The Coronavirus pandemic has impacted everyone across Canada, with some affected more severely than the others. The Government has recently announced a range of relief measures in a bid to alleviate the financial distress of Canadians at large and particularly those individuals who find themselves jobless or on reduced work hours as well as vulnerable groups.
Key support measures under Canada’s COVID-19 Economic Response Plan are noted below.
Extending the due date for payment of income tax
Taxpayers have been allowed to defer, until August 31, 2020, the payment of any Part I income tax that becomes due between March 18, 2020 and before September 2020. CRA will not charge interest or penalties on unpaid amounts of tax due over this period.
Extending the due date for filing of income tax returns
Individuals (other than trusts) may file their 2019 income tax returns by June 1, 2020 instead of the usual deadline of April 30. Please note that the tax filing deadline for sole proprietors remains unchanged at June 15, 2020.
Regardless of the flexibility to delay the filing of income tax return, the Government is encouraging individuals who expect to receive benefits under the GST credit or the Canada Child Benefit (CCB) to promptly file their returns to ensure their entitlements for the 2020-21 benefit year are determined in time. These individuals can still avail the extension in payment of taxes by August 31, 2020.
For trusts with taxation year ended on December 31, 2019, the tax return filing due date will be deferred until May 1, 2020.
Mortgage payment deferrals
Canada’s large banks have confirmed that they will provide up to a 6-month payment deferral for mortgages, on a case to case basis. Homeowners facing financial difficulties can also defer payments on mortgage loans insured by the Canada Mortgage and Housing Corporation (CMHC). Other tools available to homeowners are loan re-amortization, capitalization of outstanding interest arrears, and special payment arrangements.
Introducing the Emergency Support Benefit
The Government has announced $5 billion to support individuals who lose their jobs or face reduced work hours as a result of COVID-19 and who are not eligible for EI benefits. Eligible individuals will be able to apply for the benefit starting April 2020. While additional details are not yet available, it is expected that eligible individuals may receive up to 14 weeks of support at a level comparable to the EI benefits program.
Enhancing the Work-Sharing Program
Employees who agree to work a reduced number of hours can participate in the Work-Sharing Program if their employers have suffered at least a 10% decline in business activity due to COVID-19. The maximum duration of Work-Sharing agreements has been extended to 76 weeks across Canada, over which period eligible employers and employees will agree to a reduction in working hours (by at least 10% and up to a maximum of 60%) while income support will be provided to employees by Service Canada.
Making it easier to obtain EI sickness benefits
The Government has waived the requirements for a medical certificate as well as the one-week waiting period for individuals claiming EI sickness benefits if they are in imposed quarantine. The employees can now claim EI sickness benefits for the entire period of absence while they are in quarantine, up to a maximum of 15 weeks.
Introducing the Emergency Care Benefit
Income support of up to $900 bi-weekly, for up to 15 weeks, will be provided to:
- Employees and the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits
- Employees and the self-employed, who are taking care of a family member sick with COVID-19 but who do not quality for EI sickness benefits
- Parents with children at home due to school closures and who are unable to earn employment income, irrespective of whether they qualify for EI or not
Eligible individuals will be able to apply for the benefit starting April 2020.
Providing additional income to qualifying individuals and families
Additional financial help is proposed to be provided to:
- Low-income families through a one-time top-up to GST credit payment by early May 2020. It is expected that close to $400 will be disbursed to qualifying single individuals and close to $600 to couples
- Families with children, by giving them an additional $300 per child in CCB amounts for the 2019-20 benefit year. The additional payment is expected by May 2020
Placing interest-free moratorium on student loans
Individuals currently in the process of repaying Canada Student Loans can avail a six-month interest-free suspension in loan repayment.
Protecting retirement savings
The Government has reduced by 25% the required minimum withdrawals from Registered Retirement Income Funds (RRIFs) for 2020. Similar rules would apply to individuals receiving variable benefit payments under a defined contribution Registered Pension Plan. This will help to protect retirement savings in times of volatile market conditions.
Making it easier for banks to lend to consumers
As a concerted effort, the banking regulator and the central bank have introduced measures that will allow Canada’s large banks to inject $300 billion of additional lending into the economy at lower interest rates. These measures are designed to provide Canadians with easier and cheaper access to financing. The government is also putting in place actions to provide long-term stable funding to banks and mortgage lenders, so that they can continue to provide lending to businesses and households. Canadian banks have confirmed their commitment to provide flexible solutions, on a case-by-case basis, to individuals facing financial hardships, such as pay disruption, childcare disruption, or illness.
Please feel free to reach out to us if you have any questions in these uncertain times.
If you are interested in knowing about relief measures introduced for businesses, you can find details here.
J-MAK CPA Team
We are a CPA firm in downtown Toronto that provides tax, accounting, corporate and advisory services to businesses. We would be happy to answer any questions that you may have.