On March 18, 2020, the Federal government announced a number of new measures to assist employees and business owners through the numerous closures and restrictions imposed due to COVID-19.
On Wednesday morning, the Federal government announced an extension to the personal filing deadline for 2019. Instead of April 30th, Canadians will have until June 1st to submit their personal income tax return to the CRA. In addition to the extension for filing taxes, the Federal government has extended the deadline to pay any amount owing until after August 31, 2020. This deferment applies to amounts due, as well as instalments. We recommend that all individuals who are seeing cash flow constraints file taxes as normal but defer their payment until after August 31st. Finance Minister Bill Morneau also announced that businesses will be allowed to defer corporate taxes until after August 31st, 2020. This applies to tax balances due, as well as tax instalments. No interest or penalties will accumulate on these amounts. We recommend clients facing corporate cash flow issues to take advantage of these tax-deferrals and cancel any scheduled tax instalments up to August 31st, 2020 until business operations have returned to normal.
The government also announced that small business owners will get a wage subsidy equal to 10% of their current wage allocation for a period of 3 months. This subsidy will come into force immediately and provides up to $25,000 in assistance per employer, with a maximum subsidy of $1,375 per employee. This subsidy appies to all corporations eligible for the small business deduction. According to the federal government, businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. At this point, we are hoping to find clarity on whether this is the only route to implement the subsidy, or whether there is an option to receive the subsidy through application and reimbursement. At this time, it does not appear as though the 10% subsidy will provide substantial help to many of our small business clients who are faced with dramatically reduced income and are facing layoffs.
canada child benefit
Parents will receive a $300 Canada Child Benefit (CCB) top-up per child. The CRA encourages individuals who expect to receive Canada Child Benefit not to delay the filing of their personal return to ensure their entitlements for the 2020-21 benefit year are properly determined.
benefits to self-employed individuals
For those who do not qualify for EI benefits, an “Emergency Care Benefit” was announced. This benefit will provide $900 bi-weekly to applicants for up to 15 weeks. This is meant to address those who work from home, those who fall ill, or caretakers who would otherwise not qualify for EI benefits. These benefits would be received via direct deposit and would be available without medical documentation. Finance Minister Bill Morneau indicated that this benefit would be available in early April, with applications available through online CRA MyAccount, online through My Service Canada Account, or through a dedicated toll-free number.
The Canada Mortgage and Housing Corporation (CMHC) and other mortgage insurers are going to offer tools to lenders that can assist homeowners who may be experiencing financial difficulty. These include payment deferral, loan re-amortization, capitalization of outstanding interest arrears and other eligible expenses, and special payment arrangements.
The Government, through CMHC, is providing increased flexibility for homeowners facing financial difficulties to defer mortgage payments on homeowner CMHC-insured mortgage loans. CMHC will permit lenders to allow payment deferral beginning immediately. Canada’s big six banks (RBC, TD, BMO, Scotiabank, CIBC and National Bank) have also released a joint statement that they will also allow for mortgage payment deferrals for up to six months. There has yet to be any clarification as to whether or not interest would accrue during this time. This option for deferral is set to be reviewed on a case-by-case basis and is not applicable to all homeowners. They have also announced other opportunity for relief on other credit products, but again, these would be reviewed on a case-by-case basis. If you are concerned about loan obligations, we suggest reaching out to your financial institution to see what can be done given your individual circumstance.
- Federal student loans will see a six-month deferral on all payments and interest
- For retirees, minimum RRIF withdrawals will reduce by 25% for 2020
- GST tax credit for low-income Canadians will see an increased payment amount of $400, while couples will be eligible for $600. As with recipients of CCB, we recommend those receiving GST credits to file taxes as normal.
working with tpc financial
During this time of insecurity and unknown, we strongly encourage all TPC Financial clients to reach out to their advisor to determine how these changes have impacted their specific situation. This is a difficult time, and having access to professional advice concerning your personal and business needs should help to provide clarity on what options are available. We encourage all recipients of this newsletter and any other publications that we distribute to share with friends, family, and colleagues. We have also committed to providing extended consultations to any member of the public who has questions regarding their finances. This, of course, would be 100% complementary, as we strongly believe all Canadians should have access to high-level planning during difficult times.