COVID-19 Government Tax Relief and Other Measures

Current as of April 15, 2020. Please note that the Federal Government is announcing enhancements to their relief measures on a regular basis.

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Current as of April 15, 2020. Please note that the Federal Government is announcing enhancements to their relief measures on a regular basis. This Special Report highlights the key Federal Government announcements, as well as IG Wealth Management mortgage and banking measures that will be of interest to our clients. 

Tax Relief – Extension of Tax Filing Deadlines and Tax Payment Due Dates

Tax filing deadlines have been extended for individuals and trusts (with December 31st year-ends or with filing deadlines in April or May). As well, deadlines for the payment of taxes, including installments, have been extended for individuals, trusts and corporations, with no interest or penalties accumulating on these amounts during the extension period. The extension on payments does not apply to payroll remittances. 

INDIVIDUALS

  • The deadline for filing 2019 personal income tax returns is postponed to June 1, 2020. However, the Canada Revenue Agency (CRA) encourages individuals who expect to receive benefits under the GST Credit or the Canada Child Benefit not to delay the filing of their tax return to ensure their entitlements for the 2020-21 benefit year are properly determined.
  • The filing date for self-employed individuals and their spouses or common-law partners remains unchanged as June 15, 2020
  • For all individuals, including the self-employed, the deadline for paying taxes that become owing on or after March 18, 2020 and before September 2020 is deferred until September 1, 2020. This includes taxes owing for the 2019 taxation year and installment payments for 2020. 

TRUSTS

  • The deadline for filing 2019 trust tax returns is deferred until May 1, 2020 for trusts with December 31st year-ends. The deadline for filing 2019 trust tax returns that would have had a filing due date in April or May has been deferred to June 1, 2020.
  • The payment of taxes, including installments, that become owing on or after March 18, 2020 and before September 2020 is deferred until September 1, 2020. CORPORATIONS
  • The deadline for paying Part I income taxes that become owing on or after March 18, 2020 and before September 2020 is deferred until September 1, 2020. This relief applies to tax balances due as well as instalments. 2 • Corporate returns with a filing due date after March 18 and before June 1, 2020 are now due on June 1, 2020. Other corporate tax returns remain due 6 months after-year end

ELECTRONIC FILING AND ELECTRONIC SIGNATURES

Individuals and corporations are encouraged to e-file their tax returns if they expect a refund. As a temporary administrative measure, electronic signatures will be accepted to authorize electronic filing.

QUEBEC TAX FILERS

The Quebec government has announced similar tax filing and payment deadline extensions for individuals, trusts and businesses.

ALBERTA TAX FILERS

Alberta corporate tax returns with a filing due date after March 18 and before June 1, 2020 are now due on June 1, 2020. Other corporate tax returns remain due 6 months after-year end. Corporate income tax balances and instalment payments coming due between March 18, 2020 and August 31, 2020 are deferred until August 31, 2020. Provinces other than Alberta and Quebec do not have separate corporate tax returns and thus will have the same deferral as provided under the Federal extension.

For more information on income tax return deadlines and payment dates, click here to visit the CRA website. 

GOODS AND SERVICES TAX (GST), HARMONIZED SALES TAX (HST), IMPORT DUTIES AND SALES TAX ON IMPORTS

On March 27, the Government of Canada announced that payments by businesses of GST, HST, import duties and sales taxes on imports will be deferred until June 30, 2020. For more information click here.

Measures Impacting Individuals 25%

REDUCTION IN RRIF MINIMUM PAYMENTS FOR 2020

The required minimum withdrawals from RRIFs are reduced by 25% for 2020, recognizing that recent volatile market conditions impact many seniors’ retirement savings and providing some flexibility for those concerned that they may be required to liquidate RRIF assets to meet minimum withdrawal requirements. Similar rules will apply to individuals receiving variable benefit payments under a defined contribution registered pension plan. Any client who does not need the full current minimum should speak to their IG Consultant.

EMPLOYMENT INSURANCE

Effective as of March 15 - Temporarily waiving:

  • The one-week waiting period for those individuals in imposed quarantine that claim Employment Insurance (EI) sickness benefits. To apply click here.

CANADA EMERGENCY RESPONSE BENEFIT

The new Canada Emergency Response Benefit (CERB) will provide a taxable benefit of $2,000 per four-week period for up to 16 weeks for workers who lose their income as a result of COVID-19. The CERB is paid every four weeks and is available between the period from March 15, 2020 until October 3, 2020.

  • The CERB will apply to wage earners, as well as to contract workers and self-employed individuals who would not otherwise qualify for EI. The CERB will provide income support to individuals who: 
    • live in Canada and are at least 15 years old 
    • stopped working because of reasons related to COVID-19, are eligible for Employment Insurance regular or sickness benefits or have exhausted their Employment Insurance regular benefits between December 29, 2019 and October 3, 2020
    • had employment, self-employment income or income provincial or federal benefits related to maternity or parental leave of at least $5,000 in 2019 or in the 12 months prior to the date of their application, and 
    • have not quit their job voluntarily
  • The CERB was expanded on April 15, 2020, allowing persons to earn up to $1,000, per eligible period, of employment income, self-employment income, non-eligible dividends, royalties, or a combination thereof and still be eligible to apply for the CERB. Individuals can continue to earn up to $1,000 per eligible period while receiving benefits. Additionally, seasonal workers who have exhausted their EI benefits and are unable to undertake their regular seasonal work because of COVID-19 may also apply for the CERB.
  • For clarity regarding the $5,000 income test noted above, income can be from any of the following sources (or a combination thereof): employment, self-employment, maternity/paternal benefits under the EI program and/or similar benefits paid in Quebec under the Quebec Parental Insurance Plan. Recent commentary from the CRA indicates that non-eligible dividends could also count towards the $5,000 income requirement. How to apply
  • Application for the CERB is through CRA’s My Account (a secure online portal) or an automated tollfree number. We encourage individuals to consider setting up your CRA My Account right away and sign up for direct deposit to receive your benefits quicker.
  • Individuals who stopped work prior to March 15, 2020 and who are eligible for EI regular or sickness benefits should apply for EI and should not apply for the CERB. If EI benefits end prior to October 3, 2020, these individuals can apply for the CERB once their EI benefits cease if they are unable to return to work due to COVID-19.
  • Individuals who stopped work on or after March 15 should apply for the CERB. Individuals who stopped work on or after March 15 and who have applied for EI will automatically be enrolled in the CERB. If still unemployed after the 16-week period covered by the CERB, workers who are eligible for EI regular and sickness benefits will be able to access EI benefits at that time, CERB payments do not affect EI entitlements.
  • An individual is only eligible for the CERB if in a claim period the individual earns $1,000 or less of income (as discussed above) within the four-week benefit claim period. If an employee is 4 subsequently rehired, they may have to repay CERB benefits for the claim period if, as a result, they have earned more than $1,000 from employment, etc.

To learn more about how to apply, click here

GOODS AND SERVICES TAX CREDIT

For low and modest-income families, the Government is providing a one-time special payment by early May 2020 doubling the maximum annual Goods and Services Tax credit payment amounts for the 2019-20 benefit year. There is no need to apply for this payment. Eligible individuals will receive it automatically.

CANADA CHILD BENEFIT

The Government is increasing the maximum annual payment amounts for the 2019-20 benefit year by $300 per child. Qualifying families will automatically receive an extra $300 per child as part of their May payment. For new applications click here.

Mortgages and Banking Measures

STUDENT LOANS

Six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans.

MORTGAGES AND OTHER CREDIT RELIEF

  • Canada Mortgage and Housing Corporation (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.
  • Through Canada’s large banks, a deferral of up to six months for mortgage payments and possible relief on other credit products may be available. 

SUPPORT MEASURES FOR IG WEALTH MANAGEMENT MORTGAGE AND SOLUTIONS BANKING CLIENTS

IG Wealth Management and our partners at Solutions Banking have implemented the following support measures for those clients directly affected by the global Coronavirus outbreak:

Mortgage clients

IG Wealth Management’s Homeowner Assistance program is available to support our clients impacted by COVID-19. The program aims to provide financial assistance to qualifying clients through payment deferrals on IG mortgages. Clients experiencing financial hardships related to COVID-19, such as a material change to their income, may now submit a request to defer a payment using our online Payment Deferral Request form

Contact us

For questions or concerns, clients may contact the Mortgage Contact Centre, open Monday to Friday, 8:00 a.m. to 5:00 p.m. (CST) through one of the following contact methods:

  • By telephone at 1-800-328-6488
  • By e-mail at Mortgage.service.centre@investorsgroup.com

Solutions Banking clients

Affected Solutions Banking clients may contact Solutions Banking to work with them to determine a personalized solution depending on their situation. Measures available include payment deferrals on Solutions Banking mortgages and loan products. For all other financing, products, including the Solutions Banking Allin-One, clients are invited to contact Solutions Banking to discuss options available.

Contact us

Clients may contact a Solutions Banking representative at 1-877-999-7575, Monday to Friday from 8:00 a.m. to 6:00 p.m. (EST)

Measures Impacting Businesses 

CANADA EMERGENCY WAGE  SUBSIDY

The Canada Emergency Wage Subsidy (CEWS) will cover 75% of wages paid by eligible employers up to a weekly maximum subsidy of $847 per employee and will apply for the 12-week period from March 15 to June 6, 2020. There is no limit on the number of employees for which an employer can claim the subsidy or the total subsidy that can be claimed by an employer.

What is Eligible Remuneration?

Eligible remuneration includes salary, wages, and other remuneration but would not include severance pay, or items such as stock option benefits or the personal use of a corporate vehicle

Who is an Eligible Employer?

Eligible employers include individuals, taxable corporations, and partnerships consisting of eligible employers. The subsidy will also be available to charities and non-profits. To receive this subsidy, a business must have experienced a decrease in revenue of at least 15% in March and a decline of 30% in April or May 2020. To make this comparison, a business has the choice of comparing their revenue from March, April and May 2020 to either:

  • the same month last year, or
  • an average of revenue earned in January and February 2020

Revenues, for this purpose, will consist of revenue from its business carried on in Canada from arm’s length sources. Employers would be permitted to calculate their revenues under either the cash basis or the accrual basis.

Once an employer meets the decline in revenue test for one period, they would automatically qualify for the next period of the program. For example, if an employer meets the 15% criteria for March, then they would qualify for the March and April periods of the program.

To be eligible for the subsidy, employers must have had on March 15, 2020, a business number registered with the CRA to make payroll remittances.

How is the CEWS Calculated?

The subsidy on eligible remuneration paid to a given employee for work performed between March 15 and June 6, 2020 would be the greater of:

  • 75 per cent of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
  • the amount of remuneration paid, up to a maximum benefit of $847 per week or 75 per cent of the employee’s pre-crisis weekly remuneration, whichever is less.

As a result, employers could be eligible for a subsidy of up to 100% of the first 75% of pre-crisis wages or salaries of existing employees. These employers would be expected, where possible, to maintain existing employees’ pre-crisis employment earnings.

A special rule will apply to employees that do not deal at arm’s length with the employer. The subsidy amount for such employees will be limited to the lesser of eligible remuneration paid in any pay period between March 15 and June 6, 2020, up to a maximum benefit of $847 per week, or 75%of the employee’s pre-crisis weekly remuneration.

Refund For certain payroll contributions

  • Employers eligible for the CEWS will be entitled to receive a 100% refund for employer contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan for each week an employee was on leave with An employee will be considered to be on leave with pay throughout a week if the employer pays the employee for the week, but the employee does not do any work for the employer during that week.

Other important information

  • Organizations that don’t qualify for the Canada Emergency Wage Subsidy may continue to qualify for the previously announced temporary small business wage subsidy (TSBWS).
  • For employers that are eligible for both the CEWS and the TSBWS for a period, any benefit received from the 10 per cent wage subsidy (TSBWS), for remuneration paid in a specific period, would generally reduce the amount available to be claimed under the CEWS in that same
  • Employers cannot claim the Canada Emergency Wage Subsidy for remuneration paid to an employee for a claim period in which the employee is without remuneration for 14 consecutive·    
  • Employers receiving this subsidy are required to report the total amount received as taxable income in the year it is received.

     

How to Apply

Eligible employers will be able to access the CEWS by applying through the Canada Revenue Agency’s My Business Account portal as well as a web-based application which is expected to be available by the end of April. The Government encourages businesses to register for direct deposit with the CRA to ensure they receive funds quicker. Finance is currently working on draft legislation as well as additional details of these incentives and how they will be administered.                                                       

For further information on this subsidy, please click here.

TEMPORARY SMALL BUSINESS WAGE SUBSIDY  (TSBWS)

The TSBWS provides eligible small employers with a temporary wage subsidy for a period of up to three months. The subsidy is equal to 10% of remuneration paid during that period, up to a maximum subsidy of

$1,375 per employee and $25,000 per employer. Legislation implementing this measure was passed on March 25.

  • Employers eligible for the TSBWS include sole proprietorships and partnerships with employees, corporations eligible for the small business deduction, as well as non-profit organizations and In order to qualify, the business must have had an existing business number and payroll program account with the CRA on March 18, 2020.
  • To benefit from this support, employers can reduce their remittances of income tax withheld on their employees’ remuneration by the amount of the Employers can start reducing employee income tax remittances in the first remittance period that includes remuneration paid between March 18, 2020, and June 20, 2020. Employers cannot reduce remittance of other source deductions such as Canada Pension Plan/Quebec Pension Plan contributions and Employment Insurance premiums.
  • If an eligible employer does not reduce payroll remittances during the year, a request can be made to either have the subsidy be paid at the end of the year or be transferred to the next year’s
  • Employers receiving this subsidy are required to report the total amount received as taxable income in the year it is
  • Click here for further information.

INCREASING CREDIT AVAILABLE TO BUSINESSES

The Business Credit Availability Program (BCAP) will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide $65 billion in direct lending and other types of financial support.  By working in close cooperation with financial institutions, this program will fill gaps in market access and leverage additional lending by private sector institutions,

Businesses seeking support through BCAP should contact the financial institution with whom they have a pre-existing relationship, so that the financial institution may assess the client’s financial request.

BCAP includes the following programs:

  • The Canada Emergency Business Account will allow financial institutions and credit unions to provide loans of up to $40,000, guaranteed by the Government of Canada, to qualifying small businesses and non-profits. The loans will be interest free for the first year. Repaying the balance of the loan on or before December 31, 2022 will allow for loan forgiveness of 25 percent (up to $10,000).
    • To qualify, these organizations will need to demonstrate that they paid between $50,000 to $1 million in total payroll in 2019. Financial institutions will also generally require:
      • A pre-existing business banking account with the financial institution
      • The borrower to provide a 15-digit business number associated with a CRA payroll remittance account
    • Small businesses and non-profits should contact their financial institution to apply for these
    • More information and updates on the program can be found by clicking here.
  • Loan Guarantee for Small and Medium-Sized Enterprises
    • Allows financial institutions to issue operating credit and cash flow term loans of up to $6.25 million to existing clients, 80% will be guaranteed by
    • Available to businesses, in all sectors, that were otherwise financially viable and revenue generating prior to the COVID-19
    • Money to be used for operational expenses, not for dividend payouts, shareholder loans, bonuses, stock buyback, option issuance, increases to executive compensation or repayment/refinancing of other
    • Program now available at various financial institutions and credit
  • BDC Co-Lending Program for Small and Medium-Sized Enterprises
    • Provides term loans for operational and liquidity needs of businesses, including interest payments on existing
    • Available to businesses, in all sectors, that were otherwise financially viable and revenue generating prior to the COVID-19
    • Loans available dependent on revenues of the
      • Loans up to $312,500 to business with revenues of less than $1million
      • Loans up to $3.125 million to businesses with revenues between $1million and $50
      • Loans up to $6.25 million to businesses with revenues in excess of $50
    • Loans would be interest-only for the first 12 months, repayment over a 10-year period.
    • Applications will be made available shortly by financial institutions.

More information on the Business Credit Availability Program can be found here.

Farm Credit Canada will increase by $5 billion the near-term credit available to farmers and the agri-food sector.

 

EMPLOYMENT INSURANCE WORK SHARING PROGRAM

 

  • The EI Work Sharing Program provides EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their Temporary changes to this program will extend the eligibility of such agreements to 76 weeks, ease eligibility requirements, and streamline the application process. For more information on eligibility and to apply, click here.

CANADA SUMMER JOBS PROGRAM

  • The temporary changes to the program for this year include:
    • An increase to the wage subsidy – private and public sector employers can receive up to 100% of the provincial or territorial minimum hourly wage for each employee
    • An extension to the end date for employment to Feb 28, 2021
    • Allowing employers to adapt their projects and job activities to support essential services
    • Allowing employers to hire staff on a part-time basis
  • Although the application deadline for this program closed February 28, 2020, the government has indicated it will work with Members of Parliament to identify organizations that provide essential services in the community and could provide youth jobs but did not apply for the Canada Summer Jobs program in

CRA Audit Activity

The Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives for the majority of businesses.

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