Resources and updates: https://www.bccpa.ca/news-events-publications/news/covid-19-updates-and-resources-for-cpas/tax-and-benefits-updates/
Tax and Benefits Updates
Employment Insurance and Benefits
Canada Emergency Response Benefit
For those who are unable to work due to COVID-19, the new Canada Emergency Response Benefit (CERB) will provide a taxable benefit of $2,000 per month for up to 16 weeks to:
- workers who must stop working due to COVID-19 and do not have access to paid leave or other income support;
- workers who are sick, quarantined, or taking care of someone who is sick with COVID-19;
- working parents who must stay home without pay to care for children that are sick or need additional care because of school and daycare closures;
- workers who still have their employment but are not being paid because there is currently not sufficient work and their employer has asked them not to come to work; and
- wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.
How to apply and when to expect payment
- Apply for the new CERB using the “My Account” section on the CRA website, starting April 6, 2020. Applicants will also be able to apply via an automated telephone line or via a toll-free number.
- Canadians will begin to receive their CERB payments within 10 days of application. The CERB will be paid every four weeks and be available from March 15 to October 3, 2020.
Canadians already receiving Employment Insurance (EI) regular and sickness benefits as of March 25, 2020, will receive their benefits and should not apply to the CERB. If their EI benefits end before October 3, 2020, they can apply for the CERB once EI benefits cease, if they are unable to return to work due to COVID-19.
Employment Insurance
Waivers for the Employment Insurance program related to COVID-19 include:
- The one-week waiting period for EI sickness benefits will be waived for new claimants due to Covid-19
- The requirement to provide a medical certificate will be waived.
To apply visit the Employment Insurance section of Employment and Social Development Canada.
Record of Employment
Use the new code categories when completing Record of Employment forms due to COVID-19 situations. For details visit the Employment Insurance-Record of Employment section of Employment and Social Development Canada’s webpage.
More information on applying for Employment Insurance and other benefits and services can be found on Employment and Social Development Canada’s website.
Supplementary Unemployment Benefits Plan (SUB)
Employers can use a Supplemental Unemployment Benefit (SUB) plan to increase their employees’ weekly earnings when they are unemployed due to a temporary stoppage of work, training, illness, injury or quarantine.
- An existing plan that allows employers to “top-up” employees’ EI Benefits without penalty to the employee (i.e. additional income does not reduce EI benefits)
- SUB plans must be registered with Service Canada before they go into effect
Work-sharing Program for Employees – Temporary Special Measures for COVID-19
This EI program helps employers and employees avoid layoffs.
- Group of employees with similar jobs all reduce their hours by the same percentage to avoid lay-offs
- Employees’ reduction can be 10%-60%
- Extension of maximum possible duration from 38 to 76 weeks (special COVID extension)
- Can apply for EI benefits for workdays lost to work share reduction
Federal Tax Relief Measures
COVID-19: Changes to Canadian Taxes and Benefits
Regularly visit this site to stay informed on changes to the Canada Revenue Agency’s services, due dates, and programs affected by the pandemic including:
- Income tax filing and payment dates
- Benefits, credits and support payments
- CRA collections, audit, objections and appeals
- Charities T3010 filing deadlines
Watch for dates of modified information.
Wage Subsidies
There are two separate wage subsidy programs available.
Temporary Wage Subsidy for Employers (10%)
- This wage subsidy program is a three-month measure that will allow eligible employers to reduce the amount of payroll deductions required to be remitted to the CRA.
- Eligible employers are Canadian-controlled private corporations, charities, non-profit organizations, individuals, and partnerships with a small business limit in the prior year.
- Subsidy is equal to 10% of the remuneration paid between March 18, 2020 and June 19, 2020 to a maximum of $1,375 per employee and $25,000 per employer.
- Benefit claimed by reducing source deductions (not CPP nor EI).
- As the subsidy is government assistance, it is taxable to the employer.
Canada Emergency Wage Subsidy Program
The federal government, through the Canada Emergency Wage Subsidy, will help businesses keep and return workers to their payroll.
- Covers 75% of remuneration paid per employee, up to a maximum of $847 per week. The amount paid is reduced by any Temporary Wage Subsidy received.
- Retroactive to March 15, 2020 and covered until June 6, 2020.
- Eligible employers include non-profits, charities, individuals, and businesses (not size-dependent) that have seen a drop in revenues of at least 15% in March and 30% in April and May 2020, compared to the same period last year.
- Employers can now use standard accrual or cash-based accounting to show revenue loss.
- The subsidy will be paid by the government to the employer (i.e. not a reduction in source deductions). As this subsidy is government assistance, it is taxable to the employer.
- This is a subsidy for employees; employers are expected to at least make best efforts to top up salaries to 100% of maximum wages covered.
- Funds are expected to be available around May and will be sent from CRA directly to businesses.
- Public bodies would not be eligible for this subsidy (public bodies includes municipalities, local governments, crown corporations, public universities, colleges, schools, and hospitals).
- Organizations deemed ineligible for the Canada Emergency Wage Subsidy may access the original 10% wage subsidy.
- How to Apply: Eligible employers apply through the CRA’s My Business Account portal. More details about this process will be made available shortly.
More details will be released over the coming weeks.
CPA Canada and the Canadian Tax Foundation (CTF) have received many inquiries about the Canada Emergency Wage Subsidy (CEWS). Together, they have documented this input and compiled a summary of the key matters that was forwarded to the federal government to seek clarification.
Canada Child Benefit (CCB)
The Canada Child Benefit provides up to an extra $300 per child for 2019-2020, to be received as part of the scheduled payment in May. Those who already receive the CCB do not need to reapply. For all others, see the Government of Canada website.
Goods and Services Tax (GST) Credit
The GST Credit is a one-time special payment for low- and modest-income families.
- Average additional benefit will be close to $400 for single individuals and close to $600 for couples
- Payment will be issued on April 9, 2020
How to Apply: No need to apply, will get automatically. See the Government of Canada website.
Other Tax Measures
Various federal government measures to further support individuals and small businesses:
- Filing extensions: Most federal tax filing deadlines have been extended to June 1, 2020, including the March 31 deadline for T1134 forms and T2s. The filing deadline for the T5013 partnership return and other information that individuals will need to complete their T1 returns has been extended to May 1, 2020. Note that some returns and payments will still be due at the usual time.
- Personal returns: The deadline for filing T1 returns that were due on April 30, 2020 has been extended to June 1, 2020. Individuals expecting a refund or benefits should file sooner if possible, as the Canada Revenue Agency (CRA) will process refunds.
- Trusts, Partnerships and NR4 Information Returns: The deadlines for trusts, partnership and NR4 Information returns are extended to May 1, 2020. This is due to administrative requirements in advance of the June 1st deadline for filing individual income tax and benefit returns.
- Income tax payments for all taxpayers: The CRA will allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to income tax balances due, as well as instalments and no interest or penalties will accumulate on these amounts during this period.
- Canada Student Loans: Effective March 30, a six-month interest-free moratorium on the repayment of Canada Student Loans for all student loan borrowers. No payment will be required and interest will not accrue during this time. This will include pre-authorized debits. Students do not need to apply for the repayment pause.
- GST/HST Remittance: Businesses, including self-employed individuals, can defer all Goods and Services Tax/Harmonized Sales Tax (GST/HST) payments until June 30, 2020 if due on or after March 27, 2020.
- GST Returns: Deadline not extended, however, no penalties or interest accrued until June 30, 2020.
- Customs Duty and Sales Tax for Importers Payments: Customs duty and sales tax for importers payment deadlines for statements of accounts from March to May inclusive are being deferred to June 30, 2020.
- Certain Corporate Tax Returns Receive Filing Extension: For corporations that would otherwise have a filing due date after March 18 and before June 1, 2020, their filing due date for the current tax year has been extended to June 1, 2020. This extension was modified on March 30, 2020.
Please note, electronic signatures will be recognized by the CRA as having met the signature requirements of the Income Tax Act, as a temporary administrative measure. This is to reduce the necessity for taxpayers and tax preparers to meet in person during the COVID-19 crisis and to reduce administrative burden. This provision applies to authorization forms T183 and T183CORP,which authorizes tax preparers to file taxes.
Business Credit Availability Program
The objective of the Business Credit Availability Program (BCAP) is to help Canadian businesses obtain financing during the current period of significant uncertainty. The BCAP will support access to financing for Canadian businesses in all sectors and regions by providing $65 billion of additional support through the Business Development Bank of Canada and Export Development Canada. This program includes:
- Canada Emergency Business Account (CEBA): Provides interest-free loans of up to $40,000 to small businesses and not-for-profits, to help cover their operating costs during a period where their revenues have been temporarily reduced. A quarter of this loan (up to $10,000) is eligible for complete forgiveness.
- To qualify, these organizations will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019.
- This program will roll out in the three weeks after March 27, and interested businesses should work with their current financial institutions.
- Loan Guarantee for Small and Medium-Sized Enterprises: Enables up to $40 billion in lending, supported through Export Development Canada and Business Development Bank of Canada, for guaranteed loans when small businesses go to their financial institutions to help weather the impacts of COVID-19.
- Co-Lending Program for Small and Medium-Sized Enterprises
How to apply: Work with your current financial institution. These programs will roll out in the three weeks after March 27, 2020.
Provincial Tax Relief Measures
On March 23, 2020, the BC government announced a $5 billion COVID-19 action plan to help address immediate needs in the BC economy, including tax relief measures for businesses:
- Deferred tax payments:Effective immediately, the following tax returns and payments with due dates after March 23, 2020 and before September 30, 2020 will now be due September 30, 2020:
- Provincial sales tax (including municipal and regional district tax)
- Carbon tax
- Motor fuel tax
- Tobacco tax
- Employer Health Tax Filing Deadline – The employer health tax return and final payment due date for the 2019 calendar year has been extended to September 30, 2020. For the 2020 calendar year, employers who are required to make instalment payments won’t need to make them until after September 30, 2020. Future instalment payment due dates will be determined at a later date.
- Reduced school tax rates for businesses: School tax rates for commercial properties (Classes 4, 5 and 6) will be reduced by 50% for the 2020 tax year, saving the business community an estimated $500 million.
- Delayed Budget 2020 PST tax changes: The following tax changes announced in Budget 2020 will be postponed until further notice:
- Eliminating the PST exemption for carbonated beverages that contain sugar, natural sweeteners or artificial sweeteners
- Expanded registration requirements for Canadian sellers of goods, along with Canadian and foreign sellers of software and telecommunication services
- Delayed carbon tax increase: Increases to the carbon tax rate, as announced in Budget 2020, will be postponed until further notice. The next increase was originally scheduled for April 1, 2020.
- WorkSafeBC Payment Deferred: Businesses will not be charged a penalty if they do not pay their premiums by their usual first quarter deadline of April 30. Payments can be deferred to June 30.
Support for individuals:
- BC Emergency Benefit for Workers: will provide a one-time $1,000 payment to people who lost income because of COVID-19:
- B.C. residents who receive federal Employment Insurance, or the new federal Canada Emergency Response Benefit are eligible.
- The Canada Emergency Response Benefit applies to both wage earners and self-employed individuals, including contract workers, who would not otherwise be eligible for Employment Insurance.
- Applications for the one-time payment will open soon
- The one-time payment will be paid in May 2020
- Additional Funds with BC Climate Action Tax Credit: British Columbians who are eligible for the B.C. Climate Action Tax Credit will receive an additional $112.50 per family of four and up to $43.50 per adult starting in July 2020. This means eligible families of four will receive up to $564 and individuals up to $218.
- BC Student Loan Payments on Hold: Starting March 30, 2020, B.C. student loan payments are automatically frozen for six months.
- ICBC/BC Hydro Payment Deferrals:
- ICBC: Customers on a monthly Autoplan payment plan, who are facing financial challenges due to COVID-19, can defer their payment for up to 90 days with no penalty. Payment deferral is also available for fleets. Use their online resource tool to apply for a deferral, by 6pm at least one business day before your next payment is due.
- BC Hydro: The COVID-19 Relief Fund allows eligible residential customers who have experienced job loss to receive three months of free credit on their BC Hydro bill based on their average consumption. The fund also allows eligible small businesses that needed to close due to COVID-19 to have up to three months of electricity charges waived.
- Temporary Rent Supplement: A supplement of up to $500 per month will be available to low to- moderate renters who are facing financial hardship as a result of COVID-19. Applications for the supplement will be available shortly. The supplement will be paid directly to the landlords