The government – Prime Minister Justin Trudeau on March 19, 2020 – released its COVID-19 Economic Response Plan:
For those who are procrastinators, the plan will sit well. The usual deadline for filing your personal tax return is April 30, but this is extended to June 1. For those who will be reporting self-employment activity, or their spouses, the tax-filing deadline has been June 15 for many years, but this isn’t changing this year. Finally, if you have to file a trust tax and information return (normally due March 31), the deadline has been extended to May 1.
If you happen to owe taxes, be sure to file on time, otherwise you’ll face a penalty of 5 per cent of the tax balance owing, plus an additional 1 per cent for each full month that your return is late. One last tip: If you’re expecting to receive the GST Tax Credit or Canada Child Benefit, you’ll want to file your personal tax return as soon as possible so that you don’t delay the determination of your benefits for 2020-21.
The government is now allowing a deferral of tax payments until Aug. 31, 2020. There will be no interest or penalties charged on payments made on or before that date. This extension applies to tax balances that become owing on or after March 18, 2020, and before Sept. 1, 2020. This applies to tax balances owing or installments due. This measure also applies to corporations. It’s fine to take advantage of the extra time before you send the taxman your money, but don’t forget that the money will be due, so you’d be wise to set aside those funds in a safe place (the equity markets are likely a bad idea for now) so that you can make payments on time.
No one will blame you for avoiding a face-to-face meeting with your tax preparer for the foreseeable future. CRA won’t blame you either. As a temporary measure, the government is allowing electronic signatures on form T183, or T183CORP (these are forms that authorize your tax preparer to file your taxes electronically).
GST Tax Credit:
If you’re eligible to receive the Goods and Services Tax (GST) Credit, the government is proposing to make a special payment in May which will double the maximum credit allowance for the 2019-20 benefit year. The average increase will be close to $400 for single folks, and close to $600 for couples.
Canada Child Benefit:
The government is proposing to increase the maximum annual Canada Child Benefit (CCB) payment amounts by $300 a child, for the 2019-20 benefit year only. The overall increase for families receiving CCB will be approximately $550 on average; these families will receive an extra $300 a child as part of their May payment.
RRIFs and pensions:
The government is reducing required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25 per cent for 2020 owing to the impact of volatile market conditions on retirement savings. I don’t think this goes nearly far enough. The government should be entirely eliminating the requirement to make any withdrawals in 2020. Seniors who need the funds to meet the costs of living will still make withdrawals, but a 25-per-cent reduction does very little to help.
The government is placing a six-month interest-free moratorium on the repayment of student loans. This will help those having challenges finding employment today. Don’t forget that you’re entitled to tax credit for interest paid on qualifying student loans. The operative word here is “paid”; you’ll have to actually pay the interest to get the tax credit.
It was also announced on Wednesday that the Canada Revenue Agency will not contact any small or medium-sized businesses to initiate any post-assessment GST/HST or income-tax audits for the next four weeks. For most businesses, the CRA will also temporarily suspend audit interaction with taxpayers and representatives.
Eligible small businesses will be entitled to a three-month wage subsidy of 10 per cent of remuneration paid during that period, to a maximum of $1,375 per employee and $25,000 per employer. You can claim this subsidy immediately by simply reducing your income tax payroll remittances. Speak to a tax pro if you have questions.
Author: Tim Cestnick, FCPA, FCA, CPA(IL), CFP, TEP,
We wish everyone to stay safe and healthy!
Your HS & Partners Team