TAX & COVID-19

By: Harpreet Wadehra, CPA, CA

Certain chemicals when combined can cause a dangerous explosion and it is this explosion that the Government is trying to avoid amid COVID-19 or Coronavirus.

Prime Minster Justin Trudeau and Finance Minister Bill Morneau announced financial measures yesterday to assist Canadians and Canadian businesses facing difficultly during the COVID-19 outbreak. Although these measures provide relief to some individuals and businesses, I believe it has caused further anxiety to some who are trying to decipher what these measures mean, which measures are applicable to them and the timeframe to which they apply.

Although I have summarized some of the measures below, please note that there is not a lot of information available at this time. The details on how these will be executed is yet to come.

I would encourage you to remain healthy and remain calm during this time. Patience is required as we maneuver through the various stimulus packages and information provided.

Below is a summary of the individual and business economic stimulus response released.

Businesses

1. Wage subsidy

• a. For eligible small employers (those who are “currently” eligible for the small business deduction) a temporary wage subsidy for a period of three months equal to 10% of renumeration paid during that period to a max subsidy of $1,375 per employee and $25,000 per employer.
• b. Businesses will be able to “reduce remittance of income tax withheld on their employee’s renumeration.”

We are not sure how this is to be executed at this time It is also unclear whether this applies to shareholders who are currently on payroll (one-time or regular).

2. Businesses Filing Taxes

• a. Please note that business filing deadlines have not been extended or deferred
• b. Extended payment filing deadline of August 31, 2020 for payment of any Income tax amounts that become owing on or after March 18, 2020 and before September 2020 (both balances owing and installments). CRA has said no penalties will accumulate on these amounts during this period.
• c. CRA will not be conducing any post assessment GST/HST or Income Tax audits for the next four weeks.
• d. Suspension of all audit interaction with taxpayers and representatives for next four weeks.

It would appear that HST and payroll deadlines and related payments have not been extended. No further information is available at this time.

3. Business loans and assistance

• a. The government will be releasing additional funding to small businesses through additional loans and credit solutions to be offered through BDC and EDC for those in vulnerable sectors.

Contact the bank to determine your options.

Individuals

1. Temporary Income Support

• a. Available to:
  • Canadians who are without paid sick leave, who are sick, quarantined or home to care for their children
• b. Measures:
  • 1. Waiving the one-week waiting period for those wanting to claim EI sickness benefits, effective March 15, 2020.

• • To receive regular EI, you must have lost your job or have been laid off. EI sickness benefits can paid if you are not able to work because of illness or quarantine. The application for EI benefits can be done by visiting going to https://www.canada.ca/en/services/benefits/ei/ei-sickness/apply.html . If you think you qualify, you should apply for the benefits as soon as possible

• • 2. Introducing the Emergency Care Benefit
    • a. Provides up to $900 bi-weekly up to 15 weeks
    • b. Administered through the CRA
    • c. Provides income support to
      • i. Workers, including self-employed workers who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits
      • ii. Workers, including self-employed who are taking care of a family member who is sick with COVID-19, such as an elderly parent but do not qualify for EI sickness benefits
      • iii. 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

• c. Timeframe:
  • Available in April 2020 and will require Canadians to attest that they meet the eligibility requirements.

• d. How to apply:
  • i. Through CRA MyAccount
  • ii. By calling a toll-free number with an automated application process.

No further information is available at this time.

2. Long-term Income Support

• a. Available to:
  • Canadians who have lost their job or face reduced hours as a result of COVID’s impact.
• b. Measures:
  • 1. Emergency Support Benefit administered through the CRA (for those not eligible for EI and are facing unemployment)
  • 2. Implementing EI Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hour as a result of developments beyond their control of their employers (essentially, extending the eligibility of such agreements to 76 weeks).

No further information is available at this time.

3. Other income support

• a. One time special payment of the GST credit in May 2020 which will give an additional $400 to a single individual and $600 for a couple who qualify for these benefits
• b. One time special increase to the Canada Child Benefit (CCB) payment by $300 per child to be paid in May 2020.
• c. For students, six-month interest free loan period for those in the process of repaying their loans

It appears these benefits will be paid to those that qualified for the benefits for the period from July 1, 2019 to June 30, 2020 (based on 2018 personal taxes filed).

4. Filing extensions and payment extension

• a. Filing due date of the 2019 tax return for individuals has been extended to June 1, 2020 (from April 30, 2020). It is still advisable to file your return on time to ensure Canada Child Benefit payments and GSTC payments are not delayed for 2020/2021 tax years
• b. Taxpayers now have until August 31, 2020 to defer or pay income tax amounts owing on or after March 18, 2020 and before September 2020. This would apply to tax balances due, as well as installments. No interest and penalties will accumulate on these amounts

This extension or payment deferral does not appear to include other programs, such as payroll or GST/HST for unincorporated individuals.

5. Financial institutions

• a. Canada’s large banks have confirmed they will support up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit product
• b. There are also other deferral, loan re-amortization, capitalization of outstanding interest arrears and other eligible expense that may qualify.
  Contact your financial institution directly to see if you qualify.

For the full release, please visit: https://www.canada.ca/en/public-health/services/diseases/2019-novel-coronavirus-infection/canadas-reponse.html#economic

The opinions expressed in this article are those of the author.

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Connect with Harpreet by calling 905.790.0657 Or email info@wadehrapc.ca or visit us www.wadehrapc.ca