A Constantly Changing Tax Landscape: A Summary of Deadlines and Programs related to COVID-19
Published April 23, 2020
Associated Areas of law
As Canadians, we are all experiencing a massive series of changes due to Canada’s response to the Covid-19 pandemic. We know that it can be confusing to keep track of all the announcements and deferrals relating to income tax and HST/GST payments. We have, therefore, prepared a summary to help you understand the tax implications for yourselves, your trusts, and your business for the 2019 tax year and moving into the future.
For individuals, the return filing due date for the 2019-2020 tax year is deferred until June 1, 2020. However, the CRA are encouraging those seeking entitlement to benefits, such as the Goods and Services Tax Credit and the Canada Child Benefit, not to delay to ensure that entitlements are determined correctly.
For self-employed individuals and their spouse or common law partner the filing date for the 2019 tax year is June 15, 2020 which has not changed. The payment date however, has been extended to September 1, 2020. This includes the June 15, 2020 installment payment, for those that pay by installments.
Further, the CRA is allowing taxpayers to defer, until September 1, 2020, the payment of any income tax balance for 2019 and any amount incurred between March 18 and August 31, 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.
The filing date for Non-Resident information returns has been extended to May 1, 2020 and payment on the 15th day of each month following an amount paid or credited by residents of Canada to non-resident persons has not changed.
For low to moderate income individuals and families, a one-time goods and services special payment was paid on April 9, 2020; the amounts is close to $400 for individuals and $600 for couples. For families that are entitled to receive the Canada Child Benefit (CCB) for April 2020 and still have an eligible child in their care in May 2020 will get up to $300 extra per child, based on the family’s net income, as part of their regular May 2020 payment. This is a one-time increase to the May 2020 CCB payment for the 2019-2020 benefit year (July 2019 to June 2020).
For individuals there is a reduction in the required minimal withdrawals from registered retirement income funds by 25% for 2020. A similar reduction applies for individuals receiving benefits under defined contribution registered pension plans.
As many Canadians are aware, the Canada Emergency Response Benefit (CERB) is an emergency benefit of $500 a week up to a maximum of 16 weeks for employees and self-employed individuals who cease to be employed or to perform work for reasons related to COVID-19. Also, seasonal workers, those who make less than $1000 a month due to reduced work hours, and those who recently ran out of employment insurance are now eligible for CERB. The qualifying period beings March 15, 2020 and ends October 3, 2020. The amount is subject to income tax, but taxes are not withheld at source; therefore the individual should set aside the proper amount to ensure that they can pay their taxes for the 2020 taxation year. Essential workers who make less than $2500 a month are now eligible for a wage boost which will be dealt with by a transfer payment from the Government of Canada to the Provinces, the date of which is currently unannounced.
Trusts & Partnerships
For trusts having a taxation year ending on December 31, 2019, the return filing due date is deferred until May 1, 2020. There are no extensions for trusts with non-calendar year ends. There has been an extension for partnership returns (T5013) to May 1, 2020 and other information returns, elections, designations and information requests that are due after March 18, 2020, and before June 1, 2020, have been extended until June 1, 2020.
The filing date for corporations that would otherwise have a filing date after March 18 and before June 1, 2020, have ben extended till June 1, 2020. All businesses may defer, until September 1, 2020, the payment of any income tax amounts that becomes owing on or after March 18 and before September 1, 2020. This relief applies to tax balances due, as well as instalments under Part I of the Income Tax Act. No interest or penalties accumulate on these amounts during this period.
Employers may be eligible for a temporary wage subsidy, reducing the obligation to remit income tax withheld from their employees’ remuneration, which can be applied for during the period between March 18, 2020 and June 19, 2020. As of March 27, 2020 the amount is 75%. The subsidy applies to employers who are individuals, Canadian Controlled Private Companies (CCPCs) with capital employed in Canada that is less than $15 million, and partnerships whose members are all individuals, tax exempt entities, and registered charities.
Eligible Canadian Small Business Corporations and not-for-profits may apply for interest-free loans of up to $40,000 from the Canada Emergency Business Account, to help cover their operating costs. To qualify, these organizations need to demonstrate they paid between $50,000 and $1 million in total payroll in 2019. If repaid prior to December 31, 2022, 25% of the amount loaned will be forgiven. The CRA has not stated whether the forgiven amount will be taxable. The program is scheduled to begin mid-April, and a person should contact their financial institution to take advantage.
Finally, the GST/HST remittances have been deferred until June 30, 2020. This deferral applies to the following three situations: 1) for monthly filers the remittance amount they collect for February, March, and April 2020; 2) for quarterly filers the remittance collected for January 1, 2020 through March 31, 2020; and 3) for annual filers whose return from 2019 or installments from 2020 are due in March, April or May 2020 the remittance amount collected.
The due-date for filing GST/HST returns remains unchanged. However, the CRA has stated that they will not impose penalties for late filing, as long as the returns are filed by June 30, 2020.
Charities with Form T3010 with filing due between March 18, 2020 and December 31, 2020 have been deferred until December 31, 2020.
In summary, there are many ongoing deferrals and potential tax pitfalls awaiting individuals and businesses related to the pandemic. Many of these issues can be navigated by consulting a professional, and Patterson Law can work with you and your accountant to ensure that you keep on track with the constantly changing tax implications. For a consult please contact us at (902) 405-8000.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer or other professional. For specific technical or legal advice on the information provided and related topics, please contact the author.