We are committed to keeping you informed with the latest pandemic-related news and information.
As we have all come to learn, the COVID-19 outbreak has developed into the biggest challenge to public health in cities and communities across Canada likely in our lifetime. As a company, we are committed to supporting our clients with essential information about government relief programs and other vital resources available to you during this difficult time.
Government of Canada COVID-19 Economic Response Plan
The primary federal measures that have been introduced to help individuals and businesses through the COVID-19 pandemic are summarized below. For a complete list of the Canada Revenue Agency (CRA) updates, visit the CRA website for the latest updates.
Benefits, credits and support payments to individuals
Please Note: The Government of Canada introduced a new online tool, “Find financial help during COVID-19,” to assist individuals in identifying the relief programs that are available to them.
To support individuals who have lost income due to the pandemic, the federal government announced on March 25, 2020, the introduction of has introduced the Canada Emergency Response Benefit (CERB), which will provide a taxable benefit of $500 per week for up to 16 weeks.
CERB Update
On June 16, the federal government extended the CERB program by eight weeks to ensure Canadians have the help they need as they transition back to work. This extension will make the benefit available to eligible workers until October 3, 2020, for a total of 24 weeks.
The federal plan also provides additional assistance to families with children by increasing the maximum annual Canada Child Benefit (CCB) payment amounts, only for the 2019-20 benefit year, by $300 per child. The overall increase for families receiving CCB will be approximately $550 on average. On May 15, 2020, the government announced that this benefit will continue for an additional three months.
For low- and modest-income families, a one-time supplementary payment under the Goods and Services Tax (GST) credit will be provided. This payment will double the maximum annual GST/HST credit payment amounts for the benefit year 2019-20 benefit year. The extra payment amount will apply automatically if a taxpayer normally receives the GST/ HST credit and has filed a 2018 tax return. The average boost to income for those benefitting from this measure will be close to $400 for single individuals and $600 for couples.
The Employment Insurance Regulations have been amended to offer income support to those without paid sick leave (or similar workplace accommodation) who are sick, quarantined or forced to stay home to care for children.
Key amendments are:
- The one-week waiting period for EI has been waived temporarily as of March 15, 2020
- The requirement for claimants to provide a medical certificate to access EI sickness benefits has been waived
- The Emergency Care Benefit, which provides up to $900 bi-weekly for up to 15 weeks, has been introduced. This flat-payment benefit, administered through the CRA, provides income support to:
- Workers, including the self-employed, who are quarantined or sick with COVID-19 but do not qualify for EI sickness benefits.
- Workers, including the self-employed, who are taking care of a family member who is sick with COVID-19, but do not qualify for EI sickness benefits.
- Parents with children who require care or supervision due to school or daycare closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not.
Additional support for indigenous people living in urban centres and off-reserve
On May 21, 2020, the Prime Minister of Canada announced $75 million in new funding for Indigenous organizations that provide services to Indigenous peoples in urban centres and off-reserve.
The program is intended to support the critical needs of Indigenous populations during this crisis.
Benefits payments
The benefit payments with respect to the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit and/or the Canada child benefit (CCB) will continue for an additional three months.
Supports for Canadian seniors
On March 25, 2020, the federal government passed legislation that decreases the required minimum withdrawals from RRIFs by 25 percent for 2020. The lower RRIF factors now start at 3.96 percent at age 71, rising to 15 percent at age 94. For ages up to 71, the RRIF factors have also been reduced by 25 percent for 2020.
Additionally, the federal government invested $1.3 billion in a one-time special payment through the Goods and Services Tax (GST) credit. More than 4 million seniors benefited from this top-up, which gave an average of $375 for single seniors and $510 for senior couples.
The government also invested in community organizations that provide practical services to Canadian seniors, including the delivery of groceries and medications.
On May 12, 2020, the Prime Minister announced a series of additional measures to help Canadian seniors, including:
Support for students and recent graduates impacted by COVID-19
The Government of Canada has announced a series of measures to help Canadian students and recent graduates overcome the challenges they face as a result of the COVID-19 crisis. The measures include a six-month interest-free moratorium on the repayment of Canada Student Loans for all student loan borrowers. During this period, no payment will be required and interest will not accrue.
Temporary changes are being made to the Canada Summer Jobs program, including:
Expanding Student Financial Assistance for Fall 2020: The government proposed to change the Canada Student Loan Program’s eligibility requirements in 2020-2021 to allow more students to qualify for supports and be eligible for greater amounts.
Proposed Canada Emergency Student Benefit: For post-secondary students and recent graduates who are ineligible for the CERB or EI, the government will launch the Canada Emergency Student Benefit (CESB) on May 15, 2020. The CESB will provide $1,250 per month to eligible students from May 2020 through August 2020. The amount of $1,750 will be provided to students with dependents and permanent disabilities. The CESB is administered by the CRA.
Canada Student Service Grants: The government will launch the new Canada Student Service Grant which will provide up to $5,000 to support student's post-secondary education costs in the fall. The existing Canada Student Grants will be doubled for all eligible full-time students to up to $6,000 and for part-time students up to $3,600. More details will be posted on the government's new “I Want to Help” platform, to be launched in the coming weeks.
A new wage boost for essential workers
The Government of Canada announced on April 15, 2020, that it will work with provinces and territories through a new transfer to cost-share a temporary top-up to the salaries of essential workers earning less than $2,500 per month.
On May 7, 2020, the federal government confirmed that it will provide up to $3 billion in support to increase the wages of low-income essential workers. Each province or territory will determine which workers are eligible for support and how much support they will receive.
Support for employers
On March 13, the federal government announced help for small and medium-sized businesses through the Business Credit Availability Program (BCAP). The initiative will guarantee new operating credit and cash flow term loans up to a certain limit that financial institutions extend to small and medium-sized enterprises.
Under these changes, the program will offer loans of up to $60 million per company and guarantees of up to $80 million
Canada Emergency Business Account
On March 27, 2020, the Canada Emergency Business Account was created to provide 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. Applications for loans started on April 9, 2020, and can be made by businesses through their banks and credit unions. If the loan is repaid by Dec. 31, 2022, 25 percent of it will be forgiven, up to $10,000. If the loan is not repaid by Dec. 31, 2022, the remaining balance will be converted to a three-year term loan at 5 percent interest.
On May 19, 2020, the Government of Canada expanded the eligibility criteria to ensure farmers without payroll can now access the CEBA. Applicants with payroll lower than $20,000 will now qualify under the CEBA if they have a business operating account at a participating financial institution, have a CRA business number, have filed a 2018 or 2019 tax return and have non-deferrable expenses between $40,000 and $1.5 million.
COVID-19 Emergency Response Act
Under the COVID-19 Emergency Response Act, the federal government established a 10 percent wage subsidy for employers called Temporary Wage Subsidy (TWS).
After realizing that the 10 percent COVID wage subsidy may be insufficient to help companies keep their workers on their payrolls, the Ministry of Finance announced, on April 1, 2020, an expanded subsidy, referred to as the Canada Emergency Wage Subsidy (CEWS). Through this initiative, the federal government is covering up to 75 percent of an employee's salary up to a maximum benefit of $847 per week, for up to 12 weeks, retroactive to March 15, 2020.
CEWS Update
On July 13, 2020, the government announced that CEWS will be extended until at least December 2020. Earlier, regulatory changes were introduced to extend the program to additional categories of employers.
See the chart below for a summary of the details of both the subsidies.
| Subsidy Type | 10% Subsidy | 75% Subsidy |
|---|---|---|
| Eligible Employer | An individual (other than a trust), certain partnership, a not-for-profit organization, a registered charity and a Canadian-controlled private corporation, eligible for the small business deduction. | Individuals, taxable corporations, certain nonprofit organizations, registered charities, and partnerships consisting of eligible employers. Public-sector entities, such as governments, schools, and hospitals are excluded. |
| Eligible Employee | An individual employed in Canada. | An individual employed in Canada by the eligible entity during the qualifying period. However, an individual will not be an eligible employee in a qualifying period if that individual did not receive remuneration from the eligible employer for 14 or more consecutive days in the qualifying period. |
| Eligible Periods | March 18, 2020 to June 19, 2020. | Three initial eligible periods: >Period 1: March 15 to April 11, 2020 >Period 2: April 12 to May 9, 2020 >Period 3: May 10 to June 6, 2020 Eligible periods extended for additional periods up to Sept. 30, 2020. |
| Revenue Requirements | Not applicable. | Employer must have a drop of at least 15% of qualifying revenue in March 2020 and 30% of the qualifying revenue in April 2020 and May 2020. The reduction can be measured using any one of the following two benchmarks: >A general year-over-year approach; >The average revenue of Jan. and Feb. 2020. |
| Amount of subsidy | 10% of eligible remuneration paid during the eligible period, up to a maximum of $1,375 per employee and $25,000 per employer. | Determined by the formula on an employee-by-employee basis depending on certain prescribed factors; generally available at a rate of 75% of eligible remuneration paid to employees, up to a maximum of $847 per employee. |
| Application | No application is necessary. Instead, the employer reduces the income tax remittances by the subsidy amount. | Eligible employers to apply through My Business Account portal or a web-based application, when available. |
| Interaction of the 10% subsidy & the 75% subsidy | If an employer qualifies under both the Subsidy programs, the employer’s benefit under the 10% Subsidy will remain the same and does not get affected. | If an employer qualifies under both the Subsidy programs, the employer’s benefit under the 75% Subsidy will be reduced by an amount equal to the employer’s benefit under the 10% Subsidy. |
| Taxability | Amount is taxable to the employer. | Amount is taxable to the employer. |
| Penalty provisions | No specific penalty provisions are proposed. | Abuse of the 75% Subsidy program may result in a penalty of up to 25% of the benefit received (plus full repayment) and up to five years imprisonment. Penalties/ punishments under existing provisions of the Income Tax Act will also apply if the employer makes a deceptive statement. |
Relief for federally regulated pension plan sponsors
On April 15, 2020, the federal government announced that it will provide immediate temporary relief to sponsors of federally regulated defined benefit pension plans. This relief will help ensure that employers have the financial resources they need to maintain their operations and pension plans and protect the retirement security of their workers and retirees.
Canada’s Regional Development Agencies (RDAs)
The Government of Canada will provide $675 million to support the work of the RDAs and the businesses and workers they support. With this funding, RDAs will be able to provide equivalent bridge financing support to businesses that are unable to access the government’s support measures. The RDAs also fund the network of Community Futures Development Corporations, which supports rural businesses and communities. The government is providing an additional $287 million to the RDAs especially for this network.
Flexibility and support for registered charities and non-profits
The Government of Canada, along with the United Way Centraide Canada, the Canadian Red Cross and the Community Foundations of Canada, announced a $350 million Emergency Community Support Fund for charities and non-profits. These organizations will be able to apply for funding to support a variety of activities related to the battle against COVID-19. Eligibility criteria and how to apply will be posted on the respective websites of United Way Centraide Canada, Canadian Red Cross and Community Foundations of Canada.
Business Credit Availability Program
The Business Credit Availability Program (BCAP), announced on March 18, 2020, is a $10-billion credit initiative initially targeted at small and medium-sized businesses. The Government of Canada defines small businesses as companies having less than 99 employees and medium-sized businesses as companies with between 100 and 499 employees.
The program is a collaboration among Export Development Canada, the Business Development Bank of Canada (BDC) and private-sector lenders. The goal is to provide credit solutions for individual businesses in sectors such as oil and gas, air transportation, and tourism.
On April 17, 2020, the Government of Canada said that the BCAP will be expanded to support medium-sized businesses with larger financing needs, beginning with companies in Canada’s energy sector.
On May 11, 2020, BCAP was revised again to encompass mid-sized companies with larger financing needs.
Regional Relief and Recovery Fund (RRRF)
On May 13, 2020, the Government of Canada announced that a new Regional Relief and Recovery Fund will devote up to $962 million to help more small businesses and organizations in sectors that are key to their regions and local economies. The funding will be provided through the six regional development agencies (RDA) covering every region of Canada. Businesses interested in receiving RRRF support can apply through their local RDA.
Large Employer Emergency Financing Facility (LEEFF)
On May 11, 2020, the Prime Minister of Canada announced the LEEFF to provide bridge financing to Canada’s largest employers to protect jobs, help businesses weather the economic downturn and avoid bankruptcies of otherwise viable firms.
Companies seeking support from the LEEFF must demonstrate how they intend to preserve employment and maintain investment activities.
To qualify for LEEFF, businesses must be seeking financing of about $60 million or more, have significant operations or workforce in Canada, and not be involved in active insolvency proceedings.
The LEEFF is administered by the Canada Development Investment Corporation.
Canada Emergency Commercial Rent Assistance (CECRA)
Through CECRA, the federal government will offer forgivable loans to eligible commercial property owners experiencing rent shortfalls due to small-business tenants being financially impacted by the COVID-19 pandemic. To receive the loan, property owners will be required to reduce the rental costs of small business tenants by at least 75 percent and commit to a moratorium on evictions for three months. Tenants will still be responsible for up to 25 percent of the rent.
Changes to CRA call-center services
To manage the increase in calls due to COVID-19 and provide contact options for Canadians, the CRA has made changes to its call center services. For more information, visit the CRA website here.
Outreach activities
- Taxpayers are encouraged to use the CRA’s suite of digital services to interact with the CRA.
- The CRA is adapting its Outreach Program to help individuals better understand their tax obligations and is also modifying its Liaison Officer service to a telephone-based service.
- The CRA has made various requests to taxpayers regarding correspondence, filing and payment procedures.
Note that all drop boxes not located at the Canada Revenue Agency's tax centers have been closed, and the drop boxes at certain limited tax centers will be monitored regularly and remain open.
Collections, audit, objections and appeals
Taxpayers should be aware that the CRA has changed processes associated with: (1) Collections on new debts; (2) Audits; (3) Objections, appeals and taxpayer relief; and (4) Validation programs and verification activities.
Electronic signatures
As a temporary measure, the CRA will recognize electronic signatures for the authorization forms T183 or T183CORP. These forms are typically signed in-person to authorize tax preparers to file taxes.
Changes to income tax filing and payment dates
The federal and provincial governments have announced extensions to the various tax filing and payment deadlines to help taxpayers affected by the economic disruption from COVID-19.
Individuals
For individuals, the filing due date for 2019 personal tax returns is deferred from April 30, 2020 to June 1, 2020.
The deadline to pay any income tax amounts, including tax balances due, as well as instalments, that become owing on or after March 18, 2020 and before September 2020 is deferred until after August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
Trusts
For trusts with a taxation year-end on December 31, 2019, the filing due date for income tax returns is deferred from March 31, 2020 to May 1, 2020.
The deadline to pay any income tax amounts, including tax balances due, as well as instalments, that become owing on or after March 18, 2020 and before September 2020 is deferred until after August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
Corporations
For corporations, the filing due date for corporate income tax returns has not been deferred.
The deadline to pay any income tax amounts, including tax balances due, as well as instalments, that become owing on or after March 18, 2020 and before September 2020 is deferred until after August 31, 2020. No interest or penalties will accumulate on these amounts during this period.
The CRA announced that it will not contact any small or medium-sized businesses to initiate any new GST/HST or income tax audits for the next four weeks.
The Canada Revenue Agency also announced that it will temporarily suspend interaction with taxpayers and representatives for audits already in progress for the vast majority of businesses.
Charities
On March 27, 2020, the Government of Canada announced that the filing deadline for all charities with a Form T3010, Registered Charity Information Return due between March 18, 2020, and December 31, 2020, is extended to December 31, 2020.
Guidance on international income tax issues raised by the COVID-19 crisis
The Government of Canada's Travel Restrictions in response to the COVID-19 crisis have resulted in certain taxpayers and their representatives expressing concerns regarding certain potential Canadian income tax issues. On May 20, 2020, the CRA issued guidance on a number of these issues. The guidance will apply from March 16, 2020, until June 29, 2020, at which time the CRA may extend them if necessary, or rescind them if no longer required.
The issues covered in the guidance include:
For more information, visit Canada.ca.
Guidance on international income tax issues raised by the COVID-19 crisis.
Support for debtors
The CRA is proposing a solution to assist taxpayers and Licensed Insolvency Trustees (LITs) in circumstances where the CRA is a creditor, and the debtor is experiencing financial hardship.
Due to concerns about debtors defaulting on their proposals, the CRA is offering a waiver of the default under section 62.1 of the BIA and is granting a deferral of payments up to September 1, 2020.
For consumer proposals under the Bankruptcy and Insolvency Act (BIA), the CRA is offering to accept an amended proposal that calls for a deferral of payments up to September 1, 2020.
New measures for consumer proposals have been introduced in all provinces. As a result of these orders, debtors who have submitted consumer proposals will be able to “skip” three additional payments between
March 13, 2020, and December 31, 2020, without defaulting on their proposal.
This relief is available to taxpayers and Licensed Insolvency Trustees in circumstances where the CRA is the majority creditor and the debtor is facing financial hardship.
Selected provincial and municipal measures
Ontario
Municipal government measures
Across Canada, many cities and municipalities are providing extensions, grace periods, or suspensions in respect of various municipal taxes including property taxes, education taxes and utility bills.
In Toronto, for example, both individuals and businesses will benefit from a 60-day grace period on their property tax, Toronto Water, and Solid Waste bill payments, as of March 16, 2020. For property owners on the 11-installment pre-authorized payment plan, installment due dates will be extended by 60 days, and late payment penalties for residential properties will be waived for 60 days.
The city will suspend any pending automatic withdraws that have been scheduled within the next 60 days and which have not yet been withdrawn.
Also, many provinces and municipalities are mandating that utility payments can be deferred for 90 days.
More details of the measures taken by the municipal governments can be found at their respective websites.
Banks and credit unions
On April 4, Canada's Big Six banks all said they will temporarily reduce interest rates on credit cards to provide relief to customers affected by the COVID-19 pandemic. Most of the banks typically charge an interest rate of 19.99 percent to 20.99 percent on credit-card purchases. Under this relief measure, the interest rate will be reduced to 10.99 percent.
Also, two weeks earlier, the banks unveiled a mortgage-relief plan that allows homeowners struggling with their finances due to the pandemic to defer or skip mortgage payments for up to six months.
The banks are also working with their customers to defer payments on other loans, including credit card debt, auto loans and business loans.
Health
The following links will take you to resources that can assist you with understanding COVID-19 and how you can stay safe and healthy.