Quick checklist

APRIL 6, 2020

If you need help with any of these tax and financing questions reach out to a member of your RMT team. We have written previously about these topics but thought a quick list might be helpful. 

For entrepreneurs – tax and financing questions

  1. Do you understand the two wage subsidy programs to help employers? The small program allows you to reduce withholding remittances by the lesser of 10% of certain payroll costs or $25,000 based on your payroll for March 15 to June 15. The more generous program provides a direct reimbursement of 75% of qualified wages for companies suffering from revenue declines of 30% in each of March, April and May.
     

  2. Have you considered or implemented delays in remitting corporate tax withholdings and HST in accordance with the interest-free delay period?
     

  3. If you had payroll in 2019 of between $50,000 and $1 million, have you contacted your bank to obtain the $40,000 loan that is non-interest bearing and may provide $10,000 forgiveness?
     

  4. Have you considered accessing the up to $2 million in financing available to entrepreneurs through BDC? Alternatively, have you considered the co-lending program where BDC shares risk with your bank at an 80:20 ratio?
     

  5. Have you had a constructive discussion with your landlord to delay rent payments?
     

  6. Have you asked your banker for delays in principal payment for any term loans?
     

  7. Have you put together a good assessment of your cash flow assuming that this shutdown lasts throughout the spring and that the following months have more than the usual challenges?

For investors

Off the cuff advice is the worst advice in these times. A careful look at your objectives, your current asset mix, and personal needs leads to different answers. A member of your team at RMT would be glad to participate in a call with your financial advisor.

Here are logical responses we have seen in the last weeks.

  • Some clients have lost sleep on their equity exposure and have revisited their comfort level with their asset mix. A quick look at TSX 60 EFT XIU gives you a sense of where we are and where we could go. 2020 began with the index at $26 and now we are at $20, a loss of 23%. If you compare the $20 to the average price of the last couple of years the decline is more like 12%. Going back to 2008, XIU fell from $22.50 to $12.30, a fall of 45% and it took 8 months to get to the bottom. If you prefer to give up some upside in exchange for sleeping at night you might wish to modify your exposure, particularly after an up week in the market.
     

  • Another client was very heavy in cash and low risk fixed income instruments and wished to start buying some equities that he and his advisor believe are long term holds. He picked a few entry points with an action plan starting last week, and intends to carefully increase equity exposure over the next 6 months. Nobody knows where the bottom is and buying high-quality portfolios in an organized way over the next while seems like a good long term strategy. 

Working with your financial advisor and making sure your comfortable with the asset allocation is the place to start. We have always loved Buffett’s advice to be greedy when others are fearful and fearful when others are greedy. But it has to fit your situation.

One other item to mention: for those of you in your RIF years consider modifying downward your 2020 withdrawal. The government announced that the RIF minimum withdrawal fell by 25% so that those who don’t need the money now can leave more in the RIF to, hopefully, rebound and grow.