In response to COVID-19, on March 18, 2020, the Government of Canada announced new financial and tax measures. Highlights are outlined below:
Extension of Filing Deadlines
Individuals, other than trusts, will have an extended filing deadline to June 1, 2020 for the 2019 returns.
Trusts with a taxation year ending on December 31, 2019 will have an extended filing deadline of May 1, 2020 to file their tax returns for the 2019 taxation year.
The government did not announce measures to extend other filing deadlines, including indirect tax returns, corporate tax returns and partnership information returns. However, this could change.
Tax payment relief
Businesses will be able to defer payment of any income tax amounts until September 1, 2020. This deferral applies to tax balances and installments that are owing on or after March 18, 2020 and before September 2020. These amounts will not be subject to interest or penalties during this period.
There is no deferral for any tax withholdings such as payroll , Part XIII withholdings or extensions for filing and remitting GST or HST.
Temporary wage subsidy for small businesses
Small employers may be eligible for a temporary wage subsidy to help prevent layoffs. This subsidy, which will be available for three months, will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit from this support now by reducing their remittances of income tax withheld on their employees’ remuneration. This measure applies to corporations eligible for the small business deduction, as well as non-profit organizations and charities. More details will follow as they become available.
The CRA says it will temporarily suspend all audit interaction with taxpayers and their representatives, for the vast majority of businesses. In particular, the CRA will not contact any small or medium businesses to initiate any post assessment GST/HST or income tax audits for four weeks.
The CRA did not extend a taxpayer’s Notice of Objection deadline.
Tax filing and payment relief for individuals and trusts
As mentioned above, individuals, other than trusts, will have until June 1, 2020 to file their personal tax returns for the 2019 taxation year. Trusts with a taxation year ending on December 31, 2019 will now have until May 1, 2020 to file their tax returns for the 2019 taxation year.
In addition, all taxpayers who have income tax balances and income tax instalments that are owing on or after March 18, 2020 and before September 2020 will be able to defer payment of any income tax amounts until September 1, 2020. These amounts will not be subject to interest or penalties during this period.
Emergency Care Benefit
Workers who need to stay home because of COVID-19 but are not eligible for EI may qualify for a new Emergency Care Benefit. This new measure, which provides up to $900 every two weeks, for up to 15 weeks, will be available to individuals, including the self-employed, who fall ill with COVID-19, are placed in quarantine or take care of a family member who is ill. The benefit will also be provided to parents with children who require care or supervision due to school closures, and are unable to earn employment income. The CRA will administer the benefit and eligible individuals will be able to apply online or by phone for the benefit starting in April 2020. Applicants will not have to provide a medical certificate, but will have to re-attest that they meet the eligibility requirement every two weeks to reconfirm eligibility.
Emergency Support Benefit
The government announced a new Emergency Support Benefit to be provided through the CRA that will provide support to workers who are not eligible for EI and who are facing unemployment. Further details of this change are expected to be announced soon.
The government announced additional measures to support individuals, including changes to:
- Offer more support for workers in the air transportation, tourism and oil and gas sectors, with details to be provided soon
- Reduce required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020, with similar rules for individuals receiving variable benefit payments under a defined contribution Registered Pension Plan
- Increase the maximum annual Canada Child Benefit (CCB) payment by $300 per child for the 2019-20 benefit year as part of their May payment
- Place a six-month interest-free moratorium on the repayment of Canada Student Loans
- Make a one-time special payment to eligible individuals through the Goods and Services Tax credit (GSTC) of almost $400 for single individuals and $600 for couples on average in May 2020
Increase flexibility for homeowners to defer mortgage payments on certain insured mortgage loans through Canada Mortgage and Housing Corporation
- Provide support, through Canada’s large banks, including a deferral of up to six months for mortgages and possible relief on other credit products such as skip-a-payment on automobile loans or credit cards
Although the above-noted filing extensions have been put into place, we continue to encourage you to send us your personal tax information digitally through our secure FILE PORTAL as soon as possible. Our office also remains open to receive mail and in-person deliveries of your tax packages.
If you have any questions, please contact your Lipton advisor.