COVID-19, CRA & Revenu Québec, Tax News

Tax Deadlines & Benefits Changes: A Response to COVID-19 for Individuals & Small Business

Last updated July 27, 2020

Is the Tax Deadline Delayed for 2019 Tax Returns?

You might be wondering right now how COVID-19 is going to be affecting your taxes in terms of deadlines or deductions and credits.

Federal Tax Updates 

The CRA will not charge interest or penalties for individual and self-employed filers, among others, for their 2019 taxes, provided that your return is filed and any amounts owed are paid by September 1.

For individuals and self-employed individuals:

    • The filing deadline for individuals has been postponed to June 1, 2020; the deadline for self-employed individuals is unchanged. It remains June 15, 2020.
    • The CRA is allowing all individual tax-filers to defer their payments of any income tax amounts, that become owing on or after March 18, 2020, and before September 2020, to September 30, 2020.
    • You are encouraged to file before June 1 if you expect to receive a refund, or expect to receive benefits under the GST/HST credit or the Canada Child Benefit, so it does not delay filing of the return and determining your 2020-21 benefit.
  • For trusts:
    • With taxation year ending December 31, 2019, the filing deadline was extended to May 1, 2020
  • For businesses:
    •  The CRA is allowing all businesses to defer their payments of any income tax amounts, that become owing on or after March 18, 2020, and before September 2020, to September 30, 2020.  This relief applies to tax balances due, as well as instalments, under Part I of the Income Tax Act; no penalties or interest will accumulate on these amounts during this period.
    • There will be no initiation of post assessment GST/HST or Income Tax audits for SME businesses, for the next four weeks.

Provincial Tax Updates

Revenu Québec has instituted changes to assist individuals and business during this filing season for their provincial taxes.

  • For individuals and self-employed individuals:
    • The filing deadline for individuals has been postponed to June 1, 2020; the deadline for self-employed individuals is not noted as changed, it is currently June 15, 2020.
    • Deadline for applying balances due for the 2019 taxation year income tax returns has been postponed to September 1, 2020.  This applies to both individuals and self-employed individuals.
    • Tax installment deadlines have been moved as well; the June 15, 2020 payment is now moved to September 30, 2020.
  • For businesses:
    • Tax installment deadlines and any taxes due as of today are suspended until September 30, 2020.

Interest and Penalties

The CRA has advised that for individuals and self-employed filers, among others, that they will not be charging interest or applying penalties for any taxpayers who file and pay before the extended September 1 deadline.

Normally, the penalty for filing past the deadline is 5% of the balance owing, plus 1% for each month it is late.  It isn’t worth the extra cost to hold off. If you are unable to pay by the extended deadline, you should file by the deadline and then contact the CRA to see if they will make arrangements with you for alternate payment terms.

For this tax season, those taxes owing on your 2019 return, are deferred to September 30, 2020, but the deadline to file was June 1, 2020.

 

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What Benefits or Other Financial Support is there?

For Individuals:

Canada Emergency Response Benefit (CERB):  The newly created Canada Emergency Response Benefit (CERB), will provide a taxable benefit of $2,000 per month, for up to 4 months, to qualifying individuals; workers who lose their income as a result of the COVID-19 pandemic.  CERB is a combination of the previously announced Emergency Care Benefit and the Emergency Support Benefit.  For more details, see our blog on this new benefit and how to apply, starting April 6, 2020, click HERE.

One-Time Extra Benefit Payments: These one-time extra payments are a part of the GST/HST Tax Credit and the Canada Child Benefit.  For more details, see our blog on this new benefit, click HERE.

RRIF Withdrawal Reductions for Seniors: The minimum withdrawal amount from a RRIF (Registered Retirement Investment Fund), for 2020, will be reduced by 25% in recognition of recent declines in value and the volatile market.  For more information on this deferral, read our blog on this topic HERE.

Student Loan Repayment Moratorium: A six-month suspension of repayment of Canada Student Loans, has been placed effective March 30, 2020.  No payments are required during this time; interest will also not accrue during the moratorium.  For more information on this deferral, read our blog on this topic HERE.  According to PM Trudeau on April 8, 2020, more will be done to assist students with employee, by way of the Summer Jobs Program.  Once more details are confirmed by the CRA and MOF, you will find the information here.

For Businesses:

Canada Emergency Business Account:  The newly created Canada Emergency Business Account (CEBA), will provide capital to small businesses who need it to cover their operating costs, as a result of the COVID-19 pandemic.  This program will provide loans of up to $40,000 to small businesses and not-for-profits.  The loans will be interest-free for a period of one year, with the potential of up to $10,000 of loan forgiveness (25%), if the balance of the loan is repaid on or before December 31, 2022.  For more information on this new loan, and other financial support for SMEs, read our blog on this topic HERE.

GST/HST Remittance Deferral: GST/HST remittances are being deferred until June 30, 2020.  This applies for monthly, quarterly, and annual filers, depending upon their return or instalment dates.  For more information on this deferral, read our blog on this topic HERE.

Temporary Wage Subsidy: This is a 3-month subsidy on the payment of source remittances, for income taxes withheld from employees, to the CRA.  This subsidy is taxable income and will require accounting for it in your bookkeeping records.  For more information on this subsidy, read our blog on this topic HERE.

Canada Emergency Wage Subsidy:  The newly created Canada Emergency Wage Subsidy (CEWS), will provide financial support to businesses that have seen a 30% loss in revenue, as compared to the same time last year, and aims to assist those businesses in retaining their employees, or even re-hiring those they’ve laid off.  This program is separate from the Temporary Wage Subsidy previously created.  The benefits, eligibility, and processes differ.  This subsidy is taxable income and will require accounting for it in your bookkeeping records.  Some changes are being made to compensate for non-profits and charities and other businesses that might not otherwise qualify.  Once the CRA and MOF have announced the process for the updates, you will find the information here.  For more information on this subsidy, read our blog on this topic HERE.

We are doing our best to stay up to date with the information we are receiving from the federal government regarding benefits and credits available to individuals and businesses.  Check back for more information frequently.

 

For more details on income support and other benefits as part of the Federal Government’s Economic Response Plan for COVID-19, click here. For more details on the CRA’s September 30 extended payment date, click here. For more information about Revenue Quebec’s extended payment date, click here.

See also our COVID-19: Tax Info Centre, from our TurboTax Support team, answering many FAQs on this topic and more.

 

Additional References

https://www.canada.ca/en/revenue-agency/news/2020/07/the-canada-revenue-agency-announces-an-extension-to-the-payment-deadline-and-offers-interest-relief-on-outstanding-tax-debts-during-the-covid-19-pa.html

http://www.finances.gouv.qc.ca/documents/Bulletins/en/BULEN_2020-10-a-b.pdf