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Sheryne Mecklai

Tax Partner at Manning Elliott Vancouver
by Sheryne Mecklai
March 26, 2020

Government of Canada Announce Tax Extensions and Other Measures

*UPDATED March 26, 2020*

The Government of Canada has announced relief for Canadians. The relief comes in the form of financial support and extension of tax filing deadlines.

Flexibility for Taxpayers 

The Canada Revenue Agency (CRA) has provided relief for taxpayers. 

Extension of Tax Filing Deadlines:

Extensions of returns, forms, elections and designations due between March 18, 2020, to June 1, 2020, for:

  • Trusts – extended to May 1, 2020

  • Partnerships – extended to May 1, 2020

  • NR4s – extended to May 1, 2020

  • Individuals (excluding trusts) – extended to June 1, 2020

Extensions of returns, forms, elections and designations due between March 18, 2020, to December 31, 2020

  • Registered Charities extended to December 31, 2020 

Extensions have not been granted for returns, forms, elections and designations due on or after March 18, 2020, for:

  • Corporations 

  • Self employed individuals and their spouse – still due on June 15, 2020

  • Trust returns due before March 18, 2020, or after June 1, 2020, still due 90 days after the trust’s year-end

Extension of Tax Payment Deadlines to September 1, 2020:

Taxes and instalments payments that became owing on or after March 18, 2020, and before September 2020 are deferred to September 1, 2020.  No interest or penalties will accumulate on these amounts during this period. 

Items to note:

The tax payment extension only applies to Part I tax under the Income tax Act.  As such, the payment of other Federal taxes (i.e. Part XIII withholding tax on distributions to non-residents, Goods and Sales Tax) are not currently covered by this extension

Administrative Relief 

  • The CRA will temporarily allow electronic signatures as having met the signature requirements of the Income Tax Act including authorization forms including the forms required to electronically file tax returns;

  • The CRA will not contact small or medium businesses to initiate any post-assessment GST/HST or Income Tax audits for the next four weeks. 

  • The Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives. 

  • The Liaison Officer is now available over the phone. 

Financial Support for Businesses 

Helping Businesses Keep their Workers:

  • Small employers (i.e. corporations eligible for the small business deduction, as well as non-profit organizations and charities) will be provided with a temporary wage subsidy for 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 can access this benefit immediately by reducing the remittance of income tax withheld on employees’ remuneration. 

Supporting the Economy:

  • Lowering the Domestic Stability Buffer to allow Canada’s large banks to inject $300 billion of additional lending in addition to the interest rate decrease announced last week (to 0.75%).

  • Providing additional funding for the Business Credit Availability Program for small and medium-sized businesses to financially support businesses and provide them with credit solutions.

  • Increasing the Farm Credit Canada’s near term credit available to farmers and the agri-food sector. 

  • Reducing the administrative burden by allowing the Minister of Finance to determine limits on the Canada Account which is used by the government to support exporters.

Financial Support for Canadian Workers:

Income Support for Employed and Self Employed Workers

The Government of Canada announced the new Canada Emergency Response Benefit to combine the Emergency Care Benefit and Emergency Support Benefit that was previously announced.

The Emergency Response Benefit will be available to employees and self-employed people who cannot work due to COVID-19.  To qualify the applicant must be at least 15 years of age and have received $5,000 or more in income from employment or self-employment in 2019 or the 12 months preceding the date the application for the benefit is made. 

This includes people who are involuntarily unable to work as they are sick, quarantined or in self-isolation, or are unable to work as they are caring for family, including children due to school closures for at least 14 consecutive days within a four week period and have not received income including employment income or benefits under the Employment Insurance Act.

Qualifying individuals are eligible to receive $2,000 payments each month, for up to 16 weeks ending on October 3, 2020 

The application process is expected to launch in April 2020. Applications will be made online and must be made December 2, 2020.  The Federal Government’s goal is to have qualifying people receive money within 10 days of applying.  

Longer-Term Income Support for Workers 

Relief for Canadians who may lose their jobs or have reduced hours due to COVID-19 the government will introduce programs:

  • The Emergency Support Benefit for workers who are not eligible for EI and the EI Work Sharing Program. 

  • The EI Work Sharing Program by easing eligibility requirements and streamlining the application process for employees who agree to reduce their normal working hours 

Income Support for Individuals Who Need It Most 

  • Doubling the maximum annual Goods and Services Tax credit payment amounts for the 2019-20 benefit year. 

  • Increase of the maximum annual Canada Child Benefit payment amounts for the 2019-20 benefit year (increased to $300 per child). 

  • A 6-month interest-free moratorium on the repayment of Canada Student Loans.

  • Reducing the required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020 for seniors.

  • Funding the Reaching Home initiative to support people experiencing homelessness during the COVID-19 outbreak. 

  • Providing funding to women’s shelters and sexual assault centres.

  • Funding the Indigenous Community Support Fund to address immediate needs in First Nations, Inuit, and Métis Nation communities. 

Other Support and Relief Provided

Financial Institutions have affirmed their commitment to working with customers to provide flexible solutions, on a case-by-case basis, for managing through hardships caused by recent developments including a 6-month deferral for mortgages. 

Mortgage insurers including the Canada Mortgage and Housing Corporation (CMHC) have tools to assist homeowners experiencing financial difficulties.

The Government has created the Insured Mortgage Purchase Program which will help support the market through the purchase of insured mortgage pools through the CMHC.

The Bank of Canada is to adjust its market liquidity operations, broaden eligible collateral its term repo facility and preparing for providing support for the Canada Mortgage Bond if required.

Speak to your financial institution to determine the relief you can access.

The above content is believed to be accurate as of the date of posting. Canadian tax laws are complex and are subject to frequent changes. Professional tax advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained herein.