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Welcome to Farnham. For over 50 years, we've built our business the old-fashioned way – by taking the time to understand our clients’ goals and needs, then providing knowledgeable financial advice backed by thoughtful, personal service.

COVID-19 – Still Groundhog Day


For those who have not seen the movie and do not get the reference, you should check out this Bill Murray classic.

We have not published a communication since April 16th. There have been a number of developments in terms of relief measures for individuals and businesses since that date and so we thought it would be an opportune time for an update and check-in.

In addition to an update on the various relief programs I have, at the end of this communication, provided my own perspective on how small business is faring based on our experience and how a number of our clients have innovated and adapted to keep the lights on in these challenging times. 

We are coming up to three months now of this new reality and I think it is clear to all of us that normal is not going to be returning anytime soon. In the meantime, we need to continue to be alert for ways to innovate, watch our cash and support each other. We are here to help: we have assisted many of our clients over the past weeks with their CEWS applications which has been a real lifeline, and we will continue to update you as new developments arise.


Canada Emergency Commercial Rent Assistance (CECRA)

The CECRA was designed to provide rent relief for eligible small business tenants impacted by the pandemic. Essentially, the landlord has to agree to reduce the tenant’s monthly rent by 75%, in return they would receive a forgivable loan equal to 50% of the monthly rent. At the end of the day, the tenant pays 25%, government covers 50%, and the landlord agrees to forgo the remaining 25%. The program covers April, May and June. The landlord has to apply for all 3 months at the same time.

What makes an eligible tenant? – a small business that pays no more than $50,000 in monthly rent per location, generates no more than $20 million of gross annual revenues, and has experienced at least a 70% decline in revenues. Landlord and tenants who are not at arm’s length are eligible to participate in the program, as long as there is a valid and enforceable lease agreement and the rent is at market rates.

Despite the constant reminders and urges from government officials for landlords to apply for this program, it seems it is not getting nearly as much traction as was hoped. The lack of interest by the landlords to take this on may not be surprising: beyond resistance to forgoing 25% of their rental income, there is work and cost associated with the application process. The 50% loan is only forgivable if all of the underlying conditions are met. There may be a concern amongst the landlords that they are taking on an additional liability in times when we need less stress, not more.

The 70% decline in revenue for the tenants might also be too high of a bar. The 70% decline is measured by taking the average revenue for April through June of 2020, compared to the same period last year. Now that we are experienced pandemic survivors, we know the impact of the restrictions are ever-evolving, with many business owners finding ways to adapt their businesses and avoid such a dramatic revenue drop. There are of course many exceptions, such as retail and food service where a 70% decline is the unfortunate reality. In those cases, we encourage tenants to work with their landlords to get access to the subsidy.


Update on Canada Emergency Wage Subsidy (CEWS)

Over the past few weeks, we have been helping our clients navigate the confusing world of CEWS. What was advertised by the government as “a quick and easy application business owners can submit within minutes” actually takes a fair bit of homework to complete. Here are some things that add to the complexity:

1.How do you calculate your revenue decline?

What seemed like a simple revenue decline test (15% for March, 30% for April and May), in reality is not that simple. What if you collect deposits from customers before doing the work – is that revenue? What if you have long-term contracts and usually make adjustments at year end to accrue or defer a portion of your revenue – do you have to do this analysis monthly now? What if your revenue decline is at exactly 30% (or 15% for March) – should you be worried that you have to pay the subsidy back if CRA scrutinizes the calculations and you have no cushion? Life is hard enough these days! Last thing you need keeping you up at night is how to calculate revenues on a monthly basis.

2.Do I get the subsidy for all employees I had on payroll during the claim period?

Eligibility for this subsidy is considered month-by-month, employee-by-employee. To know if you are eligible for a particular month, calculate your revenue decline. To know if the employee is eligible – check if during the claim period they were without pay for 14 or more consecutive days. Those who were in fact without pay for 14 or more days are not eligible for the subsidy in that claim period. So, if you are planning to have your employees return to work (or hire someone new), timing of their return to work plays a crucial role in being able to get their wages subsidized.

3.The application form requires me to put the amount of the 10% subsidy I am eligible for. What if I didn’t claim it – do I still calculate it?

Sadly, yes. The government made the 10% wage subsidy automatic (whether you claimed it or not). If eligible, you will be deemed to have made an overpayment into your CRA payroll account. “In the coming months” (direct quote from CRA will publish a self-identification form that will allow your payroll account to be credited. Long-story short, if you want to hold on to as much cash as possible today, ensure to calculate your 10% subsidy and reduce the amount of source deductions you make to the CRA. Otherwise, you will get a reduced amount of the 75% wage subsidy now and wait for an unknown amount of time for this self-identification form to become available.

On the bright side of things, answering these and many other questions on a daily basis has allowed us to develop some expertise with CEWS. If you find yourself puzzled by this program, you can contact Ana Rebro – And more from the bright side – the government recently announced that this program will be extended until the end of August. No details are available at this time on whether eligibility criteria will be changed. We will continue monitoring the situation and providing support.


Tax Filing Extensions

And what kind of an accounting firm would we be, if we didn’t talk about the recent announcements on extended tax filing deadlines?

One week before what seemed to be the longest personal tax season ever was scheduled to end (with personal tax returns due on June 1 this year), CRA announced that penalties (including late-filing penalties) and interest will not be applied if returns are filed and payments are made by September 1, 2020. This effectively extends the filing deadline to September 1. We are encouraging our clients, nevertheless, to provide us with their personal tax documents as soon as possible and, of course, if you are expecting a refund the sooner you file the sooner you will receive your refund.

For Corporations with December or January year ends, the filing deadline has also been extended until September 1, 2020.

How do we feel about it? Mixed feelings, to be honest. On the one hand, the added flexibility is welcome. On the other, we were all looking forward to some time off in the summer. I guess if there is nowhere to travel and nothing to do, we can at least do what we do best – tax returns.


Commercial Banking Relationships

As you may have noted when the banks posted their latest results over the past couple of weeks, things are not rosy in the financial services industry. Banks are becoming increasingly skittish about risk, and we have seen clients moved into “special loans” in circumstances where that might not have happened in more normal times.

I expect this trend to continue and so you should not assume that your bank will “work with you” in the event you go off covenant, even by a modest amount. The predictability associated with future cash flows for many businesses has evaporated and so cash flow projections simply do not provide the same level of comfort to banks as in the past.

It is imperative, therefore, to remain onside with your covenants. You should prepare your own projections in order to identify well in advance whether there may be an issue several months out in order to have time to hopefully find a way to adjust.


Canada Emergency Business Account (CEBA)

Since our last communication, the Canada Emergency Business Account ( CEBA) has expanded the criteria for eligibility with the result that many businesses that did not previously qualify can now access this interest free, partially forgivable loan of $40,000. This loan is administered by your commercial bank. The current eligibility criteria is:

  • The Borrower is a Canadian operating business in operation as of March 1, 2020.
  • The Borrower has a federal tax registration.
  • The Borrower’s total employment income paid in the 2019 calendar year was between $20,000 Cdn and $1,500,000 Cdn. For applicants with $20,000 Cdn or less in total employment income paid in the 2019 calendar year you can still qualify if:
    • The Borrower has a Canada Revenue Agency business number and has filed a 2018 or 2019 tax return.
    • The Borrower has eligible non-deferrable expenses between $40,000 Cdn and $1,500,000 Cdn. Eligible non-deferrable expenses could include costs such as rent, property taxes, utilities, and insurance. Expenses will be subject to verification and audit by the Government of Canada.
    • The Borrower has an active business chequing/operating account with the Lender, which is its primary financial institution. This account was opened on or prior to March 1, 2020 and was not in arrears on existing borrowing facilities, if applicable, with the Lender by 90 days or more as at March 1, 2020.
  • The Borrower has not previously used the Program and will not apply for support under the Program at any other financial institution.
  • The Borrower acknowledges its intention to continue to operate its business or to resume operations.
  • The Borrower agrees to participate in post-funding surveys conducted by the Government of Canada or any of its agents.


How is Small Business Coping?

We, unfortunately, have had a front row seat to this debacle and the privilege, and in some cases heartache, of listening to our clients and assisting them to navigate through these unprecedented challenges.

I have been surprised at the generally positive attitude, the resilience and the innovation of our clients. Perhaps that should not be surprising; entrepreneurs, by nature, are optimistic and innovative. Many have been through tough times before and view this as another challenge and a problem to be solved. It has actually been quite inspirational to watch how our clients are adapting and coping – in many ways this crisis is bringing out the best in us all.

I thought it might be interesting to highlight some of our client experiences, and the ways they are adapting and innovating, often in ways that will remain beneficial when all of this is over.

  • A materials testing client, traditionally involved in testing products and metals in the automotive and aerospace industries designed specialized equipment and secured a contract to test medical masks and other PPE being imported from China.
  • An event management company with Fortune 500 clients whose business was largely the production of large corporate and executive events has pivoted to a virtual broadcast experience and found themselves almost alone in the field; leading to new clients and actual revenue growth.
  • A successful event décor business with an internal print shop worked with an Italian partner to licence production of a new product to assist in controlling traffic flow and social distancing in retail and corporate environments. The product, SafetyPois, is simple and effective, consisting of green, yellow and red adhesive “dots”, which can be customized with branding, QR codes etc. We are deploying it in our own space. If you have an interest please contact Jay Kottoor,
  • World Meats, a local family run business, traditionally a wholesaler supplying meat and food products to the restaurant industry, has developed a retail offering with home delivery of fresh and frozen products, ready made meals and cakes and pastries. You can sign up on the following link to see their products listing and order:
  • The Crooked Cue, a landmark restaurant and high end pool and billiard hall in Port Credit is now offering pick up and delivery of items off their outstanding menu. For us locals who are missing their “Cue” fix and for those who have not yet had the pleasure, check out the menu at
  • Bluboho is a Toronto based company designing fine, free spirited, luxury jewellery. With their several retail locations shuttered as a result of Covid-19, they have focused on their online store presence with amazing success. In these heavy times there is nothing better to lift spirits than a special gift for yourself or a loved one. Check out the store at

We ourselves have been forced by necessity to find new ways of managing the flow of files and client documents digitally. While this has been a challenge at a very busy time traditionally, it has proven extremely efficient and will continue to be of benefit when things return to normal. Of course one of the biggest changes that I have had to deal with is not seeing my clients physically during this period. ZOOM is fine, but we all really miss the client interaction and look forward to seeing everyone again in person when this is all over.