Small business will cost the taxpayers billions and didn't need to: Savills Canada
In-home personal trainer Dave Szymkowicz has seen his business grind to a "complete halt" in the last few weeks.
The nationwide lockdown in place to deal with the COVID-19 pandemic has rendered it impossible to visit clients' homes for their regular sessions, Szymkowicz says, and while the Aurora, Ont.-based fitness coach has offered to move many of these appointments online, most of his clients have opted to stop training altogether for financial or personal reasons.
"A lot of my clients are self-employed as well, and they're too busy right now trying to figure things out on their own that training is kind of taking a back seat," Szymkowicz says.
While his income has declined drastically as a result, Szymkowicz says he's found relief in the government aid available to him. He quickly applied for the Canada Emergency Response Benefit (CERB) when the application portal opened, and has already begun receiving payments, which "does help," he says. He's also found solace in the newly extended tax deadline.
Along with the rest of the country, Szymkowicz now has until June 1, 2020 to file his taxes for the 2019 fiscal year, and until Sept. 1, 2020, to pay amounts owed to the government. It's a small change, but one that provides major relief to many sole proprietors who've seen their income plummet due to the pandemic's economic fallout.
"There's a lot of change going on right now for people, so taxes might not be top of their mind, or they could even be sick with COVID-19," says Janine Rogan, certified public accountant and financial writer based in Calgary, who believes the decision to push out the tax deadline was a "positive" one.
"There are tons of people across the country that are facing unemployment. So, you know, potentially having to dole out thousands of dollars for a tax bill could be financially detrimental for them," she adds.
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But the tax deadline extension is not equally beneficial for all Canadians. Those who are expecting refunds should file as soon as they can to "get that money in 1/8 their 3/8 pockets," amid turbulent economic conditions, Rogan says. She also warns that many federal aid programs --including GST credits and the Canada Child Benefit -- require applicants to file their taxes annually, so those who are hoping to qualify for supplemental government aid should do their 2019 taxes as soon as possible.
As an aside, Rogan also notes that she's planning to file and pay her own self-employment taxes as soon as she can, out of a sense of moral responsibility more than anything. "If I have the means to do so, and pay my share to help the government with some revenue, I think if we can all do our part then that's a positive," she says.
That's not to say that waiting to file your taxes is irresponsible, or even feasible, for all sole proprietors. Workers who've taken financial hits and are relying on savings to get by, yet still owe large sums to the government, should feel free to take advantage of this extra breathing room. In fact, Rogan says there's merit to leaving a chunk of savings that would otherwise go to taxes in a high interest savings account for as long as possible to accumulate interest.
But those going this route should do so carefully. Without knowing exactly how much you owe, it can be easy to inadvertently spend funds set aside for taxes if you're regularly dipping into savings for daily life. When that Sept. 1 payment deadline rolls around, you'll owe the same amount that you would have in June, so it's important to make sure the necessary funds are still there.
That's why Szymkowicz keeps the HST he collects from clients in its own bank account, separate from his personal ones. "If I see it in 1/8 my personal 3/8 account I might spend it," he notes. At the end of each fiscal year, he writes a check to the Canada Revenue Agency and clears this account, in part to keep things organized and in part to prevent himself from touching it.
"My accountant still thinks it's kind of weird that I do this," Szymkowicz says. But he's not taking any risks: "The last thing I want is for the CRA to come after me."