This FAQ is intended to provide further guidance on the COVID-19 Economic Response by the CRA and the Government of Canada. The examples and interpretations noted below are based on the information provided by CRA and the Government of Canada at the time of posting. We caution readers that due to the fluidity of the situation that the information may change on a daily basis. We will continue to update the examples as new information is provided.

Please see our separate notices on COVID-19 here.


Canada Emergency Business Account

Appendment –  March 29, 2020

The Government of Canada has introduced the new Canada Emergency Business Account which is designed to help small businesses access additional capital required to help them through current challenges.  The Canada Emergency Business Account will provide a $40,000 loan to assist these businesses with their current cash flow challenges.

This program is available to small business and non-for profit organizations that paid between $50,000 and $1 million in total payroll in 2019.  The loan will be interest free for the first year.  A business that repays the loan prior to December 31, 2022 will also be forgiven 25% of the loan amount (up to $10,000).

Any application for the Canada Emergency Business Account will need to be made through an entity’s financial institution.


Frequently Asked Questions

Individuals

1. When is my 2019 individual tax return due? When is my payment of tax due for the 2019 year?

Individual tax returns are due by June 1, 2020, payment of the tax owing is not due until August 31, 2020.

CRA is allowing all taxpayers to defer, until August 31, 2020, the payment of any income tax amounts that become owing on or after March 18, 2020 and before September 2020. If you have a balance owing from a previous year or a tax installment balance due, it is our understanding that no further interest or penalties will be assessed after March 18, 2020 and until August 31, 2020.

2. What if I have already filed my return or will file before June 1, 2020, are my taxes owing as of the date I file?

Previously, the filing due date and due date for payment was the same, April 30. However, for 2019 personal tax returns the payment of the tax is not due until August 31, 2020. This is irrespective of when the return was filed.

3. How do I apply for EI benefits?

You can apply online for EI at:

https://www.canada.ca/en/services/benefits/ei.html

or call Service Canada at 1-800-206-7218.  Service Canada offices have been closed.

4. When will I receive my enhanced GST/HST credit and/or Child Care Benefit?

The new enhanced credits will likely be received starting in May of 2020. No further details have been provided.

5. Should I wait to file my personal tax return?

We are not advising clients to delay in the filing of their tax return due to the extended tax deadline, where resources are available. Timely processing of your return will ensure faster payment of refunds and timely update to your GST/HST credits, Child Care Benefits, and other government programs.

6. If I pay my installments or taxes on time (under the previous rules) will CRA credit my account any interest?

The CRA has not provided any commentary on this yet. It is our understanding that if installment and tax balances are paid as previously expected, no additional interest will accrue on the balance paid.

7. Previously, individuals with a business statement could file their T1 personal tax return up to June 15, 2020 without penalty. Has the recent announcements changed the filing deadline?

No, the filing deadline is still June 15, 2020 for those returns. If any changes are announced we will provide further details.

8. What is the Canada Emergency Response Benefit and how do I apply?

The Canadian government will provide a taxable benefit of $2,000 a month for up to 4 months to:

  • workers who must stop working due to COVID-19 and do not have access to paid leave or other income support.
  • workers who are sick, quarantined, or taking care of someone who is sick with COVID-19.
  • working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures.
  • workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work.
  • wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.

Eligible individuals must be at least 14 years of age and earned income of $5,000 or more in the 2019 or 12 consecutive months before application.

For those who are already receiving regular EI benefits, their EI will continue and they should not apply for the CERB. For those who have applied for EI and their application has not yet been processed, do not need to reapply.

The CERB benefit will be accessible through the secure web portal starting early April (estimated April 6th). Those who apply will begin receiving the CERB within 10 days of applying and it will be paid every four weeks until October 3, 2020, effective March 15, 2020.

More information is available here.

Businesses/Corporations

1. When are my returns due? When are my payments due?

CRA is allowing all businesses to defer, until August 31, 2020, the payment of any income tax amounts that become owing on or after March 18 and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. The relief will not apply to tax on investment income as this is taxed under Part IV of the Income Tax Act.  No interest or penalties will accumulate on these amounts during this period.

The federal government announced extensions to many tax-related deadlines, the following is a summary of the extensions

  • T2 Corporate Income Tax Returns – Any corporate tax return due on or after March 18, 2020 is extended to June 1, 2020.
  • T1134 Information Return Relating To Controlled and Not-Controlled Foreign Affiliates – Any return due on or after March 18, 2020 is extended to June 1, 2020.
  • T5013 Statement of Partnership Income – The March 31, 2020 deadline has been extended to May 1, 2020.
  • NR4 Statement of Amounts Paid or Credited to Non-Residents of Canada – The March 31, 2020 deadline has been extended to May 1, 2020.
  • T3 Trust Income Tax and Information Return – all deadlines after March 18, 2020 have been extended to May 1, 2020.

Election forms were not specifically noted in the release (such as T2057s, GST44, etc.), however, it is our expectation that the filing deadlines for these forms will be extended as well.

GST/HST and Duties and Taxes owed on imports payments are deferred until June 1, 2020. Returns will still need to be filed, however, no interest or penalties will be assessed on the balance outstanding.

There have been no announced changes to the remittance and payment of payroll taxes other than the temporary wage subsidy.  All payments and remittances continue with the same frequency as before.

Ontario has also announced that payments to WSIB and other Ontario Tax programs can be deferred.  Any payments to WSIB due on or after March 18, 2020 and up to August 31, 2020 can be deferred until August 31, 2020.

The following payments of provincial taxes starting April 1, 2020 can be deferred for a period of five months with no interest or penalties,

  • Employer Health Tax
  • Tobacco Tax
  • Fuel Tax
  • Gas Tax
  • Beer, Wine & Spirits Tax
  • Mining Tax
  • Insurance Premium Tax
  • International Fuel Tax Agreement
  • Retail Sales Tax on Insurance Contracts and Benefit Plans
  • Race Tracks Tax

2. What is the Canada Emergency Business Account and how do I apply?

This program will provide loans of $40,000 to eligible businesses, guaranteed by the government.  The loan will be interest free for the first year and if certain qualifications are met, up to $10,000 of the loan may be forgivable. More details on eligibility and the application process will be provided as the details are released.

3. How do I take advantage of the 75% payroll subsidy offered under the COVID-19 Economic Response Plan?

The subsidy will be equal to 75% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.

The Prime Minister announced on Friday March 27th, that the subsidy will be increased to 75% of wages instead of 10%.  No announcements on a change in the maximum amount of the subsidy.  We will provide further details on the subsidy as they become available.  We do not expect an update until Monday March 30th, 2020.

Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration.  Eligible businesses are a person or partnership that,

a) employs one or more eligible employees;

b) has, on March 15, 2020, a business number in respect of which the person or partnership is registered with the Minister to make remittances required under this section; and

c) is any of

i.  a Canadian-controlled private corporation for the purposes of section 125 that

A. would have a business limit for its last taxation year that ended before the start of the eligible period greater than nil, if the amount determined for paragraph 125(5.1)(b) were deemed to be nil, or

B. if the corporation does not have a taxation year that ended before the start of the eligible period, would meet the condition in clause (A) if its taxation year ended immediately before the start of the eligible period,

ii. an individual (other than a trust),

iii. a partnership, all of the members of which are described in subparagraphs (i) to (iii) or (v),

iv. a person exempt from tax under Part I because of paragraph 149(1)(l), and

v. a registered charity.

In short, self-employed employers, partnerships, Canadian controlled corporations eligible for the small business deduction, charities and non-profits are eligible for the wage subsidy.

CCPCs are only eligible for the subsidy if their taxable capital employed in Canada for the preceding taxation year, calculated on an associated group basis, is less than $15 million.

For example, if you had 3 employees that earned a total of $1,500 of gross wages in a remittance period. The total remittance owing is $500, you would pay CRA $0 ($500 – ($1,500 x 75%) amount cannot be negative). An administrative example can be found at the QuickBooks site here, however it is still using the 10% rate.

4. If I pay my instalments or taxes on time (under the previous rules) will CRA credit my account any interest?

CRA has not provided any commentary on this yet. It is our understanding that if instalment and tax balances are paid as previously expected, no additional interest will accrue on the balance paid.

Other

1. When is my trust return due?

All deadlines after March 18, 2020 have been extended to May 1, 2020. Payment of any taxes owing will not be due until after August 31, 2020.

2. Has the filing due date changed for any annual or information returns for non-profits and charities?

CRA has announced that it is extending the filing deadline to December 31, 2020, for all charities with a Form T3010, Registered Charity Information Return due between March 18, 2020 and December 31, 2020. There have been no announced changes yet for non-profit organizations.

Please visit our website regularly for updates on COVID-19 as it pertains to the CRA. We also encourage you to refer to the following government sites for additional information and clarification:

Government of Canada:

https://www.canada.ca/en/public-health/services/diseases/coronavirus-disease-covid-19.html

Ministry of Health Ontario:

https://www.ontario.ca/page/2019-novel-coronavirus?_ga=2.195720302.371509067.1584638162-1245930603.1571325725

Service Canada

https://www.canada.ca/en/employment-social-development/corporate/portfolio/service-canada.html

Please contact any Millards location if you have questions regarding Canada’s COVID-19 Economic Response Plan. Like so many of the client businesses we serve, Millards Chartered Professional Accountants has adopted COVID-19 procedures and protocols to guide safe interaction with others. In an effort to maintain social distancing, please contact us via phone or email only. Please continue to visit this website for further details on our current policies.