Tax and financial updates in the wake of COVID-19
New measures for individuals, trusts, and businesses
As part of measures to help Canadians manage through the COVID-19 pandemic, the Federal Government introduced numerous proposals. Here is a breakdown of key measures related to individuals, trusts, and businesses. Be sure to contact your Advisor if you have questions regarding your specific situation. Measures continue to be updated and refined by the government; therefore, please also refer to the government website for up-to-date information.
Income tax filings and payments for individuals and trusts
- Canadians now have until June 1, 2020 to submit their 2019 income tax return, instead of an April 30 filing deadline. Self-employed individuals still have until June 15, 2020 to submit their 2019 income tax returns. Trusts that operate on a December 31, 2019 taxation year, such as personal family trusts, will have until May 1, 2020 to submit the 2019 trust income tax return, instead of a March 30 filing deadline.
- For tax payments and instalments that are due from March 18, 2020 and before September 1, 2020, taxpayers will be able to defer payments until September 1, 2020. No interest or penalties will accumulate on these amounts during this period.
- Effective immediately, the Canada Revenue Agency (CRA) will now accept electronic signatures (rather than actual signatures) as having met the signature requirements of the tax law, as a temporary administrative measure.
- The deadline for producing and filing an income tax return for individuals is postponed to June 1, 2020.
- The 2019 return filing due date for certain trusts is deferred until May 1, 2020.
- For individuals and individuals in business, the deadline for applying balances due related to income tax returns for the 2019 taxation year is postponed to September 1, 2020.
- For those who must pay tax instalments, the payment of the June 15, 2020 tax instalment can be made as late as September 1, 2020.
The terms and conditions of the flexibility measures can be viewed in the Information Bulletin published by the Ministère des Finances.
Canada Emergency Response Benefit (CERB)
- Among others, individuals who are self-employed may be eligible for the CERB, which is a taxable benefit of $2,000 a month for up to 4 months. This includes the following
- Workers who must stop working due to COVID-19 and do not have access to paid leave or other income support
- Workers who are sick, quarantined, or taking care of someone who is sick with COVID-19
- Working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures
- Workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work
- Wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance
- Applications for this benefit will be available online in early April 2020
- For more information – visit the Government of Canada’s website.
RRIF minimum withdrawals
- The government is reducing required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020, in recognition of volatile market conditions and their impact on many seniors’ retirement savings. This will provide flexibility to seniors who are concerned that they may be required to liquidate their RRIF assets to meet minimum withdrawal requirements.
Measures for businesses
The government has announced the first phase of its response intended to support businesses in Canada in the wake of the COVID-19 outbreak. Here is a summary of key proposals:
- A proposed temporary wage subsidy for qualifying businesses equal to 75% of remuneration, retroactive to March 15, 2020. The wage subsidy was previously capped at 10%. More details to come soon from the government.
- All businesses can defer until after September 1, 2020 the payment of income tax payments (instalments and balances due under Part I of the Income Tax Act) that become owing between March 18, 2020 and before September 1, 2020. No interest or penalties will accumulate on these amounts during this period. Note that the filing deadline for corporate tax returns has not yet been extended—it remains no later than six months after the end of the taxation year.
- Businesses will now have until June 30, 2020 to make their GST/HST payments.
- Tax audits and assessments will halt temporarily. The CRA will not contact any small or medium business to start any post-assessment GST/HST or income tax audits for the next four weeks (from March 18, 2020). The CRA will also temporarily suspend all audit interaction with taxpayers and representatives. The CRA will customize information services to ensure that small business are aware of any changes such as filing and payment deadlines and relief measures.
- New loan programs for businesses, including a proposed Canada Emergency Business Account which can provide up to $40,000 of interest-free funding to small businesses to help cover operating costs due to COVID-19. The loans will implemented by financial institutions. Repayment of the loan on or before December 31, 2022 will result in loan forgiveness of 25% (up to $10,000). More details to come soon from the government.
On March 17, 2020, Quebec also announced similar measures as the federal government. These measures, to be administered by Revenu Quebec, include the following: The payment of tax liabilities and instalments due by corporations is postponed until August 31, 2020. The filing deadline for corporate tax returns remains the same—no later than six months after the end of the taxation year.