On March 18, 2020, the Prime Minister announced a new set of economic measures to help stabilize the economy during this challenging period. These measures, delivered as part of the Government of Canada’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses.
Changes to income tax filing and payment deadlines:
For individuals, the filing due date for 2019 personal tax returns is deferred from April 30, 2020 to June 1, 2020.
For trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred from March 31, 2020 to May 1, 2020
The Canada Revenue Agency will allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 2020. This relief would apply to tax balances due, as well as installments. No interest or penalties will accumulate on these amounts during this period.
The deadline to pay any income tax amounts, including tax balances due, as well as installments, that become owing on or after March 18, 2020 and before September 2020 is deferred until after August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.
In addition to CRA changes, the Canadian government announced its COVID-19 Economic Response Plan, which will provide up to $27 billion in direct support to Canadian workers and businesses. Here are some of the highlights from this plan:
Temporary Income Support for Workers and Parents
Introducing the Emergency Care Benefit of up to $900 bi-weekly, for up to 15 weeks. This benefit provides income support to:
Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits
Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent, but who do not qualify for EI sickness benefits
Parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not
Waiving the one-week wait period for individuals in imposed quarantine to claim Employment Insurance (EI) sickness benefits has been waived.
Waiving the requirement to provide a medical certificate to access EI sickness benefits
Income Support for Individuals Who Need It Most
A one-time special payment by early May through the GSTC. The payment will double the maximum annual GSTC payment amounts for the 2019/2020 benefit year. The average boost will be close to $400 for single individuals and $600 for couples.
An increase in the maximum annual CCB payment amounts for the 2019/2020 benefit year by $300 per child. Affected families will receive the increase as part of their May payment.
Some additional measures include the following:
Six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans
Reducing the required minimum withdrawals from RRIFs by 25% for 2020 in recognition of volatile market conditions
Helping Business Keep their Workers
To support businesses facing revenue losses and to help prevent layoffs, the government is proposing to provide eligible small employers with a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% or remuneration paid during that period, up to a maximum of $1,375 per employee and $25,000 per employer. Businesses will immediately benefit from this support by reducing their remittances of income taxes withheld on their employee’s remuneration. Businesses eligible for the small business deduction, as well as non-profit organizations and charities will be eligible for this benefit.
Ensuring Businesses Have Access to Credit
The Business Credit Availability Program will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10B of additional support to small and medium-sized businesses. BDC and EDC are cooperating with private sector lenders on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism. Farm Credit Canada will also provide support to farmers and the agri-food sector.
The office of the Superintendent of Financial Institutions is lowering the Domestic Stability Buffer effective immediately. This will allow Canada’s large banks to inject $300B of additional lending into the economy.
The Bank of Canada cut interest rates by 0.75% as a proactive measure in light of the impact of COVID-19 on the Canadian economy.
For more information, please read the full report here in case you and/or your business may benefit from this. If you require assistance from a Chartered Accountant in Toronto, we would be happy to assist you.