Taking Care of Business: 2020 Tax Updates

As you can imagine, we’re getting a lot of emails about heart-breaking things today like closures, layoffs and ROE’s. We can only imagine how hard that is to do with all the sweat and late nights it took to get your business to where it is today. Every crisis will pass and so will this one. We’ll be sending a step by step layoff plan today or tomorrow, and a guest post by an employment lawyer so stay tuned for that. For today, here’s a summary of the tax money stuff: I wanted to put together some information that may help you and your business try to navigate this difficult economic time. I did my best to keep this short, but I wanted to make sure you are informed of the many changes that have taken place recently that may help you visualize business going forward.

TAX STUFF I was in the process of compiling a highlight reel of all the tax updates today, but this one from my accountant landed in my inbox so I’ll just send that off so as not to duplicate efforts and bring me back to my inbox and meetings to move corporate and real estate things forward. Credit to Faizal Valli from Encompass CPA’s for this great summary! Yesterday, the Department of Finance released their Economic Response Plan relating to the COVID-19 pandemic.  Several measures have been introduced to help individuals and businesses; below is a summary.  We encourage you to visit the Department of Finance website for details (https://www.canada.ca/en/department-finance/economic-response-plan.html).

Filing Deadlines Individuals:

  • The personal tax return filing deadline has been extended from April 30 to June 1, 2020.  Individuals are still encouraged to file as early as possible, to obtain the GST Credit and Canada Child Benefit.
  • It appears there is no extension for self-employed individuals, whose personal tax filing deadline is June 15, 2020.

Corporations:

  • It appears there is no extension for corporation tax return filing deadlines.  As you know, a corporation must file its corporate tax return within 6 months after fiscal year-end (e.g. June 30, 2020 for December 31, 2019 fiscal year-ends).

Trusts:

  • The Trust tax return filing deadline has been extended from March 31 to May 1, 2020 – for Trusts with a December 31, 2019 year-end (which includes Family Trusts).
  • For Trusts with year-ends before December 31, 2019, it appears there is no extension. TAX PAYMENT DEADLINES ALL taxpayers (individuals, corporations or otherwise) can defer, until after August 31, 2020, payment of income tax amounts that became owing on or after today and before September 2020. See examples below:
  • E.g. #1 for self-employed or employed individuals who owe income tax by April 30, 2020, there will be a deferral until after August 31, 2020.
  • E.g. #2 for corporations with December 31, 2019 year-ends which owe income tax by March 31, 2020, there will be a deferral until after August 31, 2020.
  • E.g. #3 for corporations with a June 30, 2020 year-ends which owe income tax by September 30, 2020, there will be no deferral and income tax will be due September 30, 2020.

It appears there is NO extension for:

  • Corporations with November 30, 2019 or prior year-ends, who would have to pay corporate income tax within 3 months after fiscal year-end.
  • GST payments payable by individuals, corporations or otherwise.

For income tax payments deferred, no interest or penalties will accumulate on these amounts during this period.  SUPPORT THROUGH EI Introduction of a new Emergency Care Benefit of up to $900 bi-weekly ($450 per week) for up to 15 weeks (administered through CRA), for support to:

  • Workers, including self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits.
  • Workers, including self-employed, who are taking care of family members who are sick with COVID-19, but do not qualify for EI sickness benefits.
  • Parents with children who require care or supervision due to school closures, and are unable to earn income, irrespective of EI qualification.

The benefit will be available April 2020, and will require individuals to attest that they meet eligibility requirements, and re-attest every two weeks.  Application is through:

  • CRA My Account secure portal. If you don’t have CRA My Account, we encourage you to register as soon as possible.
  • My Service Canada Account.
  • By phone (toll free number to be provided).
  • Introduction of Emergency Support Benefit delivered through the CRA to provide support to workers who are not eligible for EI and who are facing unemployment.  Further details will likely be provided by the Department of Finance.
  • Extending the EI Work Sharing Program.

Also, those who may be able to avoid layoffs during this time while experiencing a downtown may consider the temporary special measures to the Work-Sharing program that extend the maximum duration of the Work-Sharing agreements from 38 weeks to 76 weeks across Canada for those businesses affected by the downturn in business due to COVID-19. SUPPORT THROUGH GST CREDIT AND CANADA CHILD BENEFIT (CCB) For individuals who receive the GST Credit, there will be a one-time special payment in early May 2020, which will be equal to the individual’s maximum annual payment for the 2019-2020 benefit year (the GST Credit is tax-free).  Currently, the maximum annual amount for the 2019-2020 year is $443 for single individuals and $580 for married/common-law individuals:

  • Eg. for an individual receiving the maximum annual benefit of $443 (i.e. $110.75 every three months), they will receive a one-time special payment of $443.

For families receiving the CCB, there will be an increase of $300 per child for the 2019-2020 benefit year.  The extra amount will be paid out in May 2020. That’s if for this hour, folks. Sorry for the information-overload. Take what you need and let the rest pass over you. There will be more details to come but sounds like financial relief will be available in about two to three weeks. Chat soon, Elizabeth