Canada’s $82B economic response to Covid-19

The Government of Canada announced an additional $82B COVID19 Phase 1 response package (March 18, 2020)

Some of the economic measures including:

  • Extending the income tax filing deadline.

For individuals (other than trusts), the return filing due date will be deferred until June 1, 2020.  However, the Agency encourages individuals who expect to receive benefits under the GSTC or the Canada Child Benefit not to delay the filing of their return to ensure their entitlements for the 2020-21 benefit year are properly determined.

This filing extension does not extend to Specified Income Trusts or Corporations.

 

  • Extending deferral of income taxes due for individual and corporate taxpayers. Interest and penalties will be waived during this period.

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 instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period.

NOTE:  This is a DEFERRAL of tax payments, not a forgiveness.  The intent is to allow these funds to continue to circulate in the economy during this Covid19 crisis situation, but you will have to eventually pay them (think of the deferral as a line of credit on your taxes due).

Also, this deferral does not apply to GST/HST remittances or Payroll tax remittances.  As these amounts are collected and withheld by businesses and employers IN TRUST for the government and still need to be remitted on time.

Income Tax and GST/HST audits and reviews for small and medium-sized businesses will be suspended at least for the next 4 weeks (i.e., until mid-April).  NOTE:  You are responsible for having complete and accurate records to support your tax filings and must keep these records for a period of 6 years after the taxation period.

 

  • Special EI benefits available to workers, self-employed individuals, contractors, temporary worker and others who would not normally qualify for EI benefits – available to those who are unable to work because of Covid19, up to 15 weeks of benefits equal to $900 paid bi-weekly. It will require that individuals applying make an attestation in their application (i.e., it’s on the honor system) – no medical documentation will be required.

The CRA is working on creating and implementing the system that will allow Individuals to apply for these special EI benefits online.  Finance Minister Morneau said to expect this to be available early April.

 

  • Emergency Support Benefits for workers who lost their job because of Covid19 – they can receive up to 14 weeks of support comparable to EI.

I expect that the application system will be similar to that of EI.  More details will be forthcoming from the Finance Minister and the CRA.

 

  • Enhanced GST benefits for low/modest income families between $400 and $600 (it was unclear whether this was a monthly amount or quarterly, and when these payments would be made).

 

  • Special Canada Child Benefit top up of $300/child for low/modest income families (it was unclear for how long, when and how these top up payments would be made).

 

  • Retirees and seniors are ensured that their CPP/OAS/GIS payments will continue as usual.

 

  • A 6-month interest-free period and moratorium on student loan payments.

 

  • A 10% wage subsidy available for small employers for the next 3 months, up to $25000 per employer, effective immediately. (it is unclear HOW this subsidy will be rolled out)

 

  • Additional lending and credit available to small businesses through BDC and EDC. See BDC and EDC websites for more details.

https://www.bdc.ca/en/pages/special-support.aspx?special-initiative=covid19

https://www.edc.ca/

 

  • All the major banks have announced that they we will work with individuals and businesses on a case by case basis for support, including
    • Up to 6-month deferral of mortgage payments
    • Other “skip-a-payment” options for loans and credit cards

You are encouraged to contact your bank directly to discuss your particular situation and the options available to you.

 

This is PHASE 1 of the response package designed to ensure that all Canadians can keep food in the fridge, a roof over their head and have access to required health care, without the added financial stress due to Covid19 protocols.  More specific details will be emerging over the next few days and weeks.  Stay tuned.

 

See the CRA’s official website for more information:

https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html#Flexibility_for_Tax-filers

 

Disclaimer:  This article is meant to keep you up to date and give you general information about tax initiatives that may be of interest to you.  It is not meant as tax advice for your particular situation. Please discuss your situation with your tax and financial advisors to see how these announcements apply to you and your specific circumstances.

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