On March 18, 2020, the Government of Canada announced its COVID-19 Economic Response Plan. Under this plan, a commitment was made to provide roughly $27 billion in monetary support to all Canadians. A number of these commitments apply to Canadian workers, while others focus on helping Canadian businesses deal with the economic implications of the Coronavirus pandemic. To date, Québec and Saskatchewan have also announced specific COVID-19 related tax relief measures, with announcements by other provincial jurisdictions expected in the coming days.
Federal Tax Relief Initiatives
As part of the federal government’s announcements, businesses should note that the government is postponing most GST/HST audit activity and deferring the due date for the payment of income tax amounts owing
Specifically, Bill Morneau, Canada’s Minister of Finance, has outlined the following actions:
- The Canada Revenue Agency (CRA) will not require businesses to pay any income tax amounts owing under Part I of the Income Tax Act on or after March 18, 2020 through August 31, 2020, until a date to be determined;
- Interest or penalties will not accrue on income tax balances deferred as noted in the first action above;
- Most audit interactions between the CRA and taxpayers and their representatives will be suspended;
- During the next four weeks, the CRA will not contact or commence any tax-related audit activity (e.g., income tax, SR&ED and GST/HST) related to small or medium-sized businesses; and
- The services provided by CRA Liaison Officers to help small business owners understand their tax obligations, as well as filing and payment deadlines, will be made available by phone rather than in-person.
Unfortunately, the measures announced to date do not provide for any extended filing deadlines for corporate taxpayers. GST/HST and corporate income tax return due dates remain unchanged. Individuals, however, may take advantage of an extended 2019 filing deadline of June 1, 2020. Similarly, the deadline for trusts with a taxation year ending on December 31, 2019 has been deferred until May 1, 2020.
Federal government announcements have also outlined additional initiatives designed to stabilize the Canadian economy, assist businesses, and safeguard Canadians, including:
- Using the Canada Account to provide support to Canadian businesses;
- Assisting businesses in retaining their workforce, including a temporary wage subsidy for eligible small employers;
- Temporary and longer-term income support for workers;
- Mortgage default management tools;
- Ensuring credit is readily available for businesses; and
- Sustaining the liquidity of the financial market.
Additional details on the Government of Canada’s COVID-19 Economic Response Plan are outlined in a backgrounder that can be found at:
Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses
In response to challenges created by the COVID-19 pandemic, the Ministère des Finances has announced several flexibility measures, most of which are consistent with the federal relief described above. Information Bulletin 2020-3, “Postponement of the Personal Income Tax Return Filing-Due Date for the 2019 Tax Return and Other Postponement Measures,” notes that the due date for corporate tax returns will not be altered. However, the day the tax remittance is due will be postponed. To ease cashflow restrictions for affected businesses, corporate tax instalments and tax due on or after March 18, 2020 through August 31, 2020 will become due on September 1, 2020, as announced by the Ministère in Information Bulletin 2020-4, “Postponement After August 31, 2020 of the Payment of Certain Amounts Payable Pursuant to Various Tax Provisions”.
Further details on these announcements can be found at:
Flexibility Measures for Individuals and Businesses
Individuals and businesses can pay their taxes on September 1st, 2020
Saskatchewan announced that any business affected by COVID-19 that submits a provincial tax return after the due date as a result of the virus’s impact may apply for penalty and interest relief. Requests to waive interest and penalties may be submitted, electronically, on the province’s website or via email or in writing to the Ministry.
Additional information is available in Information Notice IN 2020-03, “Notice to Businesses Regarding Penalty and Interest on Late Returns Due to COVID-19”
If you have any questions about how these changes might impact your organization, please do not hesitate to contact the Ryan TaxDirect® line at 1.800.667.1600 or firstname.lastname@example.org.