The Federal Department of Finance announced Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses on March 18, 2020. This will have important consequences to individuals, corporations, and trusts. We have outlined the highlights of the plan:

Tax Filing Deadline Extensions

The tax filing deadlines for individuals and for trusts have been extended by one month:

• Personal income tax returns normally due on April 30 will now be due on June 1, 2020.
  • Individuals expecting a refund are encouraged to file sooner to access their refund faster and get benefits paid more accurately.
• Trusts with a December 31, 2019 year end have the filing due date extended from March 30, 2020 to May 1, 2020.

Tax filing deadlines for corporations have not been extended, and there is no mention of an extension for partnership return filings. However, all income tax payments due on or after March 18 have been extended.

There is no extension of filing deadlines for other returns, such as GST/HST returns.

Note: In a typical tax season, D&H Group LLP people work substantial amounts of overtime in close quarters in our office to meet filing deadlines and serve our clients’ needs. In the current situation, that arrangement would create an unacceptably unhealthy environment.

With the one-month extension of these due dates announced March 18, 2020, we will be able to meet our clients’ extended tax filing and tax payment deadlines while promoting and maintaining a healthy and safe work environment for all our people. This means that the 2020 tax season will include:

• Scheduling preparation of personal income tax returns over the months of April and May; 
  • Clients should expect to receive their personal income return not later than the last week of May.
• Scheduling the preparation of trust income tax returns over the remainder of the month of March and the month of April;
  • Clients should expect to receive their trust income return not later than the last week of April.
• Having some of our staff work remotely using our secure virtual private network (VPN) to allow for healthy social distancing. We have rigorous measures in place to protect your privacy.
• Sending and receiving documents using our Microsoft OneDrive secure file sharing system.
• Delivering documents to you, and obtaining signatures from you, using the Adobe DocuSign system.

We strongly encourage all clients to send documents to us in electronic format (instead of a face-to-face meeting to deliver documents to us).

Please feel free to email or call us to request a link to a personalized secure folder on the Microsoft OneDrive file sharing system so that you can “drag and drop” your electronic documents into a folder to transmit them to us securely, quickly, and easily. If you don’t have the ability to generate electronic documents, please send your documents to us via Canada Post Express Mail or by fax at 604-731-9923.

Please do not come to our office during the current global pandemic without making an appointment in advance so that we can make arrangements for the appropriate social distancing.

Tax Payment Due Date Extensions

Tax payment deadlines for many amounts owing have been delayed until August 31, 2020:

• Payment of any income tax amounts by any taxpayer that become owing on or after March 18 and before September 2020 can be delayed until August 31, 2020 without interest charges or penalties. This includes:
  • Payment of the balance of income tax owing for the 2019 tax year (normally due April 30, 2020)
  • Payment of the 2020 tax year quarterly tax instalment due June 15, 2020
• Note: there are no changes to the deadlines to remit other payments, such as Goods & Services Tax/Harmonized Sales Tax (GST/HST) amounts for GST/HST registrants or payroll source deductions for employers

Note: You should consider deferring the payment of any income tax remittance that becomes owing on or after March 18, 2020. This includes:

• Personal income tax owing for the 2019 year (usually due April 30, 2020)
• Trust or estate income December 31, 2019 or later (usually due March 30, 2020)
• Personal and trust income tax instalments for the 2020 tax year payable on June 15, 2020
• Corporation income tax payments for final balances due on March 31, 2020. This includes
  • December 31, 2019 year end final balances payable for income eligible for the small business deduction, and
  • Balances due for all corporation income tax for taxation years ending on or after January 31, 2020.
• Corporation income tax instalments for the 2020 tax year payable on:
  • March 31, 2020,
  • April 30, 2020,
  • May 31, 2020,
  • June 30, 2020, and
  • July 31, 2020.

Important: All of these amounts will become due on August 31, 2020 under the current measures. However, by deferring payment until August 31, 2020 you can preserve cash for critical expenditures between now and the end of August.

Canada Revenue Agency Audit Interactions Curtailed

The Canada Revenue Agency will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.

Note: D&H Group LLP is indefinitely declining all meetings and physical interactions with CRA auditors. If you receive any request from CRA for a meeting or other physical interaction, it would be prudent to decline and request a telephone meeting instead.

Electronic Authorization of Tax Return Electronic Filing

Effective immediately the Canada Revenue Agency will recognize electronic signatures as having met the signature requirements of the Income Tax Act, as a temporary administrative measure. This provision applies to authorization Form T183 for personal income tax returns and Form T183CORP for corporation income tax returns.

Note: D&H Group LLP has recently started using Adobe DocuSign. This allows us to securely email you copies of your tax returns and other important documents and allows you to electronically sign and automatically transmit the signed authorization to efile to us.

This will promote health and safety of our clients and our people by limiting unnecessary physical interaction for signatures and document exchanges.

Temporary Income Support for Workers and Parents

The Government is waiving the one-week waiting period for workers who do not have paid sick leave and who are who are sick, quarantined or forced to stay home to care for children to allow for an immediate claim for Employment Insurance (EI) sickness benefits. This temporary measure is in effect as of March 15, 2020. The requirement to provide a medical certificate to access EI sickness benefits is also waived.

Introducing the Emergency Care Benefit providing up to $900 bi-weekly, for up to 15 weeks. This flat-payment Benefit would be administered through the Canada Revenue Agency (CRA) and provide income support to:

• Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits.
• Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent, but do not quality for EI sickness benefits.
• Parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not.

Canadians can apply for the Benefit by:

• Accessing it on their CRA MyAccount secure portal;
• Accessing it from their secure My Service Canada Account; or
• Calling a toll-free number equipped with an automated application process.

Income Support for Individuals

Government is proposing to provide a one-time special payment by early May 2020 through the Goods and Services Tax Credit (GSTC). This will double the maximum annual GSTC payment amounts for the 2019-20 benefit year. The average increase for those benefitting from this measure will be close to $400 for single individuals and close to $600 for couples.

The Government is proposing to increase the maximum annual Canada Child Benefit (CCB) payment amounts for the 2019-20 benefit year by $300 per child (this is only for the 2019-20 year). The overall increase for families receiving CCB will be approximately $550 on average; these families will receive an extra $300 per child as part of their May payment. Together, the proposed enhancements of the GSTC and CCB will give a single parent with two children and low to modest income nearly $1,500 in additional short-term support.

The Government also proposing to:

• Provide $305 million for a new Indigenous Community Support Fund to address immediate needs in First Nations, Inuit, and Métis Nation communities.
• Place a six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans.
• Reduce required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020. Similar rules would apply to individuals receiving variable benefit payments under a defined contribution Registered Pension Plan.
• Provide $157.5 million to continue to support people experiencing homelessness.
• Provide up to $50 million to women’s shelters and sexual assault centres to help with their capacity to manage or prevent an outbreak in their facilities. This includes funding for facilities in Indigenous communities.

Longer-Term Income Support for Workers

For individuals who lose their jobs or face reduced hours as a result of COVID’s impact, a new Emergency Support Benefit delivered through the Canada Revenue Agency will provide up to $5.0 billion in support to workers who are not eligible for EI and who are facing unemployment.

The Government is also implementing the Employment Insurance Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hour as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements, and streamlining the application process.

Support for Employers: Temporary Payroll Subsidy

The Government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months.

The subsidy 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 immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.

Example:

• ABC Ltd. is a Canadian-controlled private corporation that earns active business income and has 20 employees.
• For the next three months, ABC Ltd. continues to employ and pay its employees.
• Each pay period, ABC Ltd. withholds income tax from each employee’s salary.
• Instead of remitting 100% of that withholding, ABC Ltd. can retain up to 10% of each employee’s salary for the pay period to a maximum of:
  • $ 1,375 per employee; or
  • $ 25,000 per employer.
• Each employee still gets credit for the tax withheld from their paycheque, and that tax is reflected on their pay stub and their T4 slip as paid. However, the employer gets to keep the subsidy portion to spend on business expenses and preserve cash reserves.

There is no information provided yet on how this subsidy will apply to partnerships.

Access to Credit for Businesses

The Business Credit Availability Program (BCAP) will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses. This will be an effective tool for helping viable Canadian businesses remain resilient during these very uncertain times. BDC and EDC are cooperating with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism. The near-term credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada.

News