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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, 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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COVID-19

My kid has covid. Now what do we do? – Dr. Peter McCullough Interview Part 2

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This may seem a little strange because I’m going to willingly breech my own doctor / patient confidentiality.  I’m not sure what my obligation is here but I know doctors are guided by the Health Information Act (HIA) and the Personal Information Protection Act (PIPA).  Nowadays though we all know that every time I go to coach my son’s hockey team I have to divulge my health information in front of whoever happens to be near me in front of a stranger in the entrance of a hockey rink.  In other words, I’m guessing I’ll get away with this.

Recently I asked my doctor the same question we all should be asking our doctors.  “If I get a positive covid result and I’m symptomatic, can I call you and ask for some kind of treatment?”

My doctor answered in the way I suspect most doctors would.  He looked at me quizzically and said “You mean in hospital?  You’ll be treated by the doctors there.”

That’s not what I meant and I said, “No.  I mean if I have symptoms.  Will you offer me treatment to help me stay ‘out’ of the hospital in the first place?”

My doctor is a pretty good egg and I like him and all but from his response I know that if (when) I get covid I am going to be in the same position as almost every other Albertan.  I will go home and isolate and pray that this doesn’t get serious.

I don’t know about you, but as far as I’m concerned that doesn’t seem good enough. I’d like to think there are treatments out there and maybe that’s why I really like to research articles with data regarding Ivermectin and Hydroxychloroquine  (not to mention Zinc and vitamins D, and C).  Months ago these were just stories.  Then I started to meet people who told me about a family member or friend who quickly bounced back after taking treatment for covid.  Then I met a couple of those people myself.  Now I’m convinced there’s something to all these articles I’m reading.

The studies say (so does my experience with people I know) that these treatments don’t work every time.  However, if you could save even 10 percent of lives and keep even 10 percent of people out of the hospital by taking an inexpensive drug that has no serious side effects, why wouldn’t you promote the living (beep) out of that?  Seriously?  What if it was 20 or 30 or 50%.  It’s incredible to me that so many people will turn their noses at something like Ivermectin because someone on TV called it ‘horse dewormer’.  For my opinion of the people who block their ears and yell “HORSE DEWORMER” see here.  If you’ve been doing that, please stop. I guarantee you someone you know and maybe even love has either taken Ivermectin, or they’re going to want to some day. You may not know there are actually quiet a few studies.  Maybe you haven’t met anyone who swears they turned around within hours of getting treatment. But trust me, the people making decisions for us (the politicians at the very top and even more importantly the health officials) know there are treatments out there.  They’ve just chosen not to pursue them.

While those who supposedly follow the science denounce studies that looked extremely promising but were really too small, or studies that were done so far away that we simply don’t know enough to give them credence, other people who also  supposedly follow the science have found some very interesting data themselves.  Just check out this beauty from the American Journal of Therapeutics, called Ivermectin for Prevention and Treatment of COVID-19 Infection, published back on June 21 of 2021.  This is way better than 10%. This looks really promising. This is also being completely ignored by our political leaders. Don’t ask me why. Seriously don’t ask unless you have at least 2 tall boys.

The bottom line is, after all I’ve read and seen and the people I’ve met, I refuse to believe there is no such thing as a treatment for covid.  I know they’re coming out with new ones for this specific purpose, but I’m convinced by data that there are repurposed drugs that are already doing the job. Not perfectly of course, but far better than say .. nothing.

This really gets me when I think about my children.  The thought of one of my kids getting covid and then becoming symptomatic, and then getting really ill, and then not being able to access treatment when I’m pretty sure there’s something out there that would help them…  That’s not a very nice thought.  It became real for me recently when a good friend told me his son (same age as my son) tested positive.  He knows I’m keeping up on this as much as I can and he texted to let me know (and I think ask if I could recall some of the things I’ve said to him about treatment).  I shared the video I’m sharing here, below.  I also emailed links to two very similar resources for us regular folks who can only talk about the people who actually follow the science.  I’ll include these links because I think they’re REALLY worth looking at.  Especially because there’s literally nothing else to look at when someone in your household gets a positive test result.  Here’s the Guide to Home Based Treatment for Covid from the American Association of Physicians and Surgeons, and here’s the Guide to Covid Early Treatment from a group of US doctors on their website TruthForHealth.

The video below refers only to children but the two “home treatment” guides are helpful for people at any age.  I hope you never need this kind of info, but personally I don’t think we’re going to achieve the magical zero covid even if we take all the vaccine in the world. This very nasty virus is here to stay.  The way we’re going to get back to living like we should be, is with EARLY treatment.. as in BEFORE we’re deathly ill in the hospital.  I suspect we’re about 6 months away from recognized and emergency approved early treatment pills that will eventually swoop in and save the day for the vast majority.  But seriously, who cares if you put out a fire with water, or retardant, or a cut line, or by stomping on it with your foot? The important thing is that you start fighting fire as soon as you can.  For me?  I’m happy to start by throwing a little dirt on this campfire while I wait for the water bombers.

Thanks for checking this out. If you need a bit more convincing that early treatment even exists.. check out this next article.

Emergency of Under-Treatment – Panel of 8 prominent doctors and scientists say earlier treatment is the only way out of health emergency

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Alberta

Pastor Art Pawlowski predicts he’ll be back in prison soon

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In this remarkable video Calgary Pastor Art Pawlowski is virtually challenging the authorities to throw him back in prison.

Video from Calgary Freedom Central Facebook Page

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