The Canadian Department of Finance and the Prime Minister announced a number of significant economic measures to assist taxpayers in managing the economic and financial consequences of COVID-19. The tax measures, announced March 18, 2020, are a welcome relief and designed to provide direct support to employees and businesses. In addition to the items below, the measures also provide for assistance to specifically targeted high-risk groups.
The complete Department of Finance release can be found here Department of Finance Canada
Flexibility for taxpayers
All taxpayers will be allowed to defer, until September 1, 2020, the payment of any income tax amounts levied under Part I of the Income Tax Act
(Canada) 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. Further, no interest or penalties will accumulate on these amounts during this period.
No income tax or GST audits will be initiated for small or medium businesses for the next four weeks and ongoing audit interaction will be temporarily suspended.
The filing due date for the 2019 tax returns of individuals, including certain trusts, will be deferred. For individuals (other than trusts), the return filing due date will be deferred until June 1, 2020, and for trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred until May 1, 2020.
As a temporary administrative measure the Canada Revenue Agency will also recognize electronic signatures as having met the statutory signature requirements. This will apply, for example, to authorization forms T183 or T183CORP.
Support for workers and parents
For charities, non-profit organizations and certain corporations eligible for the small business deduction, the government is proposing to provide eligible small employers a temporary wage subsidy for three months. The subsidy will be provided by reducing employer remittance requirements and will equal 10% of remuneration paid during that period, up to certain per-employee and per-employer limits.
Where sick leave or similar workplace accommodation is not available, individuals who are sick, quarantined or forced to stay home to care for children will be able to access enhanced employment insurance benefits such as the reduction of the waiting period and the waiving of the requirement for a medical certificate to access sickness benefits. An emergency care benefit is also introduced for those who may not qualify for employment insurance benefits or for parents whose children require care or supervision due to school or daycare closures, and who are unable to earn employment income.
Additional benefits are being implemented where individuals lose their jobs or face reduced hours. This includes an emergency support benefit delivered through the Canada Revenue Agency for those not eligible for employment insurance, and the previously announced Employment Insurance Work Sharing Program that provides employment insurance benefits where employees agree to reduce their normal working hours.
Alberta and Quebec have announced measures similar to the federal government's deferral of the payment of income tax. In Alberta, businesses with corporate income tax balances owing on or after March 19, 2020, or instalment payments coming due between March 18, 2020, and August 31, 2020, can defer payment until August 31, 2020. Although penalties and interest will be waived on such amounts, no extension was granted for filing corporate income tax returns.
In Quebec, the payment by both individuals and businesses of tax instalments and taxes due as of March 17, 2020, is suspended until September 1, 2020, with the terms of payment to be announced. For individuals, the deadline for filing a 2019 tax return has been extended to June 1, 2020. All Revenue Québec tax audit and collection activities are being suspended and taxpayers can expect greater flexibility regarding payment agreements for tax debts.
While the situation continues to develop, the measures announced by the Department of Finance on Canadian tax filing obligations and tax payments will be a welcome relief for taxpayers as they manage the ongoing COVID-19 pandemic.