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COVID-19

Keep It Simple S…ubsidy

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9 minute read

You want my idea for the wage subsidy… well here it is.

WARNING: It is so simple to implement, there is no way a government would do it.

(Originally posted on LinkedIn (no joke) April 1, 2020)

 

 

People have said “you are quick to pick apart the wage subsidy, so what is your solution?”

So… you asked for it… here it is:

I’ve said it from the very beginning that it should resemble EI support. All they should be doing is simple.

(No this is not an April Fool’s joke… but I am hoping the Press Conference on April 1, 2020 by the Minister of Finance was)

I was fine with EI amounts… but since we have the Canadian Emergency Response Benefit (CERB)… let’s use that amount to keep it more simple.

The amount is this:

(just like the CERB). $2,000 per worker per month, taxable, and no withholdings up front

Put a ‘clawback’ amount on those that are getting it like the clawback on Old Age Security or regular EI benefits for when they file income tax next year.

The 3-prong approach to the subsidy

 

Prong 1 – CERB from Service Canada

Everyone should get it. Yes, everyone.

However, anyone that makes more than the EI maximum in 2020 must pay back 30 cents of the CERB on every dollar over the $54,200 EI maximum threshold when they file their 2020 taxes.

So when you file your personal 2020 income tax, if you ended up making more than $80,667 in income, you will have had to pay back the full $8,000 of CERB received on a T4E.

This results in helping everyone today, help jump start the economy when we need to and have those that get back on their feet quicker, paying some or all of it back.

If you received both the CERB from Service Canada, and the CERB through your employer, you have to pay back the amount greater than the $8,000 received, and then any other amount based on the formula above.

This will prevent or reduce the double dip.

 

Prong 2 – CERB through the Small Business employer

The small business (less than $15M in assets of all associated corporations) employer would also get the CERB on a per-employee basis. They already have to fill out the number of employees when they file their remittance forms, so what’s the difference?

This $2,000 flows through to subsidize the wages, and must be paid to the employees. You create a different box number to track it on the T4 slips next year for audit purposes and to make sure the employee got the money.

I know this isn’t 75%, but the 75% was a capped amount anyways. That’s why I said keep it simple.

In order to incentivize the small business employer so they don’t lay them off, treat it as a flow through, and non-taxable to the employer.

So if there are five employees at the small business, the employer will get $10,000 of CERB to flow through to the employees.

The employee’s wages will be subsidized by the $2,000 amount, and they will put the $2,000 in a different box on each T4 slip for tracking purposes.

In order to incentivize the employer to act as the flow-through for Service Canada, this $2,000 will not be subject to EI or CPP by the employer and will not be included in the taxable income of the employer.

This allows the employer to claim the full wage deduction, have subsidized payroll costs, and save the income tax amount by deducting the full payroll.

By not counting it as income, this tax and remittance savings can be viewed liked an “admin fee” for acting on Service Canada’s behalf.

On $10,000 (5 employees) this would save up to $252 in Employer EI, $525 in Employer CPP, and $900 in federal income tax.

Cost to government for employer being the administrator instead of Service Canada: $1,167.

Incentive for employer to NOT lay off the staff, $10,000 in wage costs… and $1,167 in tax savings.

 

Prong 3 – CERB through Large Corporations

If the employer is getting the CERB on a per-employee basis and they are a large (greater than $15M in assets) corporation or associated group, allow them to not pay employer EI or CPP on the CERB.

100 employees = $200,000 = up to $5,040 in reduced EI, and $10,500 in reduced CPP remittances as the incentive.

So the employer gets $2,000 per employee as a subsidy to cover wage costs, and does not have to do payroll withholdings on the amount, saving them a total of $200,000 + 5,040 + 10,500 = $215,540.

Or put another way, they can save $15,540 by not laying them off.

If that’s not enough incentive, then perhaps look at it being only 50% taxable, which in the example above, would reduce Federal income tax by $15,000 (using 15% general rate x 50% x $200,000)

 

 

Audit Tracing

By simplifying the process, there is less ability for abuse.

Service Canada will issue everyone a T4E with the CERB they personally received from them (no application necessary).

T4 box numbers can be reconciled by CRA on slip filing to amounts of CERB received by the employer through the PIER system.

Those same boxes can be reconciled to specific individuals on tax filings to see if there were any that should repay.

Amounts greater than $8,000 received by anyone will need to be repaid.

Those with income over the EI Maximum amount, will have to repay some or all of the CERB back when they file.

If you don’t agree… well… the specific repayment formula can be figured out later… we have a year for that. We need the money in the public’s hands now though.

 

In Conclusion

These incentives and recapture mechanisms will reduce the likelihood of layoffs in low-margin industries like hospitality since $2,000 a month goes a long way to covering those wages; it will “Flatten the EI Curve” (trademark pending – not really… but I like saying it)

It would get everyone back working quicker after this is done by maintaining the connection to employers, and get the economy kick-started with cash injections at the front of this thing, rather than the end.

In the end… you have employers flowing the $2,000 through to the employee on Service Canada’s behalf as a no-withholding amount and a nominal cost to the employer to administer it, rather than Service Canada processing hundreds of thousands (if not millions) of individual applications.

If they are a small business, they actually get a tax savings by being the administrator and helping Service Canada in the process.

If they are a large business, they can have a good chunk of payroll costs reduced by not having to pay EI and CPP on the amount, and perhaps tax savings.

In the end, every worker gets $8,000 over 4 months just to buy everyone time and we have Flattened the EI Curve.™

Biography of Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr can be found here.

#RedDeerStrong – If you’re struggling and you need to consolidate debt through a mortgage refinance, Kristen is here for you.

CEO | Director CGL Tax Professional Corporation With the Income Tax Act always by his side on his smart-phone, Cory has taken tax-nerd to a whole other level. His background in strategic planning, tax-efficient corporate reorganizations, business management, and financial planning bring a well-rounded approach to assist private corporations and their owners increase their wealth through the strategies that work best for them. An entrepreneur himself, Cory started CGL with the idea that he wanted to help clients adapt to the ever-changing tax and economic environment and increase their wealth through optimizing the use of tax legislation coupled with strategic business planning and financial analysis. His relaxed blue-collar approach in a traditionally white-collar industry can raise a few eyebrows, but in his own words: “People don’t pay me for my looks. My modeling career ended at birth.” More info: https://CGLtax.ca/Litzenberger-Cory.html

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COVID-19

WHO Official Admits the Truth About Passports

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From the Brownstone Institute

BY Paul ThackerPAUL THACKER

The World Health Organization’s Dr. Hanna Nohynek testified in court that she advised her government that vaccine passports were not needed but was ignored, despite explaining that the Covid vaccines did not stop virus transmission and the passports gave a false sense of security. The stunning revelations came to light in a Helsinki courtroom where Finnish citizen Mika Vauhkala is suing after he was denied entry to a café for not having a vaccine passport.

Dr. Nohynek is chief physician at the Finnish Institute for Health and Welfare and serves as the WHO’s chair of Strategic Group of Experts on immunization. Testifying yesterday, she stated that the Finnish Institute for Health knew by the summer of 2021 that the Covid-19 vaccines did not stop virus transmission

During that same 2021 time period, the WHO said it was working to “create an international trusted framework” for safe travel while EU members states began rolling out Covid passports. The EU Digital COVID Certificate Regulation passed in July 2021 and more than 2.3 billion certificates were later issued. Visitors to France were banned if they did not have a valid vaccine passport which citizens had to carry to buy food at stores or to use public transport.

But Dr. Nohynek testified yesterday that her institute advised the Finnish government in late 2021 that Covid passports no longer made sense, yet certificates continued to be required. Finnish journalist Ike Novikoff reported the news yesterday after leaving the Helsinki courtroom where Dr. Nohynek spoke.

Dr. Nohynek’s admission that the government ignored scientific advice to terminate vaccine passports proved shocking as she is widely embraced in global medical circles. Besides chairing the WHO’s strategic advisory group on immunizations, Dr. Nohynek is one of Finland’s top vaccine advisors and serves on the boards of Vaccines Together and the International Vaccine Institute.

The EU’s digital Covid-19 certification helped establish the WHO Global Digital Health Certification Network in July 2023. “By using European best practices we contribute to digital health standards and interoperability globally—to the benefit of those most in need,” stated one EU official.

Finnish citizen Mika Vauhkala created a website discussing his case against Finland’s government where he writes that he launched his lawsuit “to defend basic rights” after he was denied breakfast in December 2021 at a Helsinki café because he did not have a Covid passport even though he was healthy. “The constitution of Finland guarantees that any citizen should not be discriminated against based on health conditions among other things,” Vauhkala states on his website.

Vauhkala’s lawsuit continued today in Helsinki district court where British cardiologist Dr. Aseem Malhotra will testify that, during the Covid pandemic, some authorities and medical professionals supported unethical, coercive, and misinformed policies such as vaccine mandates and vaccine passports, which undermined informed patient consent and evidence-based medical practice.

You can read Dr. Malhotra’s testimony here.

Republished from the author’s Substack

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  • Paul Thacker

    Paul D. Thacker is an Investigative Reporter; Former Investigator United States Senate; Former Fellow Safra Ethics Center, Harvard University

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Freedom Convoy

Ottawa spent “excessive” $2.2 million fighting Emergencies Act challenge

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News release from the Canadian Constitution Foundation

Federal Court Justice Richard Mosley found in January that the February 2022 invocation of the Emergencies Act to deal with the Freedom Convoy protests was unreasonable because there was no national emergency nor threats to security of Canada as were required to invoke the Act.

The Canadian Constitution Foundation is shocked to learn that Ottawa spent more than $2 million of taxpayer funds unsuccessfully fighting the legal challenge launched by the CCF and others to the Trudeau government’s illegal invocation of the Emergencies Act in 2022.

The $2,231,000 figure was revealed by the Department of Justice in response to an inquiry from Conservative civil liberties critic Marilyn Gladu.

The hefty figure was first reported in the Globe and Mail. Experienced counsel told the Globe that the amount spent was “excessive.”

The number includes the cost that the government spent fighting the judicial review of the invocation decision in Federal Court. It does not include the cost of Ottawa’s appeal, which is proceeding at the Federal Court of Appeal.

Federal Court Justice Richard Mosley found in January that the February 2022 invocation of the Emergencies Act to deal with the Freedom Convoy protests was unreasonable because there was no national emergency nor threats to security of Canada as were required to invoke the Act.

Justice Mosley also found that regulations made as a result of the invocation violated freedom of expression because they captured people who “simply wanted to join in the protest by standing on Parliament Hill carrying a placard” and the right to be free from unreasonable searches and seizures because bank accounts were frozen without any sort of judicial pre-authorization.

CCF Litigation Director Joanna Baron was dismayed to learn how much Ottawa spent.

“Civil liberties groups like the CCF rely on regular Canadians who care about rights and freedoms to fund this type of public interest litigation,” she said.

“The fact that the government seems willing to spend whatever it takes to defend its unlawful decision shows what we’re up against when we fight to protect the constitution and the rule of law.”

The CCF is calling on the federal government to drop the appeal of Justice Mosley’s decision.

Canadians who agree with the decision are encouraged to sign the CCF’s online petition calling on the government to drop the appeal. The CCF is also asking Canadians to consider making a tax-deductible charitable donation to the CCF that will assist with fighting the appeal.

The CCF is represented by Sujit Choudhry of Haki Chambers and Janani Shanmuganathan of Goddard & Shanmuganathan.

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