The Northern Business Relief Fund (NBRF) offering help with fixed costs is welcomed by many Yellowknife business owners affected by Covid-19 pandemic disruptions, but some small, home-based business owners feel the fund leaves them out in the cold.
The $15 million-fund was announced by the Canadian Northern Economic Development Agency (CanNor) on April 20 and is targeted at small and medium-sized businesses in the three territories.
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Though home-based businesses are eligible for the fund, some business costs are deemed ineligible, according to the NBRF’s guidelines. Those costs includes rent or mortgage for home-based businesses and “other home-based business costs where the costs are not 100 per cent attributable to the business.
“For example, while a home-based business can request reimbursement for business insurance, it cannot request reimbursement of 20 per cent of its electricity bill on the basis that the business occupies 20 per cent of the floor space of the primary residence.”
For Cathy Allooloo, owner of her home-based company Narwhal Northern Adventures in Yellowknife, the rules are confusing and she’s unsure she will qualify.
Under normal Canada Revenue Agency (CRA) taxation procedures, owners of home-based businesses can claim “business-use-of-home-expenses” and can “apportion utility costs based on the square footage of their home,” she explained.
“If a business uses 20 per cent of a personal residence to conduct the business, the home owner can claim 20 per cent of utilities, property tax, mortgage interest etc as legitimate offsetting expenses.”
“If Revenue Canada recognizes these as legitimate expenses, why not the NBRF, which is a federal program? To date, the reason given is it is too difficult to track, but I do not buy this. Why not just require the same documentation that Revenue Canada requires? Why is it good enough for one arm of the federal government and not another, especially in this time of crisis when many small businesses are at risk of closing?”
Margaret Peterson, owner of My Backyard Tours, feels the NBRF doesn’t work for her if she can’t claim her rent as a home-based business.
“It decreases our eligibility. There are so many home-based businesses in town and there are the AirBnBs and B&Bs and lots of little tour companies like ours,” she said.
Raemee Kwong, owner of Aurora Dream Tours, said she would like get some assistance for her home-based tour company but she doesn’t believe it qualifies, so she won’t apply for the NBRF.
“I was thinking of talking to the MLA or somebody to maybe get a tax reduction or something,” she said.
In response to concerns about rent ineligibility for home-based businesses under the NBRF, CanNor said the fund was designed to complement other federal, territorial and municipal initiatives aimed at helping businesses affected by the pandemic.
“On the issue of business-use-of-home expenses, CRA treats a percentage of these as a deduction from business income,” said CanNor spokesperson Rebecca Grace. “For reasons of expediency in implementing payments for the NBRF, the decision was made to exclude this type of expense from eligibility under the NBRF. The eligible costs under NBRF focus on fixed business costs.”
Though Allooloo has applied to the NBRF for assistance, she said she has also raised concerns about the program indirectly through her MLA, Rylund Johnson, and with the NWT Tourism Association.
“I think it would be more fair to level the playing field and treat home-based businesses the same as any other business when it comes to claimable expenses,” she said.