Read the follow-up article to this for the most up-to-date information: COVID-19: Economic Response Plan – Legislative Update

On March 18, 2020, Prime Minister Trudeau announced Canada’s COVID-19 Economic Response Plan.  The plan includes some proposed tax and non-tax measures aimed at relieving economic hardship during the COVID-19 pandemic.

Note:  None of the proposed measures have been passed into law, nor is there any draft legislation to implement them.  Therefore, some caution is warranted before relying on these measures.  DMCL will provide updates as more details become available.

Income Tax filing deadlines extended for individuals and certain trusts

Filing deadlines have been extended for:

• Individuals – The deadline for filing your 2019 T1 Personal Income Tax return has been extended from April 30, 2020 to June 01, 2020.  The deadline for self-employed individuals is still June 15, 2020.
• Trusts whose taxation year ends on Dec 31, 2019 – The deadline for filing your 2019 T3 Trust Income Tax and Information return has been extended from March 30, 2020 to May 1, 2020.  

Filing deadlines have not been extended for:

• T2 Corporation Income Tax Returns,
• T5013 Partnership Information Returns,
• T3 Trust Income Tax and Information Returns for trusts with non-calendar year-ends.

Income Tax payment deadlines extended for ALL taxpayers

Payment deadlines have been extended for:

• All taxpayers – the deadline for paying any income tax amounts that became payable on or after March 18, 2020 and before September 2020 has been extended to September 1, 2020.

• This relief applies to:
• income tax installment payments and
• income tax balances owing at the “balance due date”.

• This relief is available to:
  • Individuals for their 2019 taxation year.
  • Trusts with a Dec 31, 2019 taxation year.
  • Canadian controlled private corporations (“CCPC’s”) that claim the small business deduction and have a taxation year ending Dec 31, 2019 or later.
  • All other companies that have a taxation year ending Jan 31, 2020 or later.

• No penalties or interest will be applied to payments deferred under this measure.

• This relief only applies to installments and balances owing under Part I of the Income Tax Act.  Therefore, there is no relief for:
  • Large corporations’ tax (Part I.3).
  • Tax on portfolio dividends and certain dividends from connected corporations (Part IV).
  • Tax on certain preferred share dividends (Part IV.1 and VI.1).
  • Withholding tax on payment to non-residents of Canada (Part XIII).

The payment deadlines for GST/HST remittances and payroll source deductions have NOT been extended.   Therefore, employers are still required to withhold and remit normal payroll withholdings to the CRA, subject to the temporary wage subsidy for small employers (see below).

Electronic signature of E-file authorization forms

• The CRA will allow and recognize electronic signatures on forms T183 and T183CORP.

Temporary wage subsidy for small employers

• The government will provide a temporary wage subsidy to eligible employers for a period of up to 3 months.  CCPC’s that are eligible for the small business deduction are eligible for this subsidy.
• 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.
• Businesses will claim the subsidy by not remitting the entire amount of income tax withheld from the payment to an employee of their salary/wages.

Business Development Bank of Canada (“BDC”) Measures

• The BDC will
  • provide working capital loans of up to $2 million with flexible terms and payment postponements for up to 6 months for qualifying businesses.
  • allow postponement of payments for up to 6 months, free of charge, for existing BDC clients with total BDC loan commitment of $1 million or less.
  • provide reduced rates on new eligible loans.
• If you are an existing BDC client – contact your account manager.
• If you are not a BDC client – call 1-877-232-2269.

Other measures for individuals:

• One time $300 per child Canada Child benefit paid in May 2020.
• Minimum RRIF withdrawals will be reduced by 25% for 2020.
• Canada’s 6 largest banks may provide up to a 6 month deferral for mortgage payments (on a case by case basis).