Canada

Tax updates in Canada in response to COVID-19

TAX ALERT  | 

This article summarizes the latest tax updates from the Canada Revenue Agency ("CRA") and certain provincial governmental authorities amid ongoing COVID-19 concerns. RSM Canada continues to closely monitor new developments and will provide updates as new information becomes available. 

This tax alert was originally published on March 18 and has been updated as of March 24 to reflect the most recent tax developments.

Federal updates

The principal federal measures to help Canadians manage through the COVID-19 concerns relate to:

  1. tax-filing deadlines and tax-payment deadlines
  2. electronic tax filing and electronic communication
  3. revised management of collections, audits and tax disputes
  4. support for employers, and
  5. legislative updates.

Each of these topics is briefly discussed below. For a complete list of the CRA updates, see the CRA official release.

Income tax-filing deadlines and payment deadlines

Previously, the Government stated it would postpone the income tax-payment deadlines, thereby providing tax deferrals to individuals and businesses to help meet liquidity needs. The CRA has now confirmed the new tax-payment deadlines and, in some cases, new extended deadlines to file income tax returns. Tax returns filed by the new filing deadlines will not be subject to late-filing penalties. Interest will not accrue on any tax provided that it is paid by the new payment deadlines.

Taxpayer

Tax-filing deadline and tax-payment deadline

Salaried individuals

The deadline to file a 2019 personal income tax and benefit return is extended from April 30, 2020 to June 1, 2020.

The deadline to pay any tax owing for the 2019 taxation year is extended from April 30, 2020 to Sept. 1, 2020.

Self-employed individuals

For self-employed individuals, or those who have spouses or common-law partners that are self-employed, the deadline to pay any balance due for individual income tax and benefit return has been extended from April 30, 2020, to Sept. 1, 2020.

Tax-filing deadline for self-employed individuals remains unchanged at June 15, 2020.

Corporations

Tax-filing deadlines for corporations are unchanged at six months after the taxation year-end.

If a corporation’s tax-payment deadline would be after March 18, 2020 and before Sept. 1, 2020, the tax-payment deadline is extended to Sept. 1, 2020.

Partnerships

Tax-filing deadlines for partnerships are unchanged at March 31 if all the partners are individuals, and five months after the partnership’s fiscal year-end if all partners are corporations.

Trusts

For trusts with a taxation year end of Dec. 31, 2019, the filing due date of March 31, 2020, will be deferred to May 1, 2020.

All trusts that have an upcoming income tax balance due date or an income tax instalment payment due date before Sept. 1, 2020, will have their payment due date effectively extended to Sept. 1, 2020.

Charities

If a charity’s tax-filing deadline would be between March 18, 2020 and Dec. 30, 2020, the tax-filing deadline is extended to Dec. 31, 2020.


Electronic tax filing and communication

  1. The CRA is encouraging taxpayers to use the CRA’s suite of secure digital services to interact with the CRA and easily manage their tax affairs anytime, anywhere. These services can quickly help Canadians track their refund, view or change their return, check benefit and credit payments, view Registered Retirement Savings Plan (RRSP) limits, set up or update direct deposit, and receive email notifications.
  2. The CRA is adapting its Liaison Officer service to support small businesses during COVID‑19. In particular, the Liaison Officer service is customizing information during these challenging times by ensuring small businesses are aware of any changes, such as tax-filing deadlines, tax-payment deadlines and proactive relief measures. Through this service, the CRA helps small business owners understand their tax obligations. Traditionally available in-person, this service is now available over the phone.
  3. The CRA call centres will continue to be open from 9 a.m. to 9 p.m. Monday to Friday, and 9 a.m. to 5 p.m. on Saturdays (local time). However, to comply with social distancing measures and to protect the health and safety of employees, the CRA may have fewer agents answering calls. As a result, the CRA can only answer calls regarding 2019 income tax and benefit returns, receiving benefit payments or setting up the My Account service.
  4. The CRA encourages those who need to update or access their tax information to use one of the CRA’s self-serve options, such as My Business Account or the CRA BizApp mobile web application.

Collections, audits and tax disputes

The CRA has released an official statement providing updates on its collection, audit and objection strategy amid the COVID-19 concerns. The CRA is temporarily revising how it administers collection, audit and objection matters.

Collections

The CRA will not take any collection action on new tax debts until further notice. For existing tax debts (i.e., as of March 19, 2020, flexible payment arrangements will be available).

Effective immediately and until further notice, the CRA is suspending all garnishment notices (Requirements to pay).

Penalty and interest relief may be available for a taxpayer that is prevented from paying tax when due, from filing a tax return on time or otherwise complying with a tax obligation because of circumstances beyond the taxpayer’s control (e.g., because COVID-19 has affected the taxpayer’s ability to pay or file on time). A taxpayer is required to submit Form RC4288, Request for Taxpayer Relief to make a request.

Payment arrangements are also available on a case by case basis

  1. if a taxpayer cannot pay taxes,
  2. for child and family benefit overpayments,
  3. for Canada Student Loans, or
  4. for other government program overpayments in full.

Audits

The CRA will not contact any small or medium businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks, starting March 19, 2020. However, these dates are fluid and subject to change.

For the vast majority of taxpayers, the CRA will temporarily suspend audit interaction with taxpayers and representatives.

Interaction with taxpayers will be limited to those cases where the legal deadline to reassess a tax return is approaching, and in cases of high risk GST/HST refund claims that require some contact before they can be paid out.

Objections

The CRA is holding most objections in abeyance until further notice. The only objections on which the CRA will continue to work are those related to taxpayers’ entitlement to benefits and credits.

Until further notice, the CRA will not take any collection action related to objections held in abeyance. Normally, the CRA enforces collection of GST/HST in dispute and 50% of a large corporation’s income tax in dispute.

 

In addition to the temporary measures the CRA is implementing, the Tax Court of Canada (TCC) is closed between March 16, 2020 and May 1, 2020 and, as a result, is excluding this period from the computation of time for deadlines prescribed by the TCC Rules. However, this extension only applies to appeals that have already been instituted in the TCC – it does not extend a taxpayer’s deadline to initiate an appeal to the TCC. Taxpayers can initiate an appeal in the TCC using the TCC’s online filing system.

The Federal Court of Appeal (FCA) is excluding the period March 16, 2020 to April 17, 2020 inclusive (the suspension period) in the calculation of time for filing appeals and applications. Those commencing appeals and applications under the Federal Courts Act will be governed by mandatory deadlines. However, they may seek an extension of the deadlines.

Support for employers

  1. On March 18, 2020, the government announced a temporary wage subsidy for employers for a period of three-months starting March 18, 2020. The government has now released a list of questions and answers (refer to the official release and RSM’s Economic Plan Summary) to help navigate through the technical interpretation and applicability of these measures.

  2. The CRA has suspended all garnishment of employee wages (Requirement to Pay notices). As a result, employers are not required to remit amounts to the CRA for employee tax debts and employers will not be liable for failing to remit. The following Requirements to Pay (RTP) measures are in effect:
  • Effective immediately, the CRA will not be sending any new RTPs to employers
  • For RTPs currently in place, remittances are not required, until further notice
  • The CRA also requests that employers not action any RTPs received this week

Legislative updates

  1. After intense negotiations, on March 25, 2020, the House of Commons unanimously passed the COVID-19 Emergency Response Act, the legislation aimed at implementing the measures introduced by the federal government on March 18, 2020. The bill will now go to the Senate, which is expected to pass it later in the day on March 25. A royal assent ceremony – the final step before the bill becomes law – is also expected to happen before the end of the day.

  2. The Ontario government passed emergency legislation on March 19, 2020, aimed at protecting workers forced to stay home due to the COVID-19 pandemic. The legislature will reconvene on March 25 when the Finance Minister Rod Phillips is set to deliver a scaled-back economic forecast instead of the planned full budget.

Provincial updates

Quebec updates

  • In the wake of the federal government’s announcements on March 18, 2020, the Québec government has harmonized its practices with those of the CRA and postponed the deadline for paying tax balances payable for the 2019 taxation year until Sept.1, 2020, both for individuals and corporations.
  • The Ministère des Finances du Québec announced the postponement to June 1, 2020 of the personal income tax return filing-due date for the 2019 taxation year and the postponement to May 1, 2020 of the income tax return filing-due date for certain trusts (other than specified investment flow-through trusts) for the 2019 taxation year.
  • Partnerships that had until March 31, 2020 to file the Partnership Information Return (TP-600-V) for the 2019 taxation year now have until May 1, 2020.
  • Similar to the CRA, Revenu Québec has released a webpage to provide updates on fiscal measures to help Canadians manage their tax and benefit affairs as COVID-19 evolves.
  • Revenu Québec will also adapt its own approach by limiting its audit and collection activities. With regard to collection measures, Revenu Québec will be open to extending payment agreements on a case-by-case basis. 

Alberta updates

  • Alberta businesses with corporate income tax balances owing or installment payments coming due between March 18, 2020 and Aug. 31, 2020, can defer making these payments until Aug. 31, 2020. No penalties and interest would apply provided the payments are made by the new deadline.
  • However, businesses are expected to continue to file their tax returns as required by legislation.

Manitoba updates

  • Manitoba is extending the April and May deadlines to file payroll taxes by up to two months for small and medium-sized businesses with monthly remittances of less than $10,000. 
  • Businesses will have up to two additional months to remit retail sales taxes and the Health and Post-Secondary Education Tax Levy, commonly called the payroll tax.
  • In its 2020 budget, Manitoba is reducing its provincial sales tax rate from 7 per cent to 6 per cent beginning on July 1, 2020.

Saskatchewan updates

  • Businesses directly impacted by COVID-19 that are unable to file their provincial tax return(s) by the due date may submit a request for relief from penalty and interest charges on the return(s) affected. Penalty and interest waiver requests can be submitted electronically through the Saskatchewan eTax Service (SETS) located at sets.saskatchewan.ca, by email.

  • Saskatchewan has deferred provincial sales tax (PST) remittances, audit program and compliance activities for three months starting March 20, 2020. During this time, businesses who are unable to remit their PST due to cash-flow concerns will not be charged any penalty and interest.

  • Government of Saskatchewan will be establishing a Business Response Team and single window information webpage for businesses to access information and receive timely updates on provincial support initiatives.

British Columbia (B.C.) updates

  • The B.C. government is increasing and expanding the B.C. Climate Action Tax Credit. An additional one-time payment will be made in July 2020 on top of the regular climate action tax credit payment. Eligible families of four will receive up to $564 and eligible individuals will receive up to $218 in an enhanced payment. 

  • Businesses with a payroll over $500,000 can defer their employer health tax payments until Sept. 30, 2020. Businesses with a payroll under this threshold are already exempt from the tax. 

  • B.C. is extending tax filing and payment deadlines for the PST, municipal and regional district tax, tobacco tax, motor fuel tax and carbon tax until Sept. 30, 2020.

  • The scheduled April 1 increase to the provincial carbon tax, as well as the new PST registration requirements on e-commerce and the implementation of PST on sweetened carbonated drinks, will be delayed and their timing will be reviewed by Sept. 30, 2020. 

Municipal tax updates

Vancouver, Edmonton, Toronto, Mississauga and Brampton, Ottawa, and Montreal 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.


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