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Canada Revenue Agency (CRA) was quick to respond to the COVID-19 pandemic in 2020. The agency offered benefits to Canadian employees, business owners, seniors, and families. They even updated existing benefits to provide more for those who need it.
The deadline for filing a tax return is April 30th after the fiscal period (Jan 1st – Dec 31st). For the 2019 tax returns, the deadline was extended to June 1st, 2020 for individuals and remained on June 15th, 2020 for self-employed. Any tax owed had to be paid by September 30th. For 2020 and following tax years, the deadline will go back to April 30th for individuals, and taxes owed will be due on the same date. Visit the CRA link for more deadline updates.
Updating existing Benefits
Canada Child Benefit (CCB)
Canada Child Benefit is a tax–free monthly payment paid to families to help with the expenses of raising a child. Since CRA has extended the deadline for filing the 2019 income tax return, they also extended the CCB payments until September 2020. Ideally, you and your spouse/common-law partner have to submit your income tax returns every year to assess your eligibility for the CCB. If you haven’t submitted one for 2019, the payments will be assessed based on your 2018 income. You still have to submit your 2019 income tax return if you wish to receive the CCB after September 2020. In the following tax years, the deadlines and payments will go back to the original schedule.
CRA offered a one-time increase in the CCB payments in May 2020 for those who received CCB in April 2020. Individuals were able to apply for up to $300 per child (max applications for two children per family). You are not required to report this income in your 2020 tax return. Parents with shared custody who share the base CCB payments will share the increased payment.
Goods and Services Tax/ Harmonized Sales Tax GST/HST credit
The Goods and Services Tax/ Harmonized Tax Credit is a tax-free quarterly payment to individuals or families with low income. Similar to the CCB extension, CRA extended the 2019 GST/HST benefits payments until September 2020 if you had filed your 2018 income tax return. You needed to file your 2019 tax return to receive payments in October 2020 and onwards.
CRA offered a one-time increase in the payment and issued it automatically to individuals who were already receiving the GST/HST credit. The increased payment depended on the income and the original benefit payments. The maximum increase was $886 for individuals and $1160 for families living married or common-law. Don’t report these benefits on your 2020 income tax return since GST/HST credits are non-taxable.
Registered Retirement Income Fund minimum withdrawals amount
RRIF is a retirement plan registered with CRA. Funds in the RRIF plan usually consists of transfers from other registered plans like RRSP. The RRIF holder has to withdraw a minimum amount from his/her RRIF plan every year depending on the holder’s age and his/her partner’s age.
The minimum withdrawals were reduced by 25% for the year 2020 as one of the COVID-19 measures to reduce the financial burdens on tax-payers. If your minimum amount was $10,000, now it is reduced to $7,500 in 2020.
Old Age Security Return of Income (OASRI)
OAS payments to non-resident seniors were temporarily extended in 2020 if their 2019 OASRI had not been assessed. CRA wanted to ensure that the most vulnerable seniors continued to receive their benefits when they needed them the most. You still needed to submit your 2019 OASRI as soon as possible and no later than October 1st, 2020 if you wanted to continue receiving your benefits after September 2020.
The Guaranteed Income Supplement (GIS) and allowance payments paid under the OAS were extended in 2020 for seniors who submitted their 2019 income tax return late. These payments will be assessed after CRA receives the 2019 tax return and any excess amount paid in 2020 will have to be reported in the 2020 income tax return as income.
COVID-19 Benefits and Services
Support for individuals
Canada Emergency Response Benefit (CERB) for Employed and self-employed: CERB is a taxable benefit of $2,000 every 4 weeks up to 28 weeks. Although CERB’s last qualifying period ended on September 26th, 2020, you still can apply retroactively if you think that you were qualified to receive the benefit. The retroactive application deadline is Dec 2nd, 2020. To qualify for the benefit, you have to fulfill all of the following conditions:
- Be a Canadian resident who is 15 years of age or older
- Earned $5,000 in employment (even if you are a student) or self-employment in the 12 months prior to your application.
- Your income in the 4 weeks’ period you apply for cannot exceed $1,000
- You have to reapply every 4 weeks
You cannot apply for CERB if you are receiving or will receive Employment Insurance (EI) for 28 weeks. Instead, you have to apply for EI for the qualifying period, and then check your eligibility for CERB after EI is fully paid to you. Both EI and CERB payments cannot exceed 28 weeks in total.
Employment Insurance and Social Development Canada have increased access to EI by reducing the required hours to qualify prior to applying to 120 hours, minimize the benefit rate to $400 per week, and paying it out for at least 26 weeks. These temporary measures took place on September 27th, 2020.
Canada Recovery Benefit (CRB): CRB is a new and improved CERB that was effective on September 27th, 2020, and has the same eligibility conditions. The benefit pays $450 per week ($500 per week before taxes) for up to 26 weeks assuming you are not eligible for EI. Since this is an ongoing taxable benefit, you will report the income you received from September 27 to December 19th, 2020 on your 2020 income tax return. Payments received after Dec 20th will be reported on the 2021 income tax return which will be filed in 2022.
Canada Recovery Sickness benefit (CRSB): CRSB is a $500 per week (up to two weeks) benefit that is paid to workers who can’t work their regular hours due to sickness or self-isolation due to COVID-19. You are eligible if you are unable to work 50% of your scheduled work as a result of self-isolating because you are sick with COVID, asked to self-isolate but not sick, or you have a health condition that puts you at risk of getting COVID. Taxes will be withheld at the source and you will receive $450 per payment. This payment has to be reported as income in your 2020 tax return.
Canada Recovery Caregiver Benefit (CRCB): CRCB is a similar benefit to CRSB that is given to those who cannot work because they have to provide care for family members and children due to daycare and school closure. You will receive $500 per weekly payment ($450 after deducting taxes) which you will report as income.
Both CRSB and CRCB serve similar needs but you cannot combine them. The benefits will be available until September 25, 2021. Report benefits received prior to Dec 26th, 2020 on your 2020 income tax return. Any income received after this date will be reported on the 2021 income tax return.
Mortgage Deferral: The federal government has made arrangements with mortgage providers to allow easier access to the Mortgage Payment Deferral program. If you have faced difficulties paying your mortgage as a result of job loss or reduced income due to COVID, you can defer your mortgage payments for up to 6 months (might be eligible for renewal). Once the deferred period is over, your payments will return to the amount paid prior to the application.
Students: Post-secondary and new graduates were able to benefit from the Canada Emergency Student Benefits (CESB). The application for CESB was closed on Sep 30th, 2020. It paid $1,250 every 4 weeks from May to August 2020 or $2,000 every 4 weeks for individuals with children under the age of 12 or disability certification on file. The benefit is taxable so you will report the income on your 2020 tax return.
New changes have been applied to the Canada Student Loans programs to accommodate more students and double the grants for full-time students to $6,000 and part-time students to $3,000. CRA provides additional support to researchers and post-doctoral fellows. The funding supports a one-semester extension between March and August 2020. It also supports holders of federal research grants. You do not claim student loans as income, however, if you went back to school, you can claim a credit for the student loan interest paid in 2020.
Disability: CRA provides a one-time tax-free payment of $600 for individuals with disabilities. You have to have a valid Disability Tax Credit Certification with CRA. You are not required to report this payment on your 2020 income tax return.
First Nation help: To support the Indigenous communities, CRA provides a new Indigenous Community Support Fund to provide essential needs and health solutions to those who live in vulnerable communities.
Essential Workers: depending on where you live, each province or territory has provided a wage top-up income benefit for essential workers to increase their minimum wage rate.
Support for Business
Most business owners are facing serious financial challenges during the pandemic. CRA provides a series of support benefits to help business owners stay open during this difficult time.
Canada Emergency Wage Subsidy (CEWS): CEWS is a new benefits program where CRA covers a portion of the employee wages. The CEWS allows you to re-hire employees and prevent further job losses. Only business owners with a payroll account who are faced with diminished revenue can apply after March 15th. You have to reapply for the benefit every 4 weeks while providing your revenue losses. There is no set deadline for when this benefit will be discontinued. The subsidy rates vary depending on the business revenue losses which is why you have to reapply every 4 weeks to renew the payments. This payment is taxable which means it is to be reported on your income tax return whether you are filing a T1 return or a T2 corporation return.
Temporarily Wage Subsidy: You can also apply for a 10% temporarily 3-month wage subsidy (TWS) to reduce the amount of payroll deductions required to be remitted from your employees’ pay to CRA. You can calculate your subsidy amount and you don’t need to apply for it. Payroll remittances made to Revenue Quebec are not eligible for TWS.
Work-Sharing (WS) program: The Government of Canada introduced new temporary measures to the WS program to support employers and workers. An extension to the duration period has been applied from 38 weeks to 76 weeks. The program will be effective from March 15th, 2020, to March 14, 2020. This plan helps employers and employees to avoid lay-offs when there is a decrease in business activities. It helps employers to retain qualified workers and avoid recruiting and training new employees and helps employees by keeping their jobs and maintain their skills.
Canada Emergency Business Account (CEBA): CEBA is a new CRA program that provides an interest–free loan of up to $40,000 to small business and non-profit organizations. The loan is to help cover the business’s operating costs to avoid closing further businesses. This loan is repayable; however, if you pay back the loan before Dec 31, 2022, up to 25% ($10,000) will be forgiven. On Oct 26, 2020, the CEBA was extended to an extra $20,000 which 50% of it is forgivable if paid before Dec 31, 2022. If you have multiple businesses (each having their own business number), you can apply for CEBA for each separately.
Rent Assistance: For business owners who are facing financial difficulties keeping up their operating costs such as commercial rent, CRA introduced Canada Emergency Commercial Rent Assistance (CECRA). The program helps to reduce the rent by at least 75% from April 2020 to September 2020. The tenant pays 25%, the property owner forgives another 25%, and the program pays the other 50%. Please note: When filing the business tax return, your rent expenses should be the actual rent paid not what your original contract stated.
Canada Emergency Rent Subsidy (CERS): CERS was introduced on Sep 27th, 2020 to replace the CECRA. The new subsidy provides support to any size of eligible businesses including charities and non-profit organizations. You can apply directly for the program without the landlord’s approval. CERS consists of two parts: the base subsidy and the lockdown support. You can get up to 65% of the eligible expenses subsidy. If you had to lockdown because your business is in a high-risk location, you can apply for an additional 25% lockdown support.
Large Employer Emergency Financing Facility (LEEFF): Large Canadian enterprises can receive emergency funding from LEEFF. This program provides financial support to Canada’s largest employers who have a significant impact on Canada’s economy.
For more information on CRA support during COVID, visit the support for business link.
Support for self-employed: self-employed taxpayers can receive the same benefits as individuals; CERB, CRB, CRSB, and CRCB. If they have a registered business number, payroll account, and a business bank account, they will be eligible to apply for CEBA and CEWS.
The government offers support and benefits for individuals who work in various other sectors such as Agriculture, fishing, culture and heritage, air transportation, tourism, energy, mining, infrastructure, and academic researches. Check the CRA’s response to provide help for these fields.
Support for organizations helping Canada: Canadians generous and like to help and support their communities. CRA realizes the need to support non-profit organizations which in return support vulnerable Canadians. Millions of dollars have been given to provide organizations with essentials, including hiring temporary helpers. Seniors and people with disabilities received the help they need as a result of this funding which allowed them to get their groceries and commute safely.
Support for provinces and territories: different response measures are given to all provinces and territories depending on the regional needs.
Quebec is providing support for individuals and business owners through the federal government. Some other incentives are provided in Quebec such as Incentive Program to Retrain Essential Workers (IPREW). The IPREW is available for people who work in essential services and earn $550 or less per week. This service is not available to self-employed individuals. The province had increased the minimum wage limit to $13.01, so it might affect workers, who with the new raise, will earn more than $550 per week. This program is not available for individuals who receive CERB, CESB, or temporary aid for workers through the federal programs.