Update to Canada’s Economic Response to COVID-19

Due to the evolving nature of the Economic Response to the COVID-19 pandemic, we are providing an updated summary of the programs and measures the Government of Canada is taking to assist Canadians.

These measures are intended to alleviate undue pressure and financial strain to individuals and businesses. We recommend that, where resources are available, all clients continue to comply with CRA filing requirements and deliver information in a timely manner.

Please see our other articles on COVID-19 here.

Support for individuals

Extra time to file income tax returns

CRA is deferring the filing due date for the 2019 tax returns of individuals. For individuals (other than trusts), the return filing due date will be deferred until June 1, 2020. Self-employed individuals must still file by June 15, 2020. For all individuals any 2019 income tax balances due, or instalments, are now deferred until August 31, 2020 without incurring interest or penalties.

All Trusts with a tax year end of December 31, 2019 are now due by May 1, 2020. All T3 Trust Income Tax returns that would have been due in April or May of 2020 are now due by June 1, 2020. For Trusts income tax balances and instalments due on or after March 18, 2020 and before September 1, 2020 are now deferred until August 31, 2020.

Temporary Salary Top-up for Low-Income Essential Workers

The Federal government is working with provinces and territories to cost-share a temporary top-up to the salaries of low-income workers earning less than $2,500 per month on a full-time basis, that are deemed essential in the fight against COVID-19. The focus is those who work on the front-line in hospitals, in long-term care facilities and those who work in the grocery/food industry.

We will provide more details as they become available.

The New Canada Emergency Response Benefit

The Canadian government will provide a taxable benefit of $2,000 a month for up to 4 months to:
workers who did not apply for, nor receive CERB or EI benefits from Service Canada for the same period
workers who did not quit their job voluntarily
workers who are 15 years or older, reside in Canada and earned at least $5,000 of income in 2019 or in the last 12 months
workers who stopped or will stop working due to COVID-19 during the 4-week period and do not expect to receive more than $1,000 (before taxes) for at least 14 days in a row during the 4-week period
workers who do not expect their situation to change during the 4-week period or to receive more than $1,000 (before taxes) during the 4-week period
workers who received regular EI benefits for at least 1 week since December 29, 2019 and are not longer eligible for benefits

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

The CERB benefit is accessible through the secure web portal. Those who apply will begin receiving the CERB within 3-10 days of applying and it will be paid every four weeks until October 3, 2020, effective March 15, 2020.

More information is available here

Improved access to Employment Insurance sickness benefits

If you are sick, quarantined or have been directed to self-isolate, the Canadian government will waive the requirement to provide a medical certificate to access EI sickness benefits. Click here to apply.

Apply for Employment Insurance

If you were recently laid off or have reduced hours and qualify for Employment Insurance benefits, you can submit your request today. Click here to apply.

Increasing the Canada Child Benefit/ Special Goods and Services Tax credit payment

The Canadian government is providing an extra $300 per child through the Canada Child Benefit (CCB) for 2019-20. This will mean approximately $550 more for the average family. This benefit will be delivered as part of the scheduled CCB payment in May.

They are also providing a one-time special payment by early May through the Goods and Services Tax credit for low- and modest-income families. The average additional benefit will be close to $400 for single individuals and close to $600 for couples.

Those who already receive the Canada Child Benefit and the GST credit do not need to re-apply.

We recommend that if you expect to receive benefits under the Goods and Services Tax credit or the Canada Child Benefit, we encourage you to not delay your 2019 return filing to ensure that your entitlements are properly determined.

Mortgage support

Canadian banks have committed to work with their customers on a case-by-case basis to find solutions to help them manage hardships caused by COVID-19. Canadians who are impacted by COVID-19 and experiencing financial hardship as a result should contact their financial institution regarding flexibility for a mortgage deferral. This allows flexibility to be available − when needed − to those who need it the most.

Contact your financial institution for further mortgage assistance.

The Canada Mortgage and Housing Corporation and other mortgage insurers offer tools to lenders that can assist homeowners who may be experiencing financial difficulty. These include payment deferral, loan re-amortization, capitalization of outstanding interest arrears and other eligible expenses, and special payment arrangements.

Canada’s mortgage insurers are committed to providing homeowners with solutions to mitigate temporary financial hardship related to COVID-19. This includes permitting lenders to defer up to six monthly mortgage payments (interest and principal) for impacted borrowers. Deferred payments are added to the outstanding principal balance and subsequently repaid throughout the life of the mortgage.

Reduced minimum withdrawals for Registered Retirement Income Funds

The government is reducing the required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020. Learn more here.

A moratorium on the repayment of Canada Student Loans

Effective March 30, there will be a six-month interest-free moratorium on the repayment of Canada Student Loans for all student loan borrowers. No payment will be required and interest will not accrue during this time. Students do not need to apply for the repayment pause. Learn more here.

A new Indigenous Community Support Fund

The Canadian government will provide $305 million for a new distinctions-based Indigenous Community Support Fund to address immediate needs in First Nations, Inuit, and Métis Nation communities. Learn more here.

Enhancing the Reaching Home Initiative

Continued support for people experiencing homelessness during the COVID-19 outbreak by providing $157.5 million to the Reaching Home initiative.

The funding could be used for a range of needs such as purchasing beds and physical barriers for social distancing and securing accommodation to reduce overcrowding in shelters. Learn more here.

Support for women’s shelters and sexual assault centres

Supporting women and children fleeing violence, by providing up to $50 million to women’s shelters and sexual assault centres to help with their capacity to manage or prevent an outbreak in their facilities.

Support to businesses

More time to pay income taxes/Extra time to file tax returns

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, 2020 and before September 1, 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. The relief will not apply to tax on investment income as this is taxed under Part IV of the Income Tax Act.

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.

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

Canada Temporary Wage Subsidy

Providing eligible small employers a temporary wage subsidy for a period of three months.

The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.

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.

Canada Emergency Wage Subsidy

This program will provide an additional subsidy to eligible employers for wages paid. Details provided to date are:

The Canada Emergency Wage Subsidy would apply at a rate of 75% of remuneration paid to a maximum benefit of up to $847 per employee, per week. The program would be in place for a 12-week period, from March 15 to June 6, 2020.
Eligible employers are those who suffer a drop in gross revenues of at least 15% in March, and 30% in April or May, when compared to the same month in 2019 or when compared to the average revenue earned in January and February 2020. Revenues do not include non-arm’s length revenues, extraordinary revenues or capital amounts.
Eligible employers would include employers of all sizes and across all sectors of the economy, with the exception of public sector entities.
For non-profit organizations and registered charities similarly affected by a loss of revenue, the revenue calculation excludes revenues form non-arm’s length persons and the choice to exclude government source revenues.
An eligible employer’s entitlement to this wage subsidy will be based entirely on the salary or wages actually paid to employees. All employers would be expected to at least make best efforts to top up salaries to 100% of the maximum wages covered.

The CEWS is expanded to include a refund of 100% for certain employer-paid contributions to where an employee is eligible for CEWS and on leave with pay. The deductions must be remitted with normal payroll remittances and a refund may be applied for afterwards.

Any benefit received under the 10% Temporary Wage Subsidy reduces the amount available under the Canada Emergency Wage Subsidy.

The full press release can be found here, our FAQ on the subject can be found here.

Temporary Changes to the Canada Summer Jobs Program

Employers will receive an increased wage subsidy, so that private and public sector employers can receive up to 100% of the minimum hourly wage for each employee. The end date for employment will be extended to February 28, 2021.

Extending the Work-Sharing program

The maximum duration of the Work-Sharing program is extended from 38 weeks to 76 weeks. The Work-Sharing program is offered to workers who agree to reduce their normal working hours because of developments beyond the control of their employers.

Canada Emergency Business Account

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. If the loan is repaid prior to December 31 2022 up to $10,000 of the loan may be forgiven.

To qualify a business must demonstrate they paid between $20,000 and $1.5 million in total payroll in 2019.

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

Establishing a Business Credit Availability Program

Establishing a Business Credit Availability Program (BCAP) to provide $40 billion of additional support largely targeted to small and medium-sized businesses, through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC).

BDC and EDC are cooperating with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism.

As a first step, businesses in need of credit support should contact their financial institution. Learn more here.

Offering a guarantee on loans

Export Development Canada is supporting businesses by offering their bank a guarantee on loans of up to $5 million to ensure that companies can access more cash immediately.

For more details, contact your financial institution.

Support for the food supply chain

Supporting producers, agribusinesses, and food processors by enabling Farm Credit Canada to lend an additional $5 billion. This will offer increased flexibility to farmers who face cashflow issues and to processors who are impacted by lost sales, helping them remain financially strong during this difficult time. Learn more here.

Providing $50 million to farmers, fish harvesters and all food production and processing employers. The program is to fund measures necessary to follow the mandatory 14-day isolation period for workers arriving from abroad. Support of up to $1,500 for each temporary worker is available.

Implementation of the Canada Emergency Commercial Rent Assistance (CECRA)

This program will be targeted to small businesses who are struggling to pay their commercial rent obligations. Loans and/or forgivable loans will be provided to commercial property owners who in turn will lower or forgo the rent due from small business for the months of April, May and June. We will provide more details as they become available

Launching an Insured Mortgage Purchase Program

The government has launched an Insured Mortgage Purchase Program, in which we will purchase up to $150 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation.

This action will provide long-term stable funding to banks and mortgage lenders, help facilitate continued lending to Canadian consumers and businesses, and add liquidity to Canada’s mortgage market.

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 ongoing information about COVID-19 as it pertains to your accounting and financial concerns.