On March 18, 2020, the federal government announced an $82 billion Economic Response Plan to help Canadians during the COVID-19 pandemic.
Here is a breakdown on some of the main tax updates for both individuals and businesses including any additional updates and changes up to March 27th, 2020 :
Individuals:
- 2019 T1 tax return filing deadline has been extended from April 30, 2020 to June 1, 2020. This filing deadline extension also applies to any elections, designations, and forms such as T1135 – Foreign Income Verification Statement.
- Income tax owing payable under Part I of the Income Tax Act can be deferred to August 31, 2020. No interest or penalties will be accumulated on tax balances due and installments between March 18, 2020 to August 31, 2020.
- Employment Insurance one-week waiting period has been waived for individuals affected by COVID-19. If you are sick, quarantined or have been directed to self-isolate, we will waive the requirement to provide a medical certificate to access EI sickness benefits.
- The annual Canada Child Care Benefit for 2019 – 2020 has been proposed to increase a maximum of $300 per child.
- A one-time special payment of the special Goods and Services Tax Credit in early May. The average additional benefit will be close to $400 for single individuals and close to $600 for couples.
- Effective March 30, 2020, the federal government is placing a six-month interest-free moratorium on the repayment of Canada Student Loans for all student loan borrowers. No payment will be required and interest will not accrue during this time. This will be applied automatically.
- Registered Retirement Income Funds (RRIFs) required minimum withdrawals for 2020 has been reduced by 25%.
- On a case-by-case basis, Canadians who are impacted by COVID-19 and experiencing financial hardship, as a result, can contact their financial institution to apply for a mortgage deferral.
- The new Canada Emergency Response Benefit (CERB) for people who are unable to work and people who are sick, quarantined, or in directed self-isolation will provide a taxable benefit of $2,000 a month for up to 4 months to:
- 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.
Businesses:
- Allowing all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 till August 31, 2020. This relief would apply to tax balances due, as well as installments, under Part I of the Income Tax Act.
- Working-Sharing program’s maximum duration has been extended from 38 weeks to 76 weeks.
- An “eligible small employer”, who employs more than one employee in Canada, will be provided with a temporary three-month wage subsidy which equals 10% of the remuneration up to a maxim subsidy of $1,375 per employee and $25,000 per employer starting March 15, 2020. On March 27, 2020, the federal government increased the wage subsidy from 10% up to 75% for qualifying businesses. More details will be announced before the end of the month.
- On March 27, 2020, the federal government announced that it will be offering a new Canada Emergency Business Account to provide interest- free loans to small businesses and not-for-profits up to $40,000 for one year. To qualify, organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25% (up to $10,000).
- On March 27, 2020, the federal government also announced that payments for Goods and Services Tax / Harmonized Sales Tax (GST/HST), as well as customs duties owing on their imports, will be deferred until June 30, 2020.
- Business Development Bank of Canada (BDC) and Export Development Canada (EDC) will be providing more than $10 billion of additional support to largely targeted to small and medium-sized businesses including new loan guarantee and co-lending options.
Trusts:
- Any income tax information return filing due date after 18 March 2020 is deferred until 1 May 2020.
For more detailed information on the Economic Response Plan, please visit the Official Government of Canada’s website here.