I trust this message finds everyone well, safe and staying in their homes while we try our best to flatten the curve. We received this helpful update from AZ Accounting Firm. I hope this may be helpful for you or someone you know.
The Government of Canada announced its COVID-19 economic response plan on March 18, 2020. The Government of Ontario’s action plan was announced on March 25, 2020. Since both programs were released there have been many changes and updates and tax policies are still changing rapidly.
As valuable clients of AZ Accounting Firm, we are doing our utmost to keep you apprised of the most current information made available.
FOR BUSINESSES
Income Tax – Extension on filing and deferral on payment
· 2019 Balance Owing – Payment of income tax becoming due between March 18, 2020 and August 31, 2020 can be deferred until August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
· Instalments – Income tax instalments due between March 18, 2020 and August 31, 2020 can be deferred until August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
· Tax filing due date – Corporate income tax filings due between March 18 to May 31, 2020 are now due June 1, 2020.
· Extension for practically all other income tax filings – Partnership returns, T3 trust returns, and NR4 returns have been extended to May 1. Practically all other income tax filings (e.g. T1135 and T1135 forms) that would normally be due between March 18 and May 31 are now due June 1. The extension does not apply to the filing of SRED returns.
· Objections – Any objections due March 18 or later have been extended until June 30, 2020.
· Audits – The Canada Revenue Agency (CRA) will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks. For the vast majority of businesses, the Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives.
· Electronic signature – The CRA will allow tax preparers to accept EFILE authorization forms signed using an electronic signature.
Canada Emergency 75% wage subsidy for qualifying small businesses, not-for-profit organizations, and charities
At this time, we are awaiting further details on the 75% wage subsidy. We will update the contents below once those details are made available. The content below is based on the announcement made April 1 by the Minister of Finance
1. 75% of wages paid starting March 15, up to a maximum of $58,700 per employee, will be eligible for the wage subsidy;
2. The wage subsidy will be limited to $847 per week per employee;
3. The subsidy will apply to all Canadian corporations, partnerships, sole proprietors, charities, and not-for-profit organizations (“employers”);
4. The employer must experience at least a 30% decrease in revenue relative to the same month in 2019 (i.e. revenue in March, April, or May);
5. Will be in place for a 12-week period from March 15 to June 6, 2020;
6. Employer must apply (or confirm eligibility) each month through CRA’s website;
7. Employers will be able to apply through CRA’s website and are strongly recommended to register for direct deposit;
8. Employers will need to attest to make their best effort to pay employees the 25% balance but it is not required if they are unable to do so;
9. Funds are expected to start being paid to employers in 6 weeks; and
10. There will be strong penalties for anyone attempting to defraud system.
10% wage subsidy for qualifying small businesses, not-for-profit organizations and charities
Based on the information currently available, you will not receive the 10% subsidy if you qualify for the 75% subsidy. For businesses that do not qualify for the 75% subsidy, they may still qualify for the 10% subsidy.
This is a temporary three-month wage subsidy that applies to employers who are:
- Canadian controlled private corporations* (CCPCs)
- Individuals (other than trusts)
- Registered charities
- Partnerships where all partners are one or more of the above
- Non-profit organizations.
Details of the Subsidy
· The subsidy is equal to 10% of remuneration paid during the period of March 18 to June 19, 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. Businesses cannot reduce the remittance of Canada Pension Plan (CPP) or Employment Insurance (EI) premiums.
· Associated CCPCs are not required to share the $25,000 maximum subsidy per employer (I.e. each associated company that is a CCPC* can claim the maximum $25,000 subsidy).
· Note: The taxable capital, calculated on an associated group basis, of a CCPC in the prior year must be below $15 million to qualify for the wage subsidy.
· More information available as of March 20 is here: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
GST/HST – Deferral on remittance
· Due date to file GST/HST returns has not been extended.
· Due date for the remittance of GST/HST for the following periods has been extended to June 30 (without incurring interest or penalties) for
o Monthly filers – Remittance for amounts collected for the February, March and April 2020 reporting periods;
o Quarterly filers – Remittance for amounts collected for the January 1, 2020 through March 31, 2020 reporting period; and
o Annual filers – 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.
Ontario Employer Health Tax (EHT) and WSIB – Deferral on remittance
· Increased EHT exemption – The Employer Health Tax (EHT) exemption has increased from $490,000 to $1 million for 2020. The increase is retroactive to January 1, 2020. The exemption will return to its current level of $490,000 on January 1, 2021.
· Deferral for payment of most provincially administered taxes – Beginning April 1, 2020, the Ontario government is providing a five-month interest and penalty-free period for businesses to make payments for the majority of provincially administered taxes including the Employer Health Tax (EHT), Tobacco Tax, and Gas Tax.
· WSIB – Can defer reporting and remittance of Workplace Safety and Insurance Board (WSIB) premiums, starting in March 2020, until August 31, 2020. More details here: https://www.wsib.ca/en/financialrelief
Payroll remittance – No deferral
· No deferral on the remittance of payroll. Must still be filed on time or face penalties.
Canada Emergency Business Account – $40,000 loan
· Interest-free loans of up to $40,000 to small businesses and non-profit organizations to help cover operating costs during a period where revenue has been temporarily reduced.
· 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).
· Small businesses and NPOs need to contact their financial institution to apply for these loans.
EI Work Sharing Program
· Program to reduce hours of a group of employees and share available work amongst them
· Employees receive EI (up to certain limits) for the hours they aren’t working
· Need to apply 10 days in advance of it taking effect
See more details on the EI working sharing program, click https://www.canada.ca/en/employment-social-development/services/work-sharing.html
FOR INDIVIDUALS
Income Tax
· Tax Filing due date – 2019 Personal income tax returns due June 1, 2020 for individuals without self-employment income. Returns are due June 15, 2020 for individuals with self-employment income.
· 2019 Balance Owing – Payment of income tax becoming due between March 18, 2020 and August 31, 2020 (i.e. balance owing on 2019 return) can be deferred until August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
· Instalments – Income tax instalments due between March 18, 2020 and August 31, 2020 can be deferred until August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
· Electronic signature – The CRA will allow tax preparers to accept EFILE authorization forms signed using an electronic signature.
Canada Emergency Response Benefit (CERB) – Temporary Income Support for Workers, Parents, and Self-employed persons
The CERB is a taxable benefit of $2,000 per month for persons that can’t earn income due to COVID-19 and, generally speaking, would not qualify for EI. The following provides a high-level summary.
Eligibility:
· Ceased working, whether employed or self-employed, for reasons related to COVID-19;
· 15 or older;
· Haven’t earned (or expect to not earn) employment income, self-employment income, or maternity benefits or EI benefits for at least 14 consecutive days; and
· Earned at least $5,000 of employment or self-employed income in 2019 or in the 12-month period prior to applying for the CERB.
NOTE: It does not apply if someone quits their employment voluntarily.
Income support for low-and-modest income families
· GST Credit – One-time special payment by early May 2020 through the GST credit. The payment will be double the maximum annual GST credit payment amounts for the 2019-20 benefit year. The average boost to income for those benefitting from this measure will be close to $400 for single individuals and close to $600 for couples.
· Canada Child Benefit (CCB) – Increase the maximum annual CCB payment amounts, only for the 2019-20 benefit year, by $300 per child. The overall increase for families receiving CCB will be approximately $550 on average; these families will receive an extra $300 per child as part of their May payment.
Other assistance
· Student Loans – Placing a six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans. The Ontario government has announced similar changes for OSAP loans.
· RRIF withdrawals – Reducing required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020, in recognition of volatile market conditions and their impact on many seniors’ retirement savings.
Assistance from Financial Institutions
· Banks in Canada have confirmed to Minister of Finance their commitment to working with customers to provide flexible solutions, on a case-by-case basis, for managing through hardships caused by recent developments.
· Canada’s large banks have confirmed that this support will include up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit products.
NPOs and CHARITIES (Not-for-Profit Organizations)
Tax filing extensions
· T3010 Charity returns otherwise due between March 18 and December 31 are now due December 31, 2020.
· T2 tax returns that were otherwise due between March 18 and May 31 are now due June 1.
Wage subsidy – NPOs and Charities – see details under Business
Canada Emergency Business Account – NPO only – see details under Business
TRUSTS
Income Tax for Trusts with December 31, 2019 year-end
· Tax Filing due date – May 1, 2019
· Balance Owing – Payment of income tax becoming due between March 18, 2020 and August 31, 2020 (i.e. balance owing on 2019 return) can be deferred until August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
· Instalments – Income tax instalments due between March 18, 2020 and August 31, 2020 can be deferred until August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
Trusts without a December 31, 2019 year-end
· Tax filing due date – For returns that would have been due between March 18 and April 30, the return will now be due May 1, 2020.
· Balance Owing – Payment of income tax becoming due between March 18, 2020 and August 31, 2020 (i.e. balance owing on 2019 return) can be deferred until August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
· Instalments – Income tax instalments due between March 18, 2020 and August 31, 2020 can be deferred until August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
Stay safe!
Karen
