Corporate Income Tax, Personal Income Tax, Small Business

Canada’s COVID-19 Economic Response Plan

The federal Government has now released Canada’s COVID-19 Economic response plan. These items are still very new, so we are developing our understanding as they are released, but if you have any questions please reach out to us.

Below are the highlights from the plan that we see:

Taxpayers

  • Individuals: The April 30 deadline has been extended until June 1, 2020 (we are encouraged to file on the normal timeline though because of credits and benefits like the GST Credit and Canada Child Benefit (discussed more below) that depend on the tax return for calculations
  • Businesses: Changes to income tax payments (as below), but no mention of changes to filing deadlines or GST payments or filing deadlines sadly
  • Taxes Due: Income tax amounts, including instalment payments, that become owing on after March 18, 2020 and before September 2020 (i.e. August 31) will be allowed to defer payment until August 31, 2020 without interest or penalty.

Businesses

  • Businesses eligible for the small business deduction will be eligible for a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. 
  • The Business Development Bank of Canada (BDC) and Export Development Canada (EDC), through the Business Credit Availability Program (BCAP) will provide $10 billion of additional support for individual businesses, including in sectors such as oil and gas, air transportation and tourism. 
  • Credit available to farmers and the agri-food sector will also be increased through Farm Credit Canada.

Income Support for Workers and Parents

  • Waiving the one-week waiting period for those individuals in imposed quarantine that claim Employment Insurance (EI) sickness benefits. This temporary measure is in effect as of March 15, 2020.
  • Emergency Care Benefit providing up to $900 bi-weekly, for up to 15 weeks. To provide support to:
    • Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits.
    • Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, such as an elderly parent
    • Parents with children who require care or supervision due to school closures, and are unable to earn employment income, 

                     All apply irrespective of whether they qualify for EI or not.

Application for the Benefit will be available in April 2020, and require Canadians to attest that they meet the eligibility requirements. They will need to re-attest every two weeks to reconfirm their eligibility. Canadians will select one of three channels to apply for the Benefit:

  1. by accessing it on their CRA MyAccount secure portal;
  2. by accessing it from their secure My Service Canada Account; or
  3. by calling a toll free number equipped with an automated application process.
  • Introducing an Emergency Support Benefit delivered through the CRA to provide up to $5.0 billion in support to workers who are not eligible for EI and who are facing unemployment.
  • Implementing the EI Work Sharing Program, which provides EI benefits to workers who agree to reduce their normal working hour as a result of developments beyond the control of their employers, by extending the eligibility of such agreements to 76 weeks, easing eligibility requirements, and streamlining the application process.

Income support for low to moderate income families

  • One time doubling of the GST Credit to be made in May 2020 (boosting the credit by $400 for single individuals and $600 for couples)
  • Increase the 2019 – 2020 Canada Child Benefit maximum by $300 per child (note the maximum gets ground down depending on income level)
  • Required RRIF withdrawals will be reduced by 25% for 2020 due to the volatile market
  • The Reaching Home initiative will receive $157.5 million to support the homeless
  • Women and children fleeing violence will receive up to $50 million through shelters and sexual assault centres

Mortgages and Banking

  • Banks in Canada will work with customers to provide solutions for managing through hardships caused by pay disruption, childcare disruption, or illness. Canada’s large banks have confirmed that this support will include up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit products.
  • CMHC will permit lenders to allow payment deferral beginning immediately.
  • Under the Insured Mortgage Purchase Program (IMPP), the government will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC). 

 
Best regards,
Andrew de Verteuil, CPA, CGA
de Verteuil & Company Inc.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s