27 March 2020
Federal and BC provincial tax measures for economic relief during COVID-19
Both the federal and provincial governments have introduced various new measures to provide economic relief to Canadians during the COVID-19 pandemic.
Following is a summary of the key support measures for business as of March 27, 2020.
1. Temporary Wage Subsidy
A new temporary wage subsidy for eligible employers for a three-month period, effective March 15, 2020. The subsidy is equivalent to 75% of the remuneration paid during that period. Eligible employers include certain Canadian-controlled private corporations (CCPCs), as well as non-profit organizations and registered charities.
This amount is paid by a set-off of income tax amounts owing to CRA by the employer and the employer will essentially reduce its remittances to the CRA. We are awaiting additional details to be announced; this post will be updated once this information is available.
2. Income Tax Deferral
Income tax payments that are owing either on or after March 18, 2020 and before September 1, 2020, are deferred without interest or penalties to September 1, 2020. This extension applies to corporations, individuals and trusts. It also only applies to amounts that are payable under Part I of the Income Tax Act. Consequently, it will NOT apply to amounts owing prior to March 18, 2020, or amounts owing under other Parts of the Income Tax Act, like Part IV tax, Part VI.1 tax and Part XIII withholding tax.
3. Personal Income Tax Return Extension
Individual income tax return filing deadline is now extended to June 1, 2020. The tax return filing deadline for Trusts with December 31, 2019 deadlines are extended to May 1, 2020. The self-employment tax-filing deadline will NOT be extended and will remain June 15, 2020.
4. GST Remittance Deferral
GST remittances have been deferred to June 30, 2020. GST filings are still due as originally scheduled. For example, March 31, 2020 filing is still due for filing on March 25, 2020, but payments may be deferred until June 30, 2020.
5. Customs Duty & Sales Tax Deferral
Payment deadlines for statements of accounts, due and payable under the Customs Act, for March, April, and May are deferred to June 30, 2020.
6. Canada Emergency Business Account
A new interest-free loan of up to $40,000 to small businesses and not-for-profits. Organizations will need to demonstrate they had a total payroll between $50,000 to $1 million in 2019 to qualify. If this loan is repaid on or before December 31, 2022, 25% of the loan, or up to $10,000, will be forgiven.
7. CRA Audit Suspensions
The CRA has indicated that it will temporarily suspend audits for the next four weeks.
8. Electronic Signatures
The CRA will recognize electronic signatures for authorization forms T183 and T183Corp. This will eliminate the need to physically meet with your accountant to file your taxes electronically.
9. Business Credit Availability Program
The Business Development Bank of Canada and Export Development Canada will be able to provide loans to qualifying businesses at market rates.
10. Bank of Canada
The interest rate has been cut to 0.75% by the Bank of Canada. The US Federal Reserve has cut its interest rate to 0.00%.
Provincial BC Government
1. Provincial tax filing extensions
Provincial Sales Tax (PST), employer health tax, motor fuel tax, carbon tax, tobacco tax, and municipal & regional district tax payments are all deferred until September 30, 2020.
2. School Property Tax reduction
School property taxes will be reduced by 50% for the 2020 tax year.
3. Budget 2020 commencement delayed
The carbon tax increase, set for April 1, 2020, will be delayed as will the PST application to sweetened carbonated beverages and the PST registration requirements for e-commerce business.
4. ICBC Deferrals
Monthly automatic payments can be deferred up to 90 days’ penalty-free
5. BC Hydro Payment Deferrals
Customers will be able to defer payments or arrange for a flexible payment plan.
In addition to the above, there is a wide range of measures aimed at individuals including, but not limited to, a new $2,000 a month tax benefit for four months under the Canada Emergency Response Benefit, student loan repayment extension for both the Canada student loan and BC student loan programs, special GST, the Canada Child benefit and BC climate action tax credits for qualified families, and reducing the required minimum withdrawals from Registered Retirement Income Funds by 25%. For a comprehensive overview of government supports available during this time, consult this table.
For more information, please contact our Business Law Group.
Learn more at our COVID-19 Resource Centre.
Ravi Patel is an Associate in our Business Law Group.