The presence of COVID-19, also known as coronavirus, in British Columbia has created significant economic pressures on individuals and businesses throughout the province. In order to limit the economic damage caused by the virus, the federal government has announced on March 18, 2020 an Economic Response Plan (the “Plan”) in which they present several economic measures that they plan to implement to protect individuals and keep businesses running. The federal government subsequently passed Bill C-13 on March 25, 2020 containing many of the measures announced in the Economic Response Plan.
In summary the tax measures include:
Measures Targeting Individuals
Most of the measures mentioned in the Plan target individuals directly. Several announcements alter the Employment Insurance (“EI”) regime upon which many Canadians may soon draw on in the near future. Most significantly, the medical certificate and the one-week waiting period for individuals to claim Employment Insurance sickness benefits will both be waived for Canadians without paid sick leave who are sick, quarantined, or forced to stay home to care for children.
For those not covered by EI, some individuals will be able to claim the Emergency Care Benefit which will provide up to $900 bi-weekly for up to 15 weeks for workers who are quarantined, sick, or a caregiver. Additionally, the government is creating the Emergency Support Benefit to provide longer term support for those who are unemployed and unable to draw upon EI in the long term.
The Plan also includes several more specifically targeted measures. For example, low-income Canadians can benefit from the expansion of the Goods and Services Tax credit. Families will see an increase in the maximum annual Canada Child Benefit payment amount by $300 per child. A new Indigenous Community Support Fund will be created. New graduates will benefit from a six-month interest-free moratorium on repayment of Canada Student Loans. And lastly, retirees will see the required minimum withdrawal from Registered Retirement Income Funds reduced by 25% for 2020.
Canada Revenue Agency Administrative Changes
Several aspects of the Plan addressed administrative changes that the Canada Revenue Agency (the “CRA”) will undertake. Of primary interest is the deferral of the tax filing date for individuals until June 1, 2020. For trusts with a December 31 year end the filing date will now be May 1, 2020, and for those with an April or May filing date, there will be an extension until June 1, 2020. No filing extension has been announced at this time for self-employed individuals or businesses.
Further, taxpayers can defer the payment of income tax amounts that become owning between March 18, 2020 and August 31, 2020 until September 1, 2020. This applies to most tax balances and installments payable during this time. Additionally, no interest or penalties will accumulate during this period, ensuring businesses can continue paying employees rather than worrying about a tax bill.
Regarding new or ongoing CRA audits, the CRA will not be initiating any audits on small or medium enterprises for four weeks and will temporarily suspend audit activity for most taxpayers in the short term.
The primary impact on taxpayers according to Jeff Glasner, Boughton Law’s Tax Dispute expert, will be longer delays to get objections assigned to CRA Appeals Officers. However, it seems likely that most audits currently being undertaken by the CRA will not be significantly delayed if their statute-barred date is approaching.
In addition to the benefits businesses can derive from the CRA’s administrative changes. The government has also announced a few economic measures to support Canadian businesses. The most important of which is the Canada Emergency Wage subsidy discussed here. In addition to that program, eligible small businesses can receive a three-month wage subsidy equal to 10% of each employee’s salary up to a maximum of $1,375 per employee and $25,000 per employer. This wage subsidy will allow eligible employers to benefit in the short term by reducing their income tax withholding remittances on their employees’ remuneration. It is important to note that this subsidy is different from the Canada Emergency Wage Subsidy and eligible employers can potentially benefit from both programs.
Conclusion
The Tax & Estates Group at Boughton Law is continuously monitoring announcements coming from the federal government and is actively advising clients on how to respond to these updates. Ensuring that you and your business are up to date and benefitting from any support measures provided by the government could make a significant difference in how effectively you can weather the current economic crisis. Do not hesitate to contact one of our lawyers if you have any questions about what actions you can take.