Individuals & trusts – COVID-19 emergency support measures
Details available as of May 12, 2020
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 and trusts. 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 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.
Please refer to the CRA’s webpage on COVID-19 for further details to taxes and benefits
Canada Emergency Response Benefit (CERB)
The CERB is an income support program, primarily for individuals who involuntarily cease working because of COVID-19.
The CERB provides a taxable benefit of $2,000 a month for up to 4 months for eligible individuals. It is important to note that no income tax withholdings will be made on the CERB payments and thus recipients must budget for this on their 2020 income tax returns.
The CERB is available from March 15, 2020 until October 3, 2020. There are seven eligibility periods over this timeframe, with each period spanning four weeks. Eligible individuals will have to reapply for the CERB in each eligibility period.
Eligible individuals include the following:
- Workers who 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
Furthermore, eligible individuals:
- Need to have earned at least $5,000 of income in 2019 or in the 12 months prior to application.
- Owner-managers can use non-eligible dividends received as part of this test.
- In the first claim, cannot earn more than $1,000 in income for at least 14 days in the application period.
- For subsequent claims, cannot earn more than $1,000 for the entire application period.
In other words, the CERB will still be available for individuals who may continue to work during the pandemic, but earn less than $1,000 a month.
Interaction of the CERB with EI
There are also rules that integrate the CERB with EI:
- Individuals who are eligible for EI before March 15, 2020 will have claims processed under EI rules
- Individuals can switch to the CERB if EI ends before October 3, 2020 and they are still jobless due to COVID-19
- Individuals who are eligible for EI on or after March 15, 2020 will have claims processed through the CERB
- Individuals can be put back on EI benefits after CERB payments end
- The period that the CERB is received will not impact EI entitlement
How to apply
Applications for this benefit became available starting April 6, 2020 on the CRA website. At this time, the government is approving all applications and will confirm eligibility after; therefore, it is important that individuals make sure they are indeed eligible before applying, as they may otherwise need to repay benefits received in the future.
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.
- For more information, visit the CRA website.
Canada Emergency Student Benefit (CESB)
The CESB is an income support program for post-secondary students who face financial hardship as a result of COVID-19 but may not be eligible for the CERB program. For example, a student who worked a summer job in 2019 but earned less than $5,000 of income that year is not eligible for the CERB.
The CESB will provide eligible students with $1,250 a month for up to 4 months (May to August 2020). For eligible students with dependents or with disabilities, the monthly benefit is increased to $2,000.
It is likely that similar to the CERB, no income tax withholdings will be made on the CESB payments once they become available; thus, eligible students must budget for this on their 2020 income tax returns.
A student is eligible based on the following criteria:
- They are a Canadian citizen, permanent resident, person registered as an Indian under the Indian Act, or a protected person under section 95(2) of the Immigration and Refugee Protection Act. This suggests that international students are not currently eligible for the CESB.
- Enrolled, at any time between December 1, 2019 and August 31, 2020, in a post-secondary educational program that leads to a degree, diploma or certificate; or
- Graduated from secondary school in 2020 and has applied for enrollment in a post-secondary educational program that is scheduled to begin before February 1, 2021.
Furthermore, eligible students must meet both of the following conditions:
- Due to COVID-19, be unable to find work, seeking work and unable to find it, or working but being paid less than $1,000 during the 4-week period for which such individual applies for the CESB.
- Not receive more than $1,000 of employment or self-employment income, EI benefits, allowances, or the CERB, during the 4-week period for which such individual applies for the CESB.
Interaction of the CESB with the CERB
If an eligible student claims the CERB, the CESB cannot be claimed for the same application period. Therefore, it appears in most cases where a student is eligible for both the CESB and the CERB, that such student claims the CERB as it provides a higher standard monthly benefit ($2,000 versus $1,250).
How to apply
Applications for this benefit are not yet available but are expected to be posted on the CRA website in the near future. It is expected that there will be 4 application periods, with each application period spanning 4 weeks. Eligible students will likely have to reapply for each period.
Once open, the applications will be available until September 30, 2020. After this date, retroactive applications will no longer be accepted, even if a student was eligible between May and August 2020.
Moreover, the CESB rules require students to attest that they are seeking work. To that end, the Government of Canada Job Bank provides students with job opportunities available and allows them to keep track of job search activities in one place.
Additional financial support for seniors
In response to potential increased costs caused by COVID-19 for seniors, the government will provide a one-time tax-free payment of $300 for seniors eligible for Old Age Security (OAS). Seniors who are eligible for the Guaranteed Income Supplement (GIS) will receive an additional $200. This financial support is expected to cost the government $2.5 billion and help 6.7 million Canadians.