How Will the COVID-19 Outbreak Affect your Taxes
Bates CPA’s Response – Still Working on your Taxes
To do our part in helping control the spread of the Covid-19 outbreak, we have closed our office to clients. Despite our office being closed to clients, we ARE open for business and we are working towards having everyone’s taxes completed by April 30th.
In order to meet this objective, we are asking clients to drop their income tax records to us as soon as possible. This year, instead of dropping records in the office, we ask that you drop your records in our secure drop box beside our office door or send the records electronically. The office drop box will be checked daily, including weekends during this time. For those sending electronically, we can set up a secure portal if you prefer this over email. Please contact us if you would like us to create a portal for you.
Once we have your taxes complete, we will contact you to set up a time to meet. In lieu of in person meetings at our office, we will be using telephone and video conferencing for our meetings and will discuss this with you when we have your returns complete.
Department of Finance Canada’s Response – Financial Assistance for Affected Canadians
Yesterday, the Department of Finance Canada began releasing details of their planned financial response to the economic hardship Canadians are facing as a result of the Covid-19 outbreak. This announcement included a variety of measures to help both individuals and businesses that may be affected. We have summarized the highlights of Finance Canadas announcement below, however we note that there are still a number of details to be released. In addition, many of these measures will require passage by parliament before they will take effect.
Extended Filing & Payment Deadlines
The personal tax filing deadline has been extended to June 1 for all Canadians. Despite this extension, we believe we are still in a position to complete all tax filings by April 30th. This will ensure that refunds get processed in a timely manner and next years credits get processed on time.
In addition to additional time to file your taxes, they have also given Canadians more time to pay their taxes owing. Any income taxes or instalments that become owing as of March 18, 2020 or later, may be deferred until August 31, 2020. Note this only applies to income taxes and not to HST.
Temporary Income Supports
Temporary Income Support – Individuals eligible for EI benefits
· Waive the one week waiting period for EI sickness benefits (effective March 15, 2020)
· Waive the requirement to provide a medical certificate for EI sickness benefits
Temporary Income Support – Self-employed individuals and those not eligible for EI benefits
· Introduction of a new Emergency Care Benefit
o This will provide up to $900 bi-weekly for up to 15 weeks
o Eligibility requirements are very vague at this point - no details on how to calculate your eligible bi-weekly payment amount
o No mention in the eligibility requirements of support for individuals who’ve had their businesses shutdown by the government
o Application for this benefit won’t be available until April 2020
In addition to these measures, the government has also announced enhancements to the Canada Child Benefit and GST Credit for low and modest income families.
Extended Payment Deadlines
Similar to individuals, the Canada Revenue Agency will also allow businesses to defer income tax and instalments that became owing on or after March 18, 2020 until August 31, 2020. Note that this only applies to Part I Income Tax and does not apply to HST, Payroll Remittances or certain tax on investment income. This also does not apply to balances already owing as of March 18, 2020.
Helping Businesses Keep their Workers
The government is proposing to help employers prevent workforce layoffs. In order to do this, they are proposing to provide eligible employers with a temporary wage subsidy equal to 10% of remuneration paid to a maximum of $1,375 per employee and $25,000 per employer.
At this time there doesn’t appear to be much information on what the eligibility criteria will be however it appears to be targeted at small and mid-sized employers.
Ensuring Businesses Have Access to Credit
The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) will be allowed to provide an additional $10 billion in credit targeted primarily and small and medium sized businesses. In addition, the near-term credit availability to farmers and agri-food sector will also be increased through Farm Credit Canada. Again, we will need to wait for more details and eligibility criteria on these as well.