Memo to Morneau: Call in the accountants
Since that fateful day, March 13, when the federal government announced that “no one should have to be concerned about job security and financial hardship should they require self- isolation,” I have been awestruck by the federal government’s “Design programs first/ Receive a ton of criticism/ Make changes later” approach.
Everybody understands Ottawa has had to roll out humongous emergency programs as fast as possible in order to get cash in peoples’ hands quickly and that in doing so it had no choice but to sacrifice consultation and effectiveness for speed. But did it really have to carry trialand-error-error-error to such extremes?
On March 18 it announced both the Emergency Care Benefit and the Emergency Support Benefit, a 10 per cent wage subsidy for small businesses and a deferral of income taxes payable until August 3.
After which, criticism came pouring in. Why not combine the Emergency Care Benefit ( ECB) and Emergency Support Benefit (ESB) into one program to make it simpler? Why weren’t GST/ HST payments deferred, too? Was a 10 per cent wage subsidy enough to help businesses keep their employees?
The government heard the voice of the people. And so on March 27 it introduced the Canada Emergency Response Benefit ( CERB) to replace the ECB and ESB. CERB would provide $2,000 per person per month for up to four months. It also announced a 75 per cent wage subsidy and allowed the deferral of all GST/ HST payments until the end of June. Finally, it announced the Canada Emergency Business Account (CEBA), which would provide up to $40,000 in interest- free loans, with 25 per cent of the loan forgivable, for businesses with a 2019 payroll between $50,000 and $1 million.
After which, criticism came pouring in again. CERB recipients could have zero other income and must have had $ 5,000 of employment, self- employment or EI income during 2019 or the past 12 months. But what about people who were looking for work and could no longer find a job? Or people who paid themselves dividends from their small business corporations but could no longer afford to do so? And weren’t the CEBA loan eligibility rules too restrictive? What if a business had payroll of just $ 49,000 or slightly over $ 1 million? Why should $ 1,000 too much or too little render it ineligible?
Yet again, the government heard the voice of the people.
On April 15, it changed the CERB’S eligibility rules to allow people to earn other income of up to $ 1,000 per month. It also extended the CERB to include seasonal and other workers who have exhausted their EI benefits and are unable to find new work, as well as people paid in dividends instead of salaries. Then, the very next day, it announced it was expanding eligibility for CEBA loans to companies with payroll between $20,000 and $1.5 million.
Yet again criticism came pouring in. Businesses that didn’t have payrolls in 2019 were still excluded from the CEBA. So were family businesses that paid dividends instead of salaries or had chosen not to pay out salaries during 2019, or businesses that used independent contractors instead of employees. On these points the government has not yet made an announcement but can there be any doubt it will?
Talk about a corona-coaster! The government’s trialand- error- error- error approach is leaving people confused and frustrated. Accountants can’t properly advise their clients because the rules keep changing. After every announcement we rush to update our clients with e- newsletters. But by the time the newsletters are prepared and sent out, often as not the information is already out of date.
The several programs Ottawa has introduced have helped many people and businesses gain speedy access to emergency funds but have left others out of luck. People who didn’t initially qualify have had to wait for programs’ flaws to be corrected. In the meantime, their unpaid bills have piled up, they have had to beg their landlords for rent relief or deferrals, and employees have been laid off.
If I were minister of finance, my next announcement would be: “Accountants of Canada: before I do anything else I want your advice. I know some of these emergency programs have flaws and unintended consequences. Please email me or call my office with your ideas and advice on how to fix them. What are your clients struggling with? How can we make everything simpler and more efficient?”
The government needs to change course and take a more collaborative approach that involves consulting accountants directly at the outset. Accountants are the ones on the ground with direct firsthand knowledge of the problems people are facing. We have good ideas and are eager to help.
ACCOUNTANTS CAN’T PROPERLY ADVISE THEIR CLIENTS BECAUSE THE RULES KEEP CHANGING.