COVID-19 Federal Emergency Tax Changes-Summary To Date
There have been numerous Government announcements on tax measures to help individuals and assist businesses through the COVID-19 pandemic. The following summarizes the current Federal tax measures as of March 27, 2020. BC tax measures can be found here.
BUSINESSES
TEMPORARY WAGE SUBSIDY
See our previous post for details (now passed into law).
On March 27, 2020, the Government proposed to increase the wage subsidy from 10% to 75% of wages for eligible employers, with conditions, and effective retroactive to March 15. Businesses are being instructed to reduce their source deductions remittances in order to claim the subsidy. Re-hired employees will be eligible for the wage subsidy. Details of any revised maximums per employee or employer are not yet clear; however, further details should be available soon.
CANADA EMERGENCY BUSINESS ACCOUNT (CEBA)
This measure permits banks to provide government-guaranteed interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover operating costs during the period where revenues have been temporarily reduced.
To qualify, organizations will need to demonstrate they paid between $20,000 and $1,500,000 in total payroll in 2019 (Box 14 of 2019 T4 Summary).
25% of the loan will be forgiven where the loan is repaid by December 31, 2022.
Applications for the loan should be available through the borrower’s financial institution.
GST/HST AND DUTY PAYMENT DEFERRAL (PROPOSED)
GST/HST and Import Duties payments can be deferred to June 2020.
OTHER BUSINESS MEASURES
PAYMENT DUE DATES AND CRA AUDITS
The deadline for businesses to pay any income tax amounts that are owing or due after March 18, 2020, and before September 1, 2020, has been extended to September 1, 2020. No interest or penalties will accumulate on these amounts during this period.
Canada Revenue Agency will not be contacting any small or medium-sized businesses to initiate any post-assessment GST/HST or Income Tax Audits for the next four weeks.
FEDERAL WORK-SHARING PROGRAM
This program has been streamlined as a result of COVID-19. Employers affected by a downturn in their business may want to consider whether they qualify for the Federal Work-Sharing Program (“WSP”).
The WSP program provides Employment Insurance (EI) benefits for eligible employees. It is designed to help eligible employers avoid layoffs during temporary reductions in business activity, such as the COVID-19 pandemic.
For more information, please refer to the following website.
INDIVIDUALS
CANADA EMERGENCY RESPONSE BENEFIT
Combines the previously announced Emergency Care Benefit and the Emergency Support Benefit.
Applies to wage earners, contract workers and self-employed individuals who are not otherwise entitled to Employment Insurance (EI), and due to COVID-19 have lost their job (or losing income), are sick, quarantined, or taking care of someone who is sick with COVID-19.
The taxable benefit will be available to those who have total income of at least $5,000 in 2019 (or within 12 months of application) from employment, self-employment and/or certain EI benefits. The individuals must have ceased working for reasons related to COVID-19 for at least 14 consecutive days within a 4 week period.
The amount of the benefit has not been specified and will be determined by the Government. It was previously announced that that benefit will be up to $2,000 per month for up to four months (or $500 per week).
The online application portal will open in early April and funds are expected to be paid within 10 days of application.
OTHER PERSONAL TAX MEASURES
For individuals (other than trusts), the tax return filing due date is deferred until June 1, 2020. The payment due date for 2019 taxes has been extended to September 1, 2020. No interest or penalties will accumulate on these amounts during this period.
Reduced required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020.
Increased GST credit for low-income individuals.
Increased maximum Canada Child Benefit payment.
TRUSTS
The due date for trusts with a year-end of December 31, 2019, will be deferred until May 1, 2020. Payment of taxes for trusts can be deferred until September 1, 2020. No interest or penalties will accumulate on these amounts during this period.
CHARITIES
The Charities Directorate has extended the filing deadline for all charities with a Registered Charity Information Return due between March 18, 2020, and December 31, 2020, to December 31, 2020.
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