The Government of Canada has introduced on March 18, 2020, a series of financial and tax measures to support businesses and individuals during the COVID-19 outbreak. We have highlighted below some of the key measures announced:
MEASURES TO SUPPORT BUSINESSES
Businesses will have the option to defer payment of any income tax amounts payable under Part I tax until September 1, 2020. This deferral applies to tax balances and installments that are owing on or after March 18, 2020 and before September 2020. These amounts will not be subject to interest or penalties during this period.
There is no deferral for any tax withholdings such as payroll, Part XIII withholdings or extensions for filing and remitting GST or HST.
- Temporary wage subsidy for small businesses
Small employers may be eligible for a temporary three-month wage subsidy to help businesses keep their workers. This subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
Businesses will be able to reduce their remittances of income tax withheld on their employees' remuneration. This measure applies to corporations eligible for the small business deduction, as well as non-profit organizations and charities.
The Government announced $10B of additional support for small and medium sized businesses, provided through BDC and EDC. Interest rates have been cut to 0.75% and actions were taken to enable banks to inject $300B of additional lending.
Access to credit through BDC and EDC will require certain formalities including the provision of historical financial statements and projected cash flows.
INDIVIDUAL MEASURES
- Tax filing and payment relief for individuals and trusts
Individuals (other than trusts) will have until June 1, 2020 to file their 2019 returns. Trusts with a fiscal year ending on December 31, 2019 were granted an extension until May 1, 2020 to file their 2019 returns. No announcements were made regarding other filing deadlines, including corporate tax filings, partnership tax filings, ETD and HST returns.
Taxpayers who owe income tax balances or income tax installments on or after March 18, 2020 and before September 2020 have until September 1, 2020 to remit these amounts. These amounts will not be subject to interest or penalties during this period.
Workers who need to stay home due to situations related to COVID-19 but are not eligible for EI may qualify for a new Emergency Care Benefit. This new measure, which provides up to $900 every two weeks, for up to 15 weeks, will be available to individuals, including the self-employed, who fall ill with COVID-19, are placed in quarantine or have to take care of a family member who is ill.
The benefit will also be provided to parents with children who require care or supervision due to school closures and are unable to earn employment income. Individuals will be able to apply online or by phone for the benefit starting in April 2020.
OTHER MEASURES
Other measures announced by the Government include:
- Offer more support for workers in the air transportation, tourism and oil and gas sectors
- Reduce required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020, with similar rules for individuals receiving variable benefit payments under a defined contribution Registered Pension Plan
- Increase the maximum annual Canada Child Benefit (CCB) payment by $300 per child for the 2019-20 benefit year as part of their May payment
- Place a six-month interest-free moratorium on the repayment of Canada Student Loans
- Make a one-time special payment to eligible individuals through the Goods and Services Tax credit (GSTC) of almost $400 for single individuals and $600 for couples on average in May 2020
- Increase flexibility for homeowners to defer mortgage payments on certain insured mortgage loans through Canada Mortgage and Housing Corporation
- Provide support, through Canada's large banks, including a deferral of up to six months for mortgages and possible relief on other credit products such as skip-a-payment on automobile loans or credit cards
LET US HELP YOU
Despite the filing extensions put in place, we encourage clients to file their taxes. We also reinforce that any provisions for GST/HST credit or CCB credit increases will only take place once the 2019 tax return is filed.
In an effort to care and protect our members and clients, our office will be closed for in-person meetings effective March 23, 2020. BGD has the appropriate infrastructure in place to continue our operations remotely so there will be no interruption to your services or communication. There is a drop box on our main floor, should you wish to drop off documents at the office.
If you have any questions or concerns, please contact your
BGD advisor.
