benefit and has children under the age of six you will receive four additional payments in 2021.  For families with income under $120,000 you will receive $300 per child under the age of six, and those with higher income will receive $150 per child under the age of six.

For reference to the full Fall Economic Statement see the link below:

https://budget.gc.ca/fes-eea/2020/report-rapport/toc-tdm-en.html

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