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COVID 19 Financial Relief for Canadians

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Since the beginning of March, restrictions and measures related to COVID-19 have rapidly escalated. On March 18, 2020, the Government of Canada announced a series of measures designed to support the finances of individuals, businesses, charities, and non-profit organizations. Since then, on an almost daily basis, new possibilities have been introduced, and old ones have been adjusted. This document aims to provide a consolidated summary of support in their most current state of affairs, as of April 8, 2020.

Businesses

Payroll Support

There are generally three payroll programs available: the 10% Temporary Wage Subsidy (10% WS), the 75% Canada Emergency Wage Subsidy (75% WS), and the Employment Insurance (EI) Work-sharing Program. In general, the 75% WS is available to a wide variety of entities whose revenue has dropped by at least 30%. The 10% WS is available only to smaller businesses, but does not require a revenue decline. In cases where employers are entitled to both, amounts received under the 10% WS will reduce the amounts receivable under the 75% WS.

10% Temporary Wage Subsidy (10% WS)

A business may benefit immediately from a 10% subsidy by reducing their remittances of income tax withheld from their employees’ remuneration.

75% Canada Emergency Wage Subsidy (75% WS)

On March 27, 2020 the government announced a 75% wage subsidy program for eligible employers for up to 12 weeks, retroactive to March 15, 2020. Unlike the 10% WS, the 75% WS is not limited to smaller businesses. However, a significant reduction of revenue is generally required to be eligible. The 75% WS also differs from the 10% WS in that it will be paid in cash to the employer.

Employment Insurance Work-sharing Program

The Work-sharing Program, which provides EI benefits to workers who agree to reduce their normal working hours (from a 10% to 60% reduction) as a result of developments beyond the control of their employers, is not a new program. However, it has been broadened as a consequence of COVID-19.

Pre-crisis remuneration

Will be the average weekly remuneration paid to the employee between January 1 and March 15, excluding any seven-day periods in respect of which the employee received no remuneration (so if an employee was hired on February 1, the lack of any remuneration in January would not reduce their pre-crisis remuneration).

Employment Insurance Work-sharing Program

The Work-sharing Program, which provides EI benefits to workers who agree to reduce their normal working hours (from a 10% to 60% reduction) as a result of developments beyond the control of their employers, is not a new program. However, it has been broadened as a consequence of COVID-19.

Layoff considerations

Each of these programs assists employers to keep employees. This can be very useful in facilitating a quick restart or gearing-up of the business. Factors to consider when determining which program should be used, if any:

  • the need to have staff ready when the business is ready to re-start or gear-up;
  • the magnitude of revenue decline;
  • whether the business will be permanently closed;
  • the programs for which the employer is eligible;
  • whether there is any work available for the employee to do;
  • how much payroll needs to be reduced;
  • employment agreement conditions, restrictions, and costs of termination; and
  • staff and client morale.

Financing

On March 27, 2020, details of the Business Credit Availability Program were announced. It provides support through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). Both organizations will work with private lenders to extend credit for businesses. In many cases, financial institutions will reach out to their clients with details and the specific application process.

Deferral of tax payment and filings

Income tax.

Deadlines for payment of corporate income tax payable under Part I of the Income Tax Act that become due on or after March 18, 2020 (also including instalments) and before September 2020 are deferred to September 1, 2020. No interest will accumulate on these amounts during this period.

GST/HST

A GST/HST remittance deferral is offered which would extend until June 30, 2020 the time for:

  • Monthly filers to remit amounts collected for the February, March and April 2020 reporting periods;
  • Quarterly filers to remit amounts collected for the January 1, 2020 through March 31, 2020 reporting period; and
  • Annual filers, whose GST/HST return or instalment are due in March, April or May 2020, to remit amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.

Individuals

A number of measures have been offered to individuals based on the number of individuals in their family, employment/business status, and income levels. These can be divided into the following categories: one-time payments, tax deferrals, employment insurance sickness benefits, the Canada Emergency Response Benefit and other supports

One-time payments

Special GST Credit payment

A one-time special payment through the Goods and Services Tax Credit (GSTC) was to be made on April 9, 2020. This will double the maximum annual GSTC and result in an average payment for those benefitting by close to $400 for single individuals and close to $600 for couples. Some individuals or families whose “adjusted income” was too high to qualify for any quarterly GSTC payments will be eligible for this one-time payment. No application was required to receive the benefit.

Tax deferrals

Payment deadlines for income tax amounts that become due on or after March 18, 2020 and before September 2020 are deferred to September 1, 2020. This includes the June 15, 2020 instalment. No interest will accumulate on these amounts during this period.

Employment insurance (EI) sickness benefit

EI sickness benefits provide up to 15 weeks of income replacement and is available to eligible claimants who are unable to work because of illness, injury or quarantine. The government has enhanced access to this benefit by:

  • Waiving the one-week waiting period for new claimants who are quarantined that claim EI sickness benefits, effective March 15, 2020; and
  • Waiving the requirement to provide a medical certificate.

Note that sickness and regular EI benefits will be rolled into the Canada Emergency Response Benefit discussed below.

Canada Emergency Response Benefit (CERB)

The CERB will provide a taxable benefit for up to four months for workers who lose their income as a result of the COVID-19 pandemic but are not eligible for traditional EI. It will also cover sickness and regular EI claims made for periods commencing on or after March 15, 2020.

Amounts

These income support payments can be made for a maximum of 16 weeks. $2,000 would be provided per 4-week period. The first 4-week period goes from March 15 to April 11, 2020. The CERB is taxable although tax will not be deducted at source. It must be reported as income for the 2020 tax year. CRA has indicated an information slip will be issued

Other support

Mortgage/debt support

The government has stated that Canada’s large banks have confirmed that support will include up to a 6-month payment deferral for mortgages and the opportunity for relief on other credit products. Banks have affirmed their commitment to working with customers to provide flexible solutions, on a case-by-case basis, for managing through hardships caused by recent developments. This may include situations such as pay disruption, childcare disruption, or illness. Further, some banks have begun to offer reduced credit card interest rates.

Emergency Loan Program for Canadians Abroad

This provides the option of an emergency loan to Canadians in need of immediate financial assistance (of up to $5,000) to return home or to temporarily cover their life-sustaining needs while they work toward their return. Each application will be assessed according to their specific situation and needs. Eligible Canadians currently outside Canada and needing help to return home can contact the nearest Government of Canada office (https://travel.gc.ca/assistance/embassies-consulates), Global Affairs Canada’s 24/7 Emergency Watch and Response Centre in Ottawa at +1 613-996-8885 (collect calls are accepted where available), or email sos@international.gc.ca

Student loans

A six-month interest-free moratorium, from March 30, 2020 to September 30, 2020, has been provided on the repayment of loans under the Canada Student Act, Canada Student Financial Assistance Act, and Apprentice Loans Act for all individuals currently in the process of repaying these loans.

Minimum RRIF withdrawal

In recognition of the substantial recent value declines in the investment markets, the minimum withdrawal from a RRIF or a money purchase pension plan for 2020 (computed as a percentage of its value on January 1, 2020) has been reduced by 25%. No similar reduction is available for defined benefit individual pension plans.

Other Filings and Administration

The following summarize administrative changes aimed at easing or delaying filing obligations and other CRA related activities. A summary of filing and payment deadlines is included in Appendix 2.

EFILE signatures

In order to reduce the necessity for taxpayers and tax preparers to meet in person, CRA will recognize electronic signatures as a temporary administrative measure. This provision applies to authorization forms T183 and T183CORP

CRA audit and verification activity

On March 18, 2020, CRA stated that they will not contact any small or medium businesses to initiate any post-assessment GST/HST or income tax audits for the next four weeks. For the vast majority of businesses, CRA will temporarily suspend audit interaction with taxpayers and representatives. Interaction with taxpayers will be limited to high risk and exceptional cases, or cases of high-risk GST/HST refund claims which require some contact before they can be paid out. Other audits are temporarily suspended.

CRA collections

Collection activities on new receivables have been suspended until further notice, and flexible payment arrangements will be offered. As well, CRA has noted that, where payments or other tax obligations have been missed due to COVID-19, the usual process of requesting penalties and/or interest be waived is available. CRA has also temporarily suspended requirements to pay (RTP) sent to employers to require they withhold amounts for unpaid taxes from employees’ remuneration.

CRA objections and appeals

Any objections related to Canadians’ entitlement to benefits and credits have been identified as a critical service which will continue to be delivered. As a result, there should not be any delays associated with the processing of these objections.

CRA Call Centres

The individual and benefit CRA call centres will continue to be open from 8 a.m. to 11 p.m. Monday to Friday and 9 a.m. to 5 p.m. on Saturdays (local time). Hours will be reduced for April 10-13 due to the holidays.

Future Changes

In many situations, the legislation behind these programs have been constructed in ways that allow the government to make quick modifications to criteria, amounts and timing. Further, over the next days and weeks, the specifics on some programs will be released.

Most of the details for these initiatives will be released on one of these four government webpages

General: https://www.canada.ca/en/public-health/services/diseases/2019-novel-coronavirus-infection/canadas-reponse.html

CRA: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html

Travel: https://travel.gc.ca/assistance/emergency-info/financial-assistance/covid-19-financial-help

Employment and Social Development Canada: https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html

Thank you very much. We appreciate you and want to support you as much as possible over these challenging times.

Canada Emergency Response Benefit to Help Workers and Businesses

In the early morning hours of March 25, 2020, Bill C-13 An Act respecting certain measures in response to COVID-19was introduced, and received Royal Assent by the afternoon.

Details on a number of measures previously announced (see Canada’s COVID-19 Economic Response Plan) were disclosed.  One common theme throughout the legislation is the ability to change specific amounts and rules by updating regulations rather than law, which means the government has more flexibility in making changes as events unfold.  The key items discussed in this document include:

  • Emergency Response Benefit;
  • GST tax credit special payment;
  • Canada child benefit special payment;
  • RRIF minimum withdrawal changes; and
  • Temporary wage subsidy for employers.

Read the full publication prepared by Video Tax News.

Temporary Wage Subsidy for Employers

Canada Revenue Agency has posted on their website how the Temporary Wage Subsidy for Employers will operate over the next 3 months.

Employers will reduce their monthly source deductions remittance (subsidy is 10% of remuneration you pay between March 18, 2020 and June 20, 2020, up to $1,375 per employee to a maximum of $25,000 per employer).
Large corporations with >$15 million in taxable capital are not eligible. Not for Profit Organizations, charities and Canadian Controlled Private Corporations that have a business number for payroll and pay wages are eligible.
Frequently asked questions and details about the Temporary Wage Subsidy are found here.
If you receive the subsidy, you have to report the total amount as income in the year in which the subsidy is received.
If you did not pay salary, wages, bonuses, or other remuneration to an employee between March 18, 2020, and June 20, 2020, you cannot receive the subsidy, even if you are an eligible employer.

Understanding Mortgage Payment Deferral

Homeowners may be eligible for a mortgage payment deferral up to 6 months to help ease financial hardship. For more details, click here.

Helping Canadians with the Economic Impact of the Pandemic

A summary of important changes to tax-filing and payment deadlines is found here.

Government Programs & Resources for Business

From the Chamber of Commerce website (www.chamber.ca or click here)
Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses
Business Development Bank of Canada: Business continuity plan and templates for entrepreneurs
Business Development Bank of Canada: Support for entrepreneurs impacted by coronavirus
Coronavirus disease (COVID-19): Resources for Canadian businesses
Coronavirus disease (COVID-19): Employment and Social Development Canada
Export Development Canada: COVID-19
Work-Sharing Program: Temporary special measures
Government of Canada: Mass Gatherings Risk Assessment

The Government of Canada is taking immediate, significant and decisive action to help Canadians facing hardship as a result of the COVID-19 outbreak.

On March 18, 2020, the Prime Minister announced a new set of economic measures to help stabilize the economy during this challenging period. These measures, delivered as part of the Government of Canada’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses.

Read the details for Individuals and Businesses here.

We have put together a few of the personal tax write-offs and credits that we see missed most often, as well as a few little known tax tips. If you think you may have missed any of these in the past, your returns may be able to be amended, so let us know!

Topics include:

  • Top Missed Tax Credits
  • Tips
  • Federal Changes
  • Ontario Changes

View or Download Booklet

On March 19, 2019 the Honourable Bill Morneau, Minister of Finance, presented the 2019 Federal Budget, Investing in the Middle Class, to the House of Commons.  No changes were made to personal or corporate tax rates, nor to the inclusion rate on taxable capital gains.

Some highlights include:

A. Personal Income Tax

  • Enhancements to the first-time home buyers’ plan.
  • Introduction of the $250 per year refundable Canada Training Credit.
  • Introduction of additional types of investments that can be made in registered tax-sheltered plans.

B. Business Income Tax

  • Full immediate write-off for certain zero-emission vehicles.
  • Further protection for farmers and fishers from the rules which prevent the multiplication of the small business deduction.
  • Increased ability of private businesses with income greater than $500,000 to claim the 35% refundable Scientific Research & Experimental Development investment tax credit.

C. International Tax

  • Several amendments relating to transfer pricing, foreign affiliate dumping, and cross-border securities lending arrangements.

D. Sales and Excise Tax

  • GST/HST relief on human ova and in vitro embryos, and multidisciplinary health care services.
  • Revisions to excise duties on various cannabis products.

E. Other Tax and Business Measures

  • Introduction of the First-Time Home Buyer Incentive.
  • $5,000 rebate for the purchase of electric or hydrogen fuel cell vehicles.
  • Interest relief on student loans.
  • CRA funding for targeted compliance initiatives and service improvements.

F. Previously Announced

  • Intention to proceed with a number of previously announced measures, such as the accelerated CCA changes from the Fall Economic Statement, and expanded disclosure requirements for trusts.

G. Other Budget Expenditures

  • Various other expenditures such as investments in rural internet and EI and CPP service delivery.

Read about the past year’s personal tax changes and how they affect you and the changes made by the government of Ontario.

  • Principal Residence Exemption
  • Tax Rate Changes
  • Families With Children
  • Teacher and Early Childhood Educator School Supply Credit
  • ReFile
  • Taxation of a Professional’s Work in Progress
  • Public Transit Credit
  • Home Accessibility Tax Credit
  • Minimum Wage
  • Vacation Time
  • Personal Emergency Leave
  • OHIP+ Program

View or Download Booklet

Eliminate confusion at tax time! Be sure that everything is organized and ready for your accountant with this checklist.

Tax season is upon us, and there are a number of changes to keep in mind when you are organizing your personal information. Here is a summary of the important tax changes for the personal tax season of 2016.

The Federal Government’s 2017–18 Budget gives Canadians a taste of what they might expect over the next couple of years: attempted efficiencies, closed tax loopholes, steady deficits, and a touch of caution. Budget 2017 outlines only $200 million in net new spending, but also an increase to the deficit of more than $5 billion for 2017–18, partly due to commitments from the previous budget, reduced revenues and increased general expenses.

Download as PDF.

Should you lease or buy your car? Use this calculator to find out! It calculates your monthly payment and your total net cost to help determine the better value.