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The Impact of COVID-19 – revised Mar 25

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Jump to: Information for Individuals Information for Businesses Important Links

Key Points For Individuals

Tax Relief

  • Tax Return Due Date Referral
    • personal tax filing due date will be June 1, 2020
    • those expecting refunds or benefits (GST/HST credit, GIS, CCB) should file ASAP to avoid a lapse in payment
  • Tax Payment Deferral
    • to after August 31, 2020
    • payment of income tax amounts (including instalments) that become owing on or after March 18 and before September
    • no interest or penalties will accumulate on these amounts during this period

Temporary Income Support for Workers

  • EI Sickness Benefits
    • for workers without paid sick leave who are sick, quarantined or forced to stay home to care for children will have access to benefits
      • without the one week waiting period, effective March 15
      • without the requirement to provide a medical certificate
March 25, 2020
  • Canada Emergency Response Benefit
    • replaces the Emergency Care Benefit and the Emergency Support Benefit
    • taxable benefit would provide $2,000 a month for up to four months for workers who lose their income as a result of the COVID-19
    • Canadians who:
      • have lost their job
      • are sick, quarantined or taking care of someone who is sick with COVID-19
      • are working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures
      • apply to wage earners, as well as contract workers and self-employed individuals who would not otherwise be eligible for Employment Insurance (EI)
    • workers who are still employed, but are not receiving income because of disruptions to their work situation due to COVID-19
    • all Canadians who have ceased working due to COVID-19, whether they are EI-eligible or not, would be able to receive the CERB
    • portal for accessing the CERB would be available in early April
    • begin to receive CERB payments within 10 days of application
    • CERB would be paid every four weeks and be available from March 15, 2020 until October 3, 2020
  • Additional information about EI & CERB
    • those already receiving EI regular and sickness benefits
      • continue to receive their benefits
      • should not apply to the CERB
        • if benefits end before October 3 and are unable to return to work due to COVID-19
        • apply for the CERB once their EI benefits cease
    • those who have already applied for EI and whose application has not yet been processed would not need to reapply
    • those eligible for EI regular and sickness benefits would still be able to access their normal EI benefits, if still unemployed, after the 16-week period covered by the CERB
click here for the latest information

Longer Term Income Support for Individuals

  • Low/Modest Income Individuals
    • will receive a one-time special payment by early May 2020 through the Goods and Services Tax credit
      • an average boost to income for those benefitting by close to $400 for single individuals and close to $600 for couples
    • increase Canada Child Benefit payment amounts by $300 per child for the 2019-20 benefit year
      • added to the May 2020 benefit cheque
  • for children under 12 , a one time payment of $200 per child ($250 for a child with special needs)
    • apply through portal soon to be launched
  • GIS payments will double to $322/mth
    • no indication of time frame

New information March 25, 2020

  • Changes to the EI Work Sharing Program
    • extending the eligibility to 76 weeks
    • easing eligibility requirements
    • streamlining the application process

Financial Assistance for Individuals

  • Municipalities urged to provide Property Tax Deferrals to municipal taxpayers

New Information March 25, 2020

  • Mortgage Deferral Program
    • up to 6-month payment deferral
    • relief on other credit products
    • flexible payment solutions
  • Student Loan Moratorium
    • six-month interest free moratorium on the repayment of Canada Student Loans
  • Minimum RRIF Withdrawals
    • reduced by 25% for 2020
    • similar rules for receiving variable benefit payments from RPP
  • Interest Rate Cuts
    • Bank of Canada reduced prime interest rate to .75%
    • other bank have also reduced rates
  • Emergency Loan Program
    • to Canadians in need of immediate financial assistance to return home
    • emergency assistance is a repayable loan
  • Indigenous Community Support Fund
    • to address immediate needs in the First Nations, Inuit and Metis Nation communities
  • Homelessness
    • support the homeless during the outbreak
    • purchasing beds, physical barriers and reducing overcrowding in shelters
  • Domestic Abuse Shelters
    • increase capacity and prevent outbreak in their facilities

Information For Businesses

Tax Relief for Businesses

  • Tax Payment Extension for Businesses
    • to after August 31, 2020
    • payment of income tax amounts (including instalments) that become owing on or after March 18 and before September
    • no interest or penalties will accumulate on these amounts during this period

Temporary Measures for Businesses

  • Increase in the Employer Health Tax exemption
  • 10% corporate tax credit for qualifying regions
  • WSIB premium deferral for up to six months

New information March 25, 2020

  • Payroll Subsidies
    • a temporary wage subsidy for a period of three months
    • equal to 10% of remuneration paid during that period
    • up to a maximum of $1,375 per employee and $25,000 per employer
    • by reducing their remittances of income tax
    • effective immediately
  • CRA Audit Activity
    • will not initiate any post assessment GST/HST or Income Tax audits for the next four weeks
    • CRA will temporarily suspend audit interaction with taxpayers (in most cases)

Financial Assistance for Businesses

  • Business Credit Availability Program
    • $10 billion of additional credit support
    • Additional credit through Farm Credit Canada for the agri-food sector
    • $300 billion in additional lending by the banks
  • Liaison Officer Service
    • available by phone
    • ensuring businesses are aware of any changes such as:
    • filing and payment deadlines
    • proactive relief measures, etc

Other Payment & Filing Extensions

No comments were made about changing the filing and payment dates for payroll, GST/HST and other non-income tax items.

Making HST debt collection a priority

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If you or your corporation owe the government for unremitted HST, you want to pay attention to this. A fellow owed the government money. He sold his personal house. The mortgage company got their money and he applied the balance towards his outstanding HST balance. The CRA challenged this feeling they had higher priority than the bank. The CRA won. The bank had to take some of the proceeds used to pay off the mortgage and pay off the CRA balance.

Do you think the bank is going to change their paperwork as a result of this? I suspect loans and mortgages will be conditional on HST and payroll remittances being current.

CRA cracking down on deducting vehicle expenses

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The CRA has commenced a project checking on your automobile claim. Their focus right now is on corporations claiming vehicle expenses. They are within their rights to ask for details.

It is your responsibility to prove the percentage of business use, so keeping a detailed mileage log and maintenance records will help if/when the CRA requests these details.

Accountant made a mistake made with a commonly used tax strategy

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An accountant applied a commonly used tax strategy for a taxpayer. One condition of this strategy is that it cannot be used BEFORE the end of the year. The accountant missed that one point, and because of this mistake, the CRA assessed a tax of almost $180,000. The CRA would not allow the accountant to fix this mistake so it went to court.

The judge determined there was no wrong doing other than the mistake of applying the strategy a bit too soon. He concluded that allowing the problem to be fixed was fairer than the CRA’s proposed alternatives.

Income tax evasion can lead to fine and imprisonment

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A solely owned corporation performed services for a customer over a two year period. The owner pocketed the money and did not report the revenue nor the GST collected. CRA learned of this and reassessed the corporation for collecting the revenue and not remitting the GST. 

The taxpayer had to pay the income taxes on this money AND the GST that was collected. Penalties of 100% of the income taxes evaded and the GST not remitted were applied.

The taxpayer was sentenced to 12 months in jail if he did not pay the CRA $837,859. Another 12 month sentence was ordered if other certain conditions were not met.