Canada

Tax updates in Canada in response to COVID-19

TAX ALERT  | 

This article summarizes federal and provincial tax measures amid ongoing COVID-19 concerns. The key updates since RSM’s last COVID-19 tax alert on June 3 include:

  1. The introduction of proposed Bill C-17, which provides for an expansion of the Canada Emergency Response Benefit (CERB), Canada Emergency Wage Subsidy (CEWS) and the enactment of the Time Limits and Other Periods Act
  2. The expansion of eligibility for the Canada Emergency Business Account (CEBA)
  3. Tax Court of Canada’s notice to the public and profession
  4. CRA’s national business resumption plan

These and other recent additions are highlighted within this article for easy identification. RSM continues to monitor new developments closely and will provide updates as information becomes available.

Tax filing deadlines and payment dates

A number of tax filing and payment deadlines have been extended due to COVID-19. A table of these extended deadlines can be found in Appendix A.

Federal benefits, credits and support payments for individuals and employers

The principal federal measures to help Canadians manage COVID-19 concerns are summarized below. For a complete list of the CRA updates, see the CRA’s official site.

For individuals

Updated

1. To support individuals that have lost their income due to the COVID-19 pandemic, the federal government introduced the CERB, which provides a qualifying individual with a taxable benefit of $2,000 for each four-week period. Originally, individuals were only eligible for the CERB for up to 16 weeks, however, on June 16, 2020, the Prime Minister announced that individuals will be eligible for the CERB for an additional eight weeks, for a total of 24 weeks.

In addition, the government introduced Bill C-17, an Act respecting additional COVID-19 measures. Bill C-17 had its first reading in the House of Commons on June 10, 2020, but has not progressed since and, therefore, has not yet passed. We summarize the main elements of Bill C-17 in this Tax Alert: proposed amendments to the CEWS legislation, proposed legislation related to time periods for judicial matters and other legislation, and proposed amendments related to the CERB.

As it relates to measures targeted at individuals, Part 4 of Bill C-17 proposes amendments to the CERB that, if passed, will restrict entitlement to the CERB in certain circumstances and will establish punitive measures that the government can impose against taxpayers in cases of abuse of the CERB program. In particular, if passed, it will render an individual ineligible for the CERB if the individual fails to:

  • Return to work when it is reasonable to do so and the employer makes a request for the individual’s return;
  • Resume self-employment when it is reasonable to do so; or
  • Accept a reasonable job offer when the individual is able to work.

Furthermore, if passed, it will allow the government to impose penalties in certain circumstances. If the Minister determines that the individual made false statements or provided false information to the Minister related to their CERB claim, the proposed legislation under section 12.1(2) provides for a penalty equal to three times the amount of the support payment. Alternatively, the Minister can impose punitive penalties for fraudulent claims or obstructing a CRA investigation related to the claims. In particular, anyone guilty of an offence is liable to (i) a fine of up to $5,000 plus an amount of not more than double the amount of the income support payment that was or would have been paid as a result of committing the offence; and/or (ii) fine and imprisonment for a term not more than six months.


2. To support students, the federal government has introduced the Canada Emergency Student Benefit (CESB). The CESB provides eligible high school students, post-secondary students, and Canadian students studying abroad with $1,250 a month between May and August 2020 (up to $2,000 a month for students with dependents or that have disabilities).

3. To support families, the federal government has temporarily increased the Canada Child Benefit payments and provided a one-time supplementary payment under the Goods and Services Tax (GST) credit. The Minister of National Revenue further announced that eligible Canadians who are presently receiving CCB payments or GST credits will continue to receive them, until September 2020, if eligible Canadians are not able to file their 2019 returns on time.

4. The Employment Insurance Regulations were amended to offer assistance to those placed in quarantine by health officials due to COVID-19. Key amendments are:

  • The one-week waiting period has been waived temporarily as of March 15, 2020;
  • A claimant only needs to provide a declaration that a period of quarantine was imposed under the laws of Canada or a province by a person in authority to place themselves under quarantine instead of a medical certificate to access the EI sickness benefits.

5. The Federal government is working in conjunction with the provincial and territorial governments to provide wage top-ups for essential workers. Each province or territory will determine which workers would be eligible for support, and how much support he or she will receive, but the Federal government has committed to provide up to $3 billion in support to increase the wages of low-income essential workers.

6. The Federal government has announced additional measures for Canadian seniors. The measures will include a one-time tax-free payment of $300 for seniors eligible for the Old Age Security (OAS) pension, with an additional $200 for seniors eligible for the Guaranteed Income Supplement (GIS), and extending GIS and allowance payments if their 2019 income returns have not been assessed.

Updated

7. The Federal government is providing a non-taxable one-time payment of $600 to individuals who were certificate holders of the disability tax credit on June 1, 2020. If the certificate holder is also a senior and eligible for the OAS pension, they will receive $300 under the disability tax credit and $300 under the special COVID-19 one-time OAS pension payment. If the certificate holder is also eligible for the GIS payment, they will receive $100 as the disability tax credit, and $500 from the special COVID-19 one-time OAS pension and GIS payments. Click here for more details.

 

For employers

1. The Federal government launched the Canada Emergency Business Account to assist eligible small businesses and non-profit organizations with interest-free loans of up to $40,000. Applications for loans started on April 9, 2020, and are made directly through banks and credit unions. If the loan is repaid by December 31, 2022, 25% will be forgiven, up to $10,000. If the loan is not repaid by December 31, 2022, the remaining balance will be converted to a three-year term loan at 5% interest. Originally, an entity was eligible for the CEBA if it paid between $20,000 and $1.5 million in payroll between January 1 and December 31, 2019.

Updated

The government has expanded eligibility to include owner-operated small businesses that had been ineligible for the program due to their lack of payroll, sole proprietors receiving business income directly, and family-owned corporations remunerating in the form of dividends rather than payroll. Now, an entity that paid less than $20,000 in payroll in the 2019 calendar year is eligible for the CEBA if it has all of the following:

  • A business operating account at a participating financial institution;
  • A CRA business number;
  • A 2018 or 2019 tax return; and
  • Eligible non-deferrable expenses of between $40,000 and $1.5 million (eligible non-deferrable expenses could include costs such as rent, property taxes, utilities and insurance).


2. The employment insurance work-sharing program provides employment insurance benefits to eligible employees who agree to reduce their normal working hours and share the available work while their employer recovers. This measure is an agreement between eligible employers, eligible employees and the Government of Canada. The application processing time has also been reduced to 10 days from 30 days. 

3. The Business Credit Availability Program (BCAP) has been expanded to include medium to large businesses. Under the expanded BCAP, eligible businesses can receive loans of up to $60 million per company, and guarantees of up to $80 million. The loans available to aid businesses are: (1) Loan guarantee for small and medium-sized enterprises; (2) Co-lending program for small and medium-sized enterprises; (3) BDC’s Mid-Market Financing Program; and EDC’s Mid-Market Guarantee and Financing Program.

RSM’s funding guide provides more details on these credit availability programs.

4. The Federal government introduced the COVID-19 Emergency Response Act for the 10% temporary wage subsidy for employers. Individuals (other than a trust), certain partnerships, nonprofit organizations, registered charities and certain Canadian-controlled private corporations, are eligible for the temporary wage subsidy for March 18 to June 19, 2020 period. The subsidy covers 10% of eligible remuneration for each eligible period up to a maximum of $1,375 per employee and $25,000 per employer.

Section 111 of the Income Tax Regulations provides further guidance on deemed remittance for the temporary wage subsidy, allowing employers to elect the amount of the temporary wage subsidy claimed rather than prescribing an amount to have been claimed under the temporary wage subsidy. Therefore, if an employer is applying for the CEWS, the employer can elect the amount of the temporary wage subsidy claimed to be 0% to maximize the subsidy under the CEWS.

5. The Federal government introduced the CEWS for employers. Eligible entities, such as individuals, taxable corporations, certain nonprofit organizations, registered charities, and partnerships, who satisfy the revenue decline threshold of either 15% to 30% depending on the eligibility period can apply for the CEWS. If an employer qualifies, the CEWS subsidizes up to of 75% of eligible remuneration paid to employees, up to a maximum of $847 per employee. The CEWS was originally established to operate for three 4-week periods starting on March 15 and ending on June 6, 2020.

Updated

In May, the government announced that it would extend the CEWS for another three 4-week periods from June 7 to August 29, 2020. To qualify for the first period, an eligible entity must have experienced a drop of at least 15% of qualifying revenue in March 2020 when compared to the qualifying revenue for the prior reference period, generally meaning the same period in 2019 or the average of January and February 2020. To have qualified for periods 2, 3 or 4, an eligible entity must have experienced a drop of at least 30% of qualifying revenue in April 2020 (for the second period), May (for the third period) or June (the fourth period) when compared to the prior reference period. If an eligible entity satisfied the revenue decline for any period, it is deemed to have also satisfied the revenue decline for the period immediately following. The government has not released details related to the required revenue decline threshold for periods 5 or 6. Refer to RSM’s previous Tax Alert for further details on the CEWS.

Part 1 of Bill C-17 proposes amendments to the CEWS that, if passed, would increase eligibility in for the CEWS for some entities effective retroactively to period 1 and would eliminate eligibility for some trusts effective as of period 3.The proposed amendments are as follows:

  1. Extending eligibility to entities that have employees but where another entity administers the payroll and makes remittances in respect of the entities’ employees.
  2. Deeming an amalgamated corporation to be the same corporation as each of the predecessor corporations, unless one of the main purposes of the amalgamation is to qualify for the CEWS, thereby allowing the amalgamated corporation to use the predecessor corporations’ qualifying revenue when determining if it satisfied the revenue decline threshold.
  3. Restricting eligibility for non-taxable trusts (effective period 3) unless the non-taxable trust is an eligible entity by virtue of the fact that it is a registered charity or one of the other types of eligible tax-exempt entities, or is a prescribed organization.
  4. Expanding the definition of baseline remuneration.

The CRA has released the following tools and resources to assist employers with applying for the CEWS.

  1. Information and spreadsheets to help employers calculate the subsidy amount.
  2. How to apply for the subsidy under one of three possible methods.
  3. FAQ document related to the wage subsidy.

Most recently, the CRA has released an update to the CEWS which allows taxpayers to correct previously filed CEWS applications. Find additional information on how to amend a CEWS claim.


6. The Canada Emergency Commercial Rent Assistance (CECRA) program was introduced to help commercial property owners, small businesses, non-profit organizations, and charities suffering from COVID-19. Administered by the Canada Mortgage and Housing Corporation, the CECRA provides qualifying commercial property owners with loans equal to 50% of a qualifying tenant’s monthly rent, but the loan converts into a subsidy (i.e., a forgivable loan) if the commercial property owner agrees to forgive at least 75% of the tenant’s monthly rent obligation. Under the CECRA, the federal government will pay 37.5% of the rent, the provincial government will pay 12.5% of the rent, the tenant will pay no more than 25% of the rent, and the property owner will forgo the remainder of the rent (at least 25%) for April, May and June 2020. To qualify, both the tenant and property owner must meet a host of criteria as stipulated on the CMHC website. If a property owner is eligible, applications can be submitted online to CMCH before August 31, 2020.

7. The Large Employer Emergency Financing Facility (LEEFF) was introduced to provide financing to Canada’s large employers who have been affected by COVID-19. The Canada Development Investment Corporation (CDEV), in cooperation with Innovation, Science and Economic Development Canada (ISED) and the Department of Finance, will administer the LEEFF program. Large for-profit businesses, other than those in the financial sector, and certain not-for-profit businesses who (a) have a significant impact on Canada’s economy, (b) have approximately $300 million or more in annual revenues, and (c) require a minimum loan size of $60 million, are eligible for this program.

Canada Revenue Agency communications

Call center services

The CRA has made various changes to its call center services and has provided contact options to the taxpayer. 

Outreach activities

  1. The CRA is encouraging taxpayers to use the CRA’s suite of secure digital services to interact with the CRA and providing various options to file taxes.
  2. The CRA is adapting its Outreach Program to help individuals better understand their tax obligations and is also modifying its Liaison Officer service to a telephone-based service.
  3. The CRA has made various requests regarding correspondence, filing and payment procedures. All drop boxes not located at the Canada Revenue Agency's tax centers have been closed and the drop boxes at certain limited tax centers will be monitored regularly and remain open.

Electronic signatures

For the authorization forms T183 or T183CORP, the CRA will recognize electronic signatures as having met the signature requirements of the Income Tax Act.

CRA lowering the prescribed interest rate to 1% on July 1, 2020

The CRA sets the prescribed interest rate on a quarterly basis. The prescribed rate represents the annual interest that, among other things, must be charged on non-arm's length loans in order to avoid taxable benefits (for example, when a corporation advances amounts to a shareholder or person not dealing at arm's length with a shareholder) and to avoid attribution of income and capital gains (for example, when the loan is between spouses).  As described in RSM’s previous Tax Alert, a low-interest rate environment can present certain Canadian tax opportunities.

Collections, audit, objections and appeals

Updated

National Business Resumption Plan

On June 23, 2020, the CRA released its National Business Resumption Plan (NBR). The NBR sets out which services CRA will resume in July and August, and an estimated timeline for the resumption of the remaining services between September 2020 and January 2021. Below is a list of selected services that CRA will resume in July and August. CRA’s release includes the full list of services and timelines for resumption of each service.

CRA services to be resumed in July and August:

  1. All remaining functions in the Objections Program, the Taxpayer Relief Program and CPP/EI Appeals to the Minister and to the Courts.
  2. Audit activity and criminal investigations (referred to as the Compliance Branch Programs), but only with respect to high net worth compliance programs, (2) GST/HST refund integrity programs and (3) GST/HST large business programs. Audits for the remaining CRA programs (medium businesses, small businesses, non-residents, and others) are expected to resume between September 2020 and January 2021.
  3. Collections and verifications, but only in respect of accepting incoming calls from taxpayers regarding payment arrangements. CRA anticipates that it will not start calling taxpayers for collections matters until, at the earliest, September, and will not send legal warning letters until January 2021.
  4. Trust exams and employer compliance audits related to the CEWS.

The reopening of the Tax Court

On June 17, 2020, the Tax Court released a notice to the public and profession informing that it is preparing for the reopening of several of its offices in the near future and for the resumption of in-person Court hearings in a number of cities across the country starting July 20, 2020.

On June 25, 2020, Chief Justice Rossiter conducted a webinar related to the re-opening of the Tax Court. Beginning on July 6, 2020, registrars will begin processing notice of appeals that have been received by the Court since the TCC shutdown in March. Similarly, the Court will begin rescheduling appeals based on a priority basis focusing on general procedure over informal procedure cases and those appeals that would provide refunds and credits to the taxpayers. Further, the Court will be offering fast track settlement conferences to allow the Court to focus on and expedite contentious appeals.

Under the Tax Court’s prior order, the computation of time for all procedural timetables and deadlines under the Tax Court Rules were suspended as of March 16, 2020. The Court has stated that the computation of time will recommence 60 days after the Tax Court reopens on July 6, 2020. 

 

Draft legislation for Time Limits and Other Periods

Updated

Part 2 of Bill C-17 proposes to enact the Time Limits and Other Periods Act (COVID-19), allowing CRA to suspend or extend certain time limits. Bill C-17 has only gone through a first reading in Parliament and, therefore, it not yet law. The purpose of the proposed legislation is as follows:

  1. Temporarily suspend certain time limits and temporarily authorize, in a flexible manner, the suspension or extension of other time limits in order to prevent any exceptional circumstances that may be produced by COVID-19 from making it difficult or impossible to meet those time limits; and
  2. Temporarily authorize, in a flexible manner, the extension of other periods in order to prevent any unfair or undesirable effects that may result from the expiry of those periods due to those exceptional circumstances.

Select provincial updates

Alberta
  1. Delaying the remittance of the Alberta Tourism Levy until Aug. 31, 2020.
  2. Freezing the Residential education property tax rates at 2019 rates.
  3. Deferring payment of non-residential education property tax for six months.
  4. Various measures for employers and employees to appropriately respond to public health measures and remain attached to jobs respectively.
  5. Delaying Timber dues up to six months to provide relief to forest companies.
  6. Deferring WCB premiums until early 2021 for private sector employers.
  7. Suspensions to the reporting requirements under various conservation acts.
  8. Deferring public offerings and direct purchase requests of petroleum, natural gas, and oil sands.
  9. Extensions for Petroleum and Natural Gas Agreements.
British Columbia (B.C.)
  1. BC Emergency Benefit for Workers to people who lost their income as a result of COVID-19.
  2. Emergency Relief Support Fund for children and youth with special needs and their families.
  3. Enhancing the BC Climate Action Tax Credit.
  4. Delaying the tax changes announced in Budget 2020 following until further notice.
  5. Delaying filing of Carbon Tax Return – Inventory (FIN 103) as the returns will not be processed at this time.
  6. Delaying the coming-into-force of the “significant control” reporting requirements from May 1, 2020 to October 1, 2020.
  7. School tax rates for commercial properties will be reduced by 50% for 2020.
  8. Stumpage, the fee operators pay the Province to harvest, buy or sell trees from Crown land, is being deferred for three months.
  9. Postponing Property Tax Late Payment Penalties for Businesses until November 3, 2020.
  10. BC logging tax returns due between March 18 and August 31 are now due Sept. 1, 2020.

Updated

11. Expanding COVID-19 related funding and support for the summer.

 

Manitoba
  1. Delaying until further notice the tax changes that were scheduled to be effective as July 1, 2020.
  2. Creating the Manitoba Gap Protection Program (MGPP) to advance non-interest bearing forgivable MGPP loan of $6,000 to eligible businesses.
  3. Implementing the Summer Student Recovery Plan to provide businesses with a wage subsidy for hiring students.
  4. Providing financial support to seniors through a new Seniors Economic Recovery Credit will provide every Manitoban aged 65 and older with a one-time, refundable tax credit of $200.

Updated

5. Extending the payroll tax (Health and Post Secondary Education Tax Levy) filing deadline for small to medium sized business with monthly remittances of no more than $10,000. The returns and remittances normally due monthly from April 15 to September 15 are extended to October 15, 2020.

6. Creating the Manitoba Job Restart Program to provide a financial benefit to those who return to work or stop receiving COVID related financial assistance.

 

New Brunswick (NB)
  1. 2020 New Brunswick Low-Income Seniors’ Benefit to assist low-income seniors.
  2. Emergency Bridging Fund for vulnerable post-secondary students.
  3. Government of New Brunswick Small Business Emergency Working Capital Program to provide small business owners with working capital loans. 
  4. Business Property Tax Penalty Relief Program for business property owners for the months of June and July 2020.

Newfoundland & Labrador 

Updated

1. All tax returns, with the exception of tax returns required from inter-jurisdictional carriers, falling under the purview of the Revenue Administration Act and Regulations, which would otherwise be due March 20, 2020 to July 31, 2020, are now due August 20, 2020.

2. Fuel Tax Exemption Permits that were originally set to expire on March 31, 2020 have been extended to August 31, 2020.

3. Establishment of the Essential Worker Support Program, including hours and income thresholds during the 16-week eligibility period. Employers can begin submitting applications on July 6, 2020 and will have until July 30, 2020 in which to apply.


 4. The Department of Tourism, Culture, Industry and Innovation of Newfoundland & Labrador announced additional measures to help businesses.

Northwest Territories
  1. One-time emergency allowance for income assistance recipients.
  2. Waiver of interest on all late tax returns between March 15, 2020 and June 30, 2020.
  3. Excluding ‘gifts and unearned income’ from the calculation of income until June 30, 2020. 
  4. The Department of Industry, Tourism and Investment (ITI) and Community Futures Development Corporations (CFDC) are contributing funds to allow businesses to defer loan payments and cover interest costs.
  5. Providing businesses with funding so that they are able to top up wages for low-wage workers. The temporary top up is for workers making less than $18 per hour, and for a maximum of 16 weeks between April 1 and July 31, 2020.
  6. Providing additional funding to support for Entrepreneurs and Economic Development program

Updated

7. Extension of the Northwest Territories’ Business Development and Investment Corporation for payment deferral/reduction initiative for the low-interest Working Capital Loans until March 31, 2021.

8. A proposal to increase the borrowing limit for the Northwest Territories from the current level of $1.3 billion to $1.8 billion. This is subject to Governor in Council approval.

 

Nova Scotia
  1. New programs for providing financial assistance to self-employed and laid-off workers.
  2. Worker Emergency Bridge Fund and Small Business Impact Grant for small businesses and social enterprises.
  3. Provide businesses with the COVID-19 Small Business Credit and Support Program as a temporary stream for access to credit, cash grants and support delivered through participating credit unions.
  4. Essential Health Care Workers Program which will provide a bonus of up to $2,000 after a four-month period to  full-time, part-time and casual health-care workers as well as cleaning staff.

Updated

5. The province is investing $750,000 in small businesses by giving funding to business incubators in Nova Scotia for the purpose of investing in startup activities.

 

Nunavut

Updated

1. The Government of Canada is proposing that the borrowing limit for Nunavut be increased from the current level of $650 million to $750 million, upon Governor-in-Council approval.


 2. Nunavut Essential Workers Wage Premium program with the help of the Government of Canada that will provide up to an extra $5 per hour to lower-wage essential workers for 16 weeks.

Ontario
  1. Support for Families program support their children’s learning. Applications are open and can be submitted online.
  2. Release of Ontario’s one-year economic and fiscal update entitled, “Ontario's Action Plan: Responding to COVID-19 (March 2020 Economic and Fiscal Update)”. RSM has released a Tax Alert capturing the changes introduced.
  3. Doubling the payments made through the Ontario Guaranteed Annual Income System (GAINS), beginning April 2020 for a period of six months.
  4. Increase in the Employer Tax Exemption on up to $1 million of payroll in 2020 for private-sector employers (other than registered charities) with total annual Ontario remuneration of less than $5 million.
  5. The Ontario government has suspended the tax increase scheduled for the beer and wine tax until December 31, 2020. The beer basic tax rates were scheduled to increase by an adjustment factor on June 1, 2020.

Updated

6. The government of Ontario is providing loans of up to $50,000 to Indigenous-owned small and medium sized businesses. Up to 50% of each loan will be in the form of a non-repayable grant, with no interest due on the loan portion until December 31, 2022. Businesses may use these funds to cover general expenses such as payroll, rent, utilities and taxes. 

 

Prince Edward Island (PEI)
  1. Income Support Program for individuals who lost their job or got laid-off.
  2. Special Situations Fund for individuals who are not eligible for other federal and provincial funding support.
  3. Temporary Rental Assistance Benefit for supporting renters and landlords.
  4. Emergency Income Relief Fund for the self-employed individuals.
  5. Emergency Working Capital Financing for small business.
  6. Emergency Relief Worker Assistance Program for employers to assist their employed workers who have been impacted by reduced hours at work. 
  7. Business Adaptation Program that provides up to $2,500 non-repayable contribution to help businesses, entrepreneurs, not-for-profits and nongovernmental organizations.

Quebec
  1. Incentive Program to Retain Essential Workers (IPREW) for low-income earners to make up the difference between the CERB and an eligible individual's wages.
  2. Extension of 90-day time limit to file a notice of objection to June 30, 2020.
  3. Suspension of time limit to file appeals before the Court of Québec until the health emergency is lifted.
  4. Suspension of collection actions, including lifting garnishment notices.

Updated

5. The Minister of Revenue announced that the tax legislation will be amended to attribute, in certain cases, a discretionary power to the Minister that allows him to extend the time limit for applying for tax incentives intended for businesses.

6. The Quebec government announced its Tourism Recovery Plan.


Saskatchewan
  1. Saskatchewan Small Business Emergency Payment (SSBEP) to help small and medium-sized businesses.
  2. Suspension of audit program and compliance activities for three months starting March 20, 2020.

Updated

3. Saskatchewan is expanding the wage supplement program to include more workers. To be eligible, workers will have to meet one of two sets of criteria. Workers must also have total earnings of less than $2,500 (gross) in the four-week period for which the worker has applied for the supplement. 


Many Canadian cities and municipalities are providing extensions, grace periods, or suspensions in respect of various municipal taxes including property taxes, education taxes and utility bills. More details of the measures taken by the municipal governments can be found at their respective websites.

Tax community response

Certain issues relating to the federal initiatives are yet to be addressed. Taxpayers and other stakeholders including Canadian tax and accounting organizations have raised questions and suggestions with respect to the tax aspects of the economic response to the COVID-19 pandemic, including:

Outstanding deadline issues

  1. Although payment of customs and duty taxes by importers is extended to June 30, 2020, can an importer still claim an input tax credit for the GST payable on import?
  2. If Bill C-17 is passed, will CRA extend the deadline for filing SR&ED claims?

Outstanding issues with respect to employee benefits and expenses

  1. As described in RSM’s previous Tax Alert, an employee wishing to deduct home office expenses must have a Form T2200 signed by employer. Will CRA relieve the requirement that employers issue T2200 forms for each employee that received an allowance to set up a home office?
  2. CRA has set out its administrative approach on international income tax issues raised by COVID-19 for matters such as corporate residence, carrying on business in Canada, cross border employment income and other matters. However, it is unclear whether CRA will adopt the same approach in the context of the foreign affiliate rules.

Outstanding issues with respect to the CEWS

  1. Where the same employees work for different corporations in the group (i.e. they get separate T4s from each employer), the maximum subsidy the group can claim for the employee is $847 per week, but how will the $847 per week limit be allocated between the entities within the group?
  2. The proposed legislative changes in Bill C-17, if passed, will allow an employer to be a ‘qualifying entity’ in situations where another entity (a payroll entity) administers the payroll and makes remittances in respect of the employer’s employees. However, if the payroll entity allocates the payroll cost to the employer, it appears that salaries may not be ‘eligible remuneration’ because payroll entity is reimbursed for the cost of the salaries paid. Will the government amend the legislation so that the salaries paid will be considered ‘eligible remuneration’?
  3. What are the rules related to a parent and subsidiary computing qualifying revenue on a consolidated basis if a parent acquired a subsidiary after the prior reference period but before the current reference period?
  4. Similarly, if an affiliated group elects to compute qualifying revenue on a consolidated basis, but one of the entities was not part of the affiliated group in the prior reference period, will that entity be excluded from the affiliated group for the current reference period?
  5. What are the eligibility rules for employers operating separate businesses or divisions?

Outstanding issues with respect to other government programs

  1. Canada Emergency Business Account - In an event that a business undergoes a change in ownership structure (for example, a business is rolled over from one business structure to another) prior to March 1, 2020, would payroll deduction under the rolled-over business be included in determining the eligibility of CEBA?
  2. Temporary Wage Subsidy - Where a CCPC is a member of an associated group but no annual business limit has been allocated to it in the prior year, can this allocation be amended in order for the CCPC to be eligible for the TWS program?

Appendix A

Summary of extended tax filing and payment deadlines

Taxpayer

Federal/ Province

Tax return filing deadline

Tax payment deadline

Individuals

Federal

Extended from April 30, 2020 to June 1, 2020.*

Extended from April 30, 2020 to Sept. 1, 2020.

Quebec

Extended from April 30, 2020 to June 1, 2020.*

Extended from April 30, 2020 to Sept. 1, 2020.

Self-employed individuals

Federal

Remains June 15, 2020.*

Extended from April 30, 2020 to Sept. 1, 2020.

Quebec

Remains June 15, 2020.*

Extended from April 30, 2020 to Sept. 1, 2020.

*The Canada Revenue Agency (CRA) and Revenu Quebec (RQ) have announced that they will not charge late-filing penalties or interest for the 2019 individual income tax returns if they are filed, and payments are made, prior to Sept. 1, 2020.

Corporations

Federal

Filings due March 19 to May 30, 2020, extended to June 1, 2020.

Filings due May 31 to August 31, 2020, extended to Sept. 1, 2020.

Extended to Sept. 1, 2020.

Quebec

Filings due March 19 to May 30, 2020, extended to June 1, 2020.

Filings due May 31 to August 2020, extended to Sept. 1, 2020.

Extended to Sept. 1, 2020.

Alberta Corporate Income Tax Return (AT1)

Filings due March 18 to May 30, 2020, extended to June 1, 2020.

Filings due May 31 to August 31, 2020, extended to Sept. 1, 2020.

Extended to August 31, 2020.

Partnerships

Federal

Filings due March 31, 2020, extended to May 1, 2020.

Filings due April 1 to May 30, 2020, extended to June 1, 2020.

Filings due May 31, to August 2020, extended to Sept. 1, 2020.

Not applicable.

Quebec

(TP-600-V)

Filings due March 17 to March 31, 2020, extended to May 1, 2020.

Filings due April 1 to May 30, 2020, extended to June 1, 2020.

Filings due May 31 to August 31, 2020, extended to Sept. 1, 2020.

Not applicable.

Trusts

Federal

(including the associated T3 information return)

Filings due from March 31, 2020, extended to May 1, 2020.

Filings due from March 31 to May 30, 2020, extended to June 1, 2020.

Filings due May 31 to August 31, 2020, extended to Sept. 1, 2020.

If a trust’s tax payment deadline or tax instalment deadline is between March 18, 2020 and August 31, 2020, the payment or instalment deadline is extended to Sept. 1, 2020.

 

 

Quebec

(other than specified investment flow-through trusts)

2019 tax return is extended to May 1, 2020.

Filings due March 31 to May 30, 2020, extended to June 1, 2020.

Filings due May 31 to August 2020, extended to Sept. 1, 2020.

A trust’s deadline to pay 2019 taxes and the June 15, 2020 instalment payment is extended to Sept. 1, 2020.

Charities

Federal

 

Form T3010 due between March 18, 2020 and Dec. 30, 2020, extended to Dec. 31, 2020.

Not applicable.

Quebec

(Registered Charities and Other donees Information Return)

Form TP-985.22-V due between March 17, 2020 and Dec. 30, 2020, extended to Dec. 31, 2020.

Not applicable.

Non-Resident information return

Federal

 

NR4 information return due March 31, 2020 extended to May 1, 2020.

Unchanged.

Other Returns

Federal

(Information returns, elections, designations and information requests)

Filings due between March 19, 2020 and May 30, 2020, extended to June 1, 2020.

Filings due May 31 to August 2020, extended to Sept. 1, 2020.

Penalties and interest will not be applied if information returns, elections, designations, and information requests are filed and payments are made by September 1, 2020.

Section 216(4) filings

Filing for 2019 tax year that would have been due June 30, 2020 extended to Sept. 1, 2020.

Payment for 2019 tax year that would have been due June 30, 2020 extended to Sept. 1, 2020

Section 217 filings

Filing for 2019 tax year that would have been due June 30, 2020 extended to Sept. 1, 2020.

Payment for 2019 tax year that would have been due June 30, 2020 extended to Sept. 1, 2020

Quebec

(Déclaration de revenus et de renseignements des sociétés sans but lucratif)

If a non-profit corporation’s Form CO-17.SP and the Information Return for Tax-Exempt Entities (TP-997.1-V) is due between March 17, 2020 and May 30, 2020, the deadline is extended to June 1, 2020. If the filing deadline falls between May 31 and August 31, 2020 the deadline is extended Sept. 1, 2020.

Not applicable.

Payroll remittances

Federal

No extension granted.

No extension granted.


Changes to indirect tax filing deadlines, tax payment deadlines, and other returns for federal and provincial returns 

Federal/ Province

Type of Indirect tax

Tax return filing deadline

Tax payment deadline

Federal

Goods and Services Tax/Harmon-ized Sales Tax (GST/HST)

No extension for filing GST/HST returns.

However, no late filing penalty will be imposed where a return is filed late provided it is filed by June 30, 2020.

The deadline to remit GST/HST for the amounts due from March 27, 2020 to June 29, 2020 is extended to June 30, 2020.

Customs duty and sale tax for importers

No extension.

Payment of customs duty and sales tax for importers for March, April and May 2020, will be due June 30, 2020 and any unpaid amounts will be subject to specified interest starting July 1, 2020.

Clearance certificates

Delays in processing clearance certificates (Forms TX19 and GST352). 

Not applicable.

British Columbia

Provincial Sales Tax (PST)

The deadline to file B.C. PST returns (including municipal and regional district tax) due from March 24, 2020 to Sept. 29, 2020 is extended to Sept. 30, 2020.

The deadline to remit B.C. PST (including municipal and regional district tax) for the amounts due from March 24, 2020 to Sept. 29, 2020 is extended to Sept. 30, 2020.

However, in order to be eligible to claim commission, businesses are required to either file their returns based on the original reporting period, or file these returns separately prior to Sept. 30, 2020 and make a lump-sum payment of the net tax owing by Sept. 30, 2020.

Employer Health Tax

The filing deadline for the employer health tax return for the 2019 calendar year is extended to Sept. 30, 2020.

The remittance for the employer health tax return for the 2019 calendar year is extended to Sept. 30, 2020.

Other Indirect Taxes

The deadline to file B.C. employer health tax, tobacco tax, motor fuel tax and carbon tax returns due from March 24, 2020 to Sept. 29, 2020 is extended to Sept. 30, 2020.

The deadline to remit B.C. employer health tax, tobacco tax, motor fuel tax and carbon tax for the amounts due from March 24, 2020 to Sept. 29, 2020 is extended to Sept. 30, 2020.

Manitoba

Retail Sales Tax (RST)

The deadline for monthly returns, for businesses with monthly RST remittances of no more than $10,000, due between April 20, 2020, and September 21 is extended to October 20, 2020.

No extension.

However, no penalties or interest will be imposed for businesses with monthly RST remittances of no more than $10,000 until after October 20, 2020.

Newfoundland & Labrador

International Fuel Tax Agreement return

Deadline to file International Fuel Tax Agreement returns, from inter-jurisdictional carriers, for the quarter of Jan. 1, 2020 to March 31, 2020 is extended from April 30, 2020 to June 1, 2020.

Deadline to remit International Fuel Tax Agreement, from inter-jurisdictional carriers, for the quarter of Jan. 1, 2020 to March 31, 2020 is extended from April 30, 2020 to June 1, 2020.

Other tax returns

Deadline to file Gasoline Tax, Carbon Tax, Health and Post-Secondary Education Tax, Insurance Companies Tax, Mining and Mineral Rights Tax, Tax on Insurance Premiums and Tobacco Tax returns, due during the period between March 20, 2020 and July 31, 2020, is extended to August 21, 2020.

Deadline to remit Gasoline Tax, Carbon Tax, Health and Post-Secondary Education Tax, Insurance Companies Tax, Mining and Mineral Rights Tax, Tax on Insurance Premiums and Tobacco Tax, due during the period between March 20, 2020 and July 31, 2020, is extended to August 20, 2020.

Ontario

Other tax returns

Tax filing deadlines remain unchanged.

 

Remittance deadlines remain the same. However, beginning April 1, 2020 for 5 months, penalties and interest will not apply for any missed remittance deadlines.

Quebec

Quebec Sales Tax (QST)

 

 

No extension.

However, no late filing penalty will be imposed on returns due from March 27, 2020 to June 1, 2020 if they are filed by June 30, 2020.

The deadline to remit QST for the amounts due from March 27, 2020 to June 1, 2020 is extended to June 30, 2020.

Mining Tax

Deadline for return due from June 1 to August 31, 2020 extended to Sept. 1, 2020.

 

Saskatchewan

Provincial Sales Tax

No extension granted.

However, no penalties or interest will be imposed if payment arrangements are in place by July 31, 2020.

The deadline to remit provincial sales tax (PST) is extended to July 31, 2020 for the following reporting periods, if payment arrangements are in place by July 31, 2020.

 


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