As was covered in the last issue, the COVID-19 pandemic has resulted in unprecedented strains on our economy and our personal financial situations. The federal government announced several programs offering targeted support for individuals, businesses and other organizations. The following outlines the updates and amendments to these programs from May 13 to July 1.
The government had extended the filing deadline for most personal tax returns from April 30 to June 1; on May 25, it announced that it will not assess late filing penalties if those returns are filed by September 1, which is also the date by which any balances due must be paid.
Extending the deadline for filing personal tax returns would normally mean delays in the 2020/21 Goods and Services Tax credit, Canada Child Benefit and Guaranteed Income Supplement (GIS) payments, which all start in July 2020 and are based on net income reported on the 2019 tax return. However, estimated payments based on 2018 reported net income will continue until the end of September 2020. If you are eligible for these benefits, file your 2019 tax returns as soon as possible to avoid an interruption in these benefits.
The previously-announced Canada Emergency Response Benefit (CERB) provides $500 per week for up to 16 weeks to eligible workers who have stopped working or whose work hours have been reduced because of COVID-19. The federal government announced in June that these payments will be extended by an additional eight weeks to August 29. The draft legislation released on June 10 included additional flexibility, e.g., for short-term loss of employment, as well as restrictions intended to encourage those receiving the benefit to seek employment.
The Canada Revenue Agency (CRA) released guidance on international tax issues raised by the crisis. For example, while residency for income tax purposes is normally a question of fact, a “sojourner” who is physically present in Canada for 183 days or more in any taxation year will be deemed resident throughout the year and is therefore taxable in Canada on their worldwide income. When an individual has remained in Canada and is unable to return to their country of residence solely because of the COVID-19 travel restrictions, the CRA will not count those days towards the 183-day limit for deemed residency. The CRA may apply similar flexibility to corporate residency issues on a case-by-case basis, and to whether a corporation is carrying on a business or has a permanent establishment in Canada.
The Canada Emergency Student Benefit (CESB) opened for applications on May 15. It provides support to students and new graduates who are not eligible for the CERB or Employment Insurance benefits, or who are unable to work due to COVID-19; from May to August 2020, the CESB will be $1,250 per month for eligible students or $2,000 per month for eligible students with dependents or a disability. Students can earn up to $1,000 during each four-week period without affecting their CESB eligibility.
Applications for the new Canada Student Service Grant (CSSG) opened on June 25 to students who choose to do national service and serve their communities. It will provide grants of between $1,000 and $5,000 based on the number of hours they serve.
Seniors and people with disabilities
Seniors who are eligible for the Old Age Security pension (OAS) will receive a one-time tax-free payment of $300 in early July; those who also receive the GIS will receive an additional $200.
Individuals who hold a valid Disability Tax Credit certificate as of June 1 will also receive a one-time tax-free payment of $600; if they also receive both the OAS and GIS, they will receive an additional $100, while those who receive only the OAS will receive $300.
The CRA has further extended the due date to September 1 for corporations to file a T2 tax return and for trusts to file a T3 tax return, which would have been due in June, July or August. The government also announced support for the new Business Resilience Network operated by the Canadian Chamber of Commerce, which provides financial planning advice and information about tax rules and government programs to small- to medium-sized businesses, not-for-profit organizations and charities.
Support to fill wage gaps
The Canada Emergency Wage Subsidy (CEWS) enables eligible employers to re-hire their employees and avoid layoffs. Since it was first announced, the program has broadened its definition of “eligible employees” and been extended from a June 6 to an August 29 end date, along with other amendments to increase access and clarify eligibility requirements.
Loans for small businesses, not-for-profit organizations and commercial property owners
The federal government provides interest-free loans of up to $40,000 for small businesses and not-for-profit organizations through the Canada Emergency Business Account (CEBA). To qualify, the organization must have had 2019 payroll expenses of between $20,000 and $1.5 million. In June, access to the CEBA was extended to businesses with payroll of less than $20,000 and eligible non-deferrable expenses of between $40,000 and $1.5 million; this makes the program accessible to sole proprietors earning business income directly and to family-owned corporations that remunerate through dividends rather than payroll.
The Canada Emergency Commercial Rent Assistance (CECRA) program provides support to commercial property owners who forgive a portion of the April, May and June rent of eligible small business tenants. Applications opened in late May. On June 30, it was announced that the CECRA would be extended for the month of July. Businesses located on federal lands, such as national parks and historical sites, will also be eligible for rent relief on terms similar to those of the CECRA.
Programs for other circumstances
The previous article identified targeted programs to meet the needs of organizations that do not qualify for other COVID-19 programs or that are considered to need more support.
- Additional support has been announced through the Women Entrepreneurship Strategy Ecosystem Fund.
- A new Emergency Processing Fund will provide funding for up to 50% (25% for larger enterprises) for eligible COVID-19 response and strategic investment expenditures incurred by small- and medium-sized enterprises in the agricultural food processing or manufacturing industries. Applications must be processed by July 31.
- Support will be also be available to fish, seafood and aquaculture processors through the Canada Seafood Stabilization Fund, and to the tourism industry through the Atlantic Canada Opportunities Agency and through Canada Economic Development for Quebec Regions.
As these programs are being updated or amended frequently, please check www.canada.ca for the most current information.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.