On March 27, the Government of Canada announced additional support for businesses dealing with the economic impacts of COVID-19. These measures are a part of the government’s COVID-19 Economic Response Plan, which provides direct support and tax deferrals to Canadian workers and businesses to help them in these difficult times. The new tax measures announced include:
Enhanced Wage Subsidy
The wage subsidy rate will be increased to 75 per cent from the previously announced 10 per cent for qualifying businesses, for up to 3 months, retroactive to March 15, 2020. This is intended to help businesses keep and return workers to payroll. More details are expected to follow before the end of the month. These details will presumably include eligibility criteria, revised per employee and per employer limits, and the process for receiving the subsidy.
Deferral of Sales Tax Remittances and Customs Duty Payments
GST/HST Remittance Deferral
Generally, GST/HST remittances are being deferred until June 30, 2020. The Minister of National Revenue will extend until June 30, 2020 the time that:
- Monthly filers have to remit amounts collected for the February, March and April 2020 reporting periods;
- Quarterly filers have to remit amounts collected for the January 1, 2020 through March 31, 2020 reporting period; and
- Annual filers, whose GST/HST return or instalment are due in March, April or May 2020, have to remit amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.
The deadline for businesses to file GST/HST returns is unchanged. Those who are able to, should continue to file their GST/HST returns on time reporting their net tax for the reporting period to help facilitate tax compliance and administration. However, recognizing the difficult circumstances faced by businesses, the CRA won’t impose penalties where a return is filed late provided that it is filed by June 30th.
Customs Duty and Sales Tax Deferral for Importers
Deferrals will similarly be available for customs duty and sales taxes for importers. Payments deadlines for customs duties and GST on imports for statements of accounts for March, April, and May are being deferred to June 30, 2020.
New Loan Programs for Businesses
The government has introduced three new business credit availability program measures: a $25 billion Canada Emergency Business Account as well as two SME Loan and Guarantee programs – a $20 billion EDC Guarantee Program and a $20 billion BDC Co-Lending Program.
Canada Emergency Business Account
The new Canada Emergency Business Account will be implemented by eligible financial institutions in cooperation with Export Development Canada (EDC). This program will provide interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus.
This program is available to eligible small businesses and not-for-profit organizations and can be applied for by contacting their financial institution. To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000).
EDC Loan Guarantee for Small and Medium Enterprises
To support the operations of small and medium-sized enterprises (SMEs), EDC will guarantee new operating credit and cash flow term loans that financial institutions extend to SMEs, up to $6.25 million.
BDC Co-Lending Program for Small and Medium Enterprises
To provide additional liquidity support for Canadian businesses, the Co-Lending Program will bring the Business Development Bank of Canada (BDC) together with financial institutions to co-lend term loans to SMEs for their operational cash flow requirements.
Eligible businesses may obtain incremental credit amounts up to $6.25 million. BDC’s portion of this program is up to $5 million maximum per loan. Eligible financial institutions will conduct the underwriting and manage the interface with their customers.
Additional Tax Deadline Extensions
In addition to income tax and filing payment deadline extensions announced earlier, the CRA introduced additional tax deadline extensions as follows:
Administrative tax measures
Administrative income tax actions required of taxpayers by the CRA that are due after March 18, 2020, can be deferred to June 1, 2020. These administrative income tax actions include returns, elections, designations and information requests.
These measures include additional deadline extensions as follows:
- T2 Corporate Income Tax Returns – The deadline for filing of corporate income tax returns due after March 18, 2020 is extended to June 1, 2020.
- T5013 Partnership Information Returns – The deadline for filing any income tax information return due after March 18, 2020 is extended to May 1, 2020.
- Trust Information Returns – The deadline for filing any income tax information return due after March 18, 2020 is extended to May 1, 2020.
- NR4 Non-resident Information Returns – The deadline for filing an NR4 information return is extended to May 1, 2020.
- T1134 Information Returns Relating to Controlled and Not-Controlled Foreign Affiliates – The deadline for filing any income tax information return due after March 18, 2020 is extended to June 1, 2020.
These measures specifically exclude the following:
- Payroll deductions payments and all related activities
- Form T661, Scientific Research and Experimental Development (SR&ED), Form T2038(IND), Investment Tax Credit (Individuals), Form T2 Schedule 31, Investment Tax Credit – Corporations, or any prescribed forms, receipts, documents or prescribed information related to these three forms.
Extending the deadline for filing an objection
For any objection request due March 18 or later, the deadline is effectively extended until June 30, 2020.
Taxpayer relief requests
Taxpayers who are unable to file a return or make a payment by the tax-filing and payment deadlines because of COVID-19 can request the cancellation of penalty and interest charged to their account. Penalties and interest will not be charged if the new deadlines that the government has announced to tax-filing and payments are met.
More Information
For more information about deadlines, see Helping Canadians with the economic impact of the COVID-19 Pandemic. For more details about these additional measures, please see the Department of Finance Backgrounder.
Over the next days and weeks, further specifics on all programs announced will continue to be released. Most of the details for these initiatives will be released on one of these four webpages:
Canada Revenue Agency:
https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html
Travel:
https://travel.gc.ca/assistance/emergency-info/financial-assistance/covid-19-financial-help
Employment and Social Development Canada:
https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html
This article has been written in general terms to provide broad guidance only. It should not be relied upon to cover specific situations and you should not act upon the information contained herein without obtaining specific professional advice. Please contact our office to discuss this information in the context of your specific circumstances. We accept no responsibility for any loss or damage resulting from your reliance on the information in this article.
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