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Keep It Simple S…ubsidy

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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, Canadian Tax Advisory CGL Strategic Business & Tax Advisors 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://www.CGLtax.ca/Litzenberger-Cory.html

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Bruce Dowbiggin

Corporate Capture & Youth Checkout: The Covid Scorecard

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The decade past has witnessed a Great Realignment. (Mind we said realignment, not reset.) The election of Barack Obama through Donald Trump and Covid-19 has seen a tectonic shift in the plates beneath society. Alliances have been broken. Power has shifted. Loyalties have disappeared.

The result is a new coalition, a cult alliance of tech, knowledge-based industry, culture and corporatism. Under cover of social unrest and virus paranoia these former antagonists found common cause in punishing the middle and lower classes of society for not acknowledging their elevated, superior status. (Translation: they voted for Trump.)

These woke apostles are unapologetic. Through censorship, cancel culture and financial, leverage they’ve created an oligopoly unabashed in bare-knuckled self-interest. And to constantly remind you that they’re in charge.

To understand how revolutionary this alliance is one need only recall the dirigiste fervour of the 1960s. While it seemed to everyone at the time that society might tip in the maelstrom of riot and protest, the corporate side never blinked. They viewed the Weathermen and the Red Brigade as fringe outfits that would never see power. They held to the status quo (or privilege in today’s CRT newspeak.)

That has changed, because of writers such as French socialist economist Thomas Piketty. Thanks to him Corporate America is now obsessed with Environmental, Social and Governance (ESG), not shareholder value. It is dominated by HR departments deeply committed to radical notions of social justice and racial equity. Inspired by the example of Michelle Obama, they’ve made Wall Street into Woke Street.

As we wrote in February of 2021 “the New Left now ruthlessly employs Big Tech, Wall Street and the media against its idealogical enemies— including some of its former allies… the Democratic Party of 2021 has morphed from brave to slave, dedicated to intellectual conformity, not contrary opinions. Gone are the civil libertarians like (William) Kunstler. In their place are AOC and her brigades of SJWs purveying hate-speech laws and attacking deniers of the “true climate religion”. First amendment rights have been replaced by cancel-culture indictments.”

Jordan B. Peterson, who recently resigned his tenured position at University of Toronto, describes the corporate submission: “What in the world is wrong with you? Can’t you see that the ideologues who push such appalling nonsense are driven by an agenda that is not only absolutely antithetical to your free-market enterprise, as such, but precisely targeted at the freedoms that made your success possible?

“Can’t you see that by going along, sheep-like (just as the professors are doing; just as the artists and writers are doing) that you are generating a veritable fifth column within your businesses? Are you really so blind, cowed and cowardly?”

While this corporate surrender has transpired, another schism has developed under cover of the Covid-19 pandemic panic. Its effect could be just as enduring. This one is based on age.

The group in society most vulnerable to the ravages of the pandemic is the 55+ cohort, the aging Boomers— the same one orchestrating the reaction to the virus. They are also the most afraid of its impact on them personally. It would be no exaggeration to say those health concerns have been reflected in the overbearing lockdown, mask, distancing and detention policies used against the virus. The generation that once worshipped free speech was quick to abandon civil liberties in its panic to save its own hide.

But younger generations who are far less vulnerable to the virus are tired of being participants in the psycho-dramas of aging the Boomers and their death phobia. And they’ve reached their end. They now flock to clubs, arenas and stadiums to see their friends. They know some of them will get sick, but 99.99 percent of them will be fine even if infected.

They are dismissive of the political shell game of their elders and the autocrats of Big Health. And, as we can see from one of the major sports, they’re headed in a new direction.

NHL players, God bless ‘em, have recognized that old people’s worries are not their worries. For months the league has gone with the Covid catechism to please politicians. Players were ordered to be vaccinated. Anyone testing positive from the wonky PCR test was sidelined. Even asymptomatic players. Games were played with undermanned rosters.

With 100 percent vaccinated, the league still saw 70 percent of players test positive. So the NHL now says “No more”. Only players who show symptoms will be removed from play. Excellent athletes are not 81-year-old U.S. senators shaking in their Depends.

With the accepted narrative now collapsing— Britain has abandoned the mask and lockdown mandates— more jurisdictions will do contrition for overshooting the mark. Dottering Joe Biden can talk about belatedly sending out 400 million masks, but he’s lost the room. Under 50s have moved on.

The only question is how long the ESG folks propping him up will wait before he’s sent overboard. While health is important, everything is second to their power.

Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster (http://www.notthepublicbroadcaster.com). The best-selling author was nominated for the BBN Business Book award of 2020 for Personal Account with Tony Comper. A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, he’s also a regular contributor to Sirius XM Canada Talks Ch. 167. His new book with his son Evan Inexact Science: The Six Most Compelling Draft Years In NHL History is now available on http://brucedowbigginbooks.ca/book-personalaccount.aspx

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Bruce Dowbiggin

Fortress Australia Gets Its Scalp, Tosses Djoker Out

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The ceremony of innocence is drowned;

The best lack all conviction, while the worst   

Are full of passionate intensity. —W.B. Yeats

There has always been a large reservoir of affection for Australia in the West. The sun-kissed land down under. Kangaroos. Beaches. Crocodile Dundee. Aussie Rules Football. Men At Work. Foreigners embraced all the clichés gleefully.

The Australian Open tennis tournament was part of that scenario. The first Grand Slam, played in scorching sunshine while the Northern Hemisphere freezes in January. TV coverage was laced with tourist entreaties to fly 14 hours to the Great Barrier Reef and Gold Coast.

But with the nation’s behaviour in fighting Covid-19, this is all (in the words of Yeats) “changed, changed utterly.” The fever-swamp regime now running the nation has gone off the rails with detention camps for unvaxxed, flying squads of police roaming the streets and total lockdowns in emulation of the Chinese.

Australia’s heavy-handed “cures” for Covid would make Curfew Quebec look a model of tolerance. While America is moving away from draconian lockdowns, (Associated Press is now asking its writers to play down Covid numbers) Australia is still singing from the 2020 WHO hymn book that pretends lockdowns save lives. For example, mask mandates were recently re-imposed when five— count ‘em— five local cases were spotted in Perth.

Look, Australia is entitled to run their nation any way they want. They have the constitutional right to act like so many scared kookaburras in the face of a virus that will spare 99.98 percent of them. But don’t push the “shrimp on the bar-b” hokum on the world when the tennis begins.

This whack-a-mole mania culminated in Sunday’s expulsion of Covid rebel Novak Djokovic. After granting the No. 1 men’s player in the world a visa to play, Australia’s Minister of Immigration Alex Hawke said he had cancelled the 34-year-old’s visa for a second time on “health and good order grounds, on the basis that it was in the public interest to do so”. He said Djokovic’s example was— wait for it— a threat to his people.

Good order? Hawke and his government have to lock up the population because their Island Fortress strategy isn’t enough to curb Omicron’s arrival. Yet Djokovic is the threat, not their frantic search for a fifth column of viral killers in Canberra.

Djoker knew he was going into headwinds as he sought to play in the Open as an unvaccinated player. He was less than forthcoming on his entry documents. So his highly political stance made him a target. But a threat to the people of Australia? Please. (The cops escorting him to the airport was reminiscent of Judy Garland being shooed from the country in the 1960s for being too drunk to perform.)

The Australian PM Scott Morrison, with his eyes on re-election, greeted the expulsion, mumbling about needing to “keep our borders strong and keep Australians safe… It’s now time to get on with the Australian Open and get back to enjoying tennis over the summer.”

Djokovic’s argument is that the Australian government that initially granted him a visa is now using him as an easy target to whip the natives in line. The independent, unapologetic Djokovic has certainly served the Aussie politicians well as a convenient whipping boy for the petrified millions who put their faith in governments and health “experts” to save them from the dreaded virus.

(Sounds like France, which never misses an opportunity to enforce the status quo, will emulate Australia by banning an unvaxxed Djokovic if he ventures there in June for the French Open.)

The “burn the witch” frenzy feeds into the non-vaxxed insanity currently underway in Canada and the U.S. There are demands that those who declined the juice be denied healthcare or fined or have their taxes audited. Immunity is dismssed. Cobbled hospital numbers are conflated with truths. Instead, images of gap-toothed hillbillies saturate progressive media who find their allies have been unable to halt the virus as promised.

Inconveniently, polling by Abacus in Canada has shown that the typical anti-vaxxer is not a swaggering tennis player, a bow hunter or toothless yokel but is in fact a 42-year-old Ontario white woman who votes Liberal.

The bright side of this Kafkaesque farce is that Omicron is fading like old Xmas decorations. Many are predicting that it is peaking now and will be a spent force by February. The tinpot tyrants in Australia, having booted Djokovic, will need something else to reinforce their desperate grasp on power.

Ditto here in North America. Unless a follow-up variant can be swiftly produced (remember that subsequent viruses are always weaker) Skippy and Biden will be left to explain their enforced vaccines and virus solutions to a public disinterested in their ongoing need for power.

To use a tennis analogy they’ll be down two breaks and facing Djokovic’s best serve. Should be entertaining.

 

Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster (http://www.notthepublicbroadcaster.com). The best-selling author was nominated for the BBN Business Book award of 2020 for Personal Account with Tony Comper. A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, he’s also a regular contributor to Sirius XM Canada Talks Ch. 167. His new book with his son Evan Inexact Science: The Six Most Compelling Draft Years In NHL History is now available on http://brucedowbigginbooks.ca/book-personalaccount.aspx

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