There were a number of new initiatives and updates announced today regarding the COVID-19 Pandemic response. Following is a summary of the initiatives as they now stand. Please be aware that the details of these announcements continue to be outlined and explained. We will keep you up to date as we get new details.
Income Taxes Filing dates
CRA has extended the filing deadline for 2019 personal income tax returns from April 30 to June 1.
The deadline for filing Trust returns has been extended to May 1.
Payment for Taxes Owing
All taxpayers that owe income tax balances for 2019 will have until September 1, 2020 to pay these balances. This is effective for amounts that are otherwise due after March 18, 2020 and before September 1, 2020. This initiative applies to individuals and businesses.
These deferred amounts will not be subject to interest or penalties “during this period”.
Temporary Wage Subsidy
This subsidy is to help small business retain employees and help prevent lay-offs.
The subsidy will be available for three months, will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
The subsidy can be applied directly to current remittances of income tax withheld as source deductions from employees.
The subsidy is available to corporations eligible for the small business deductions and for non-profit organizations and charities.
Emergency Care Benefit
An Emergency Care Benefit is offered to support affected individuals who need to stay home because of COVID-19. Up to $900 paid every two weeks, for up to fifteen weeks, available to individuals, including self-employed individuals, who fall ill with COVID-19, are placed in quarantine or take care of a family member who is ill.
This benefit is also provided to parents with children who require care or supervision due to school closures and are unable to earn employment income.
The benefit starts in April and will be available for online application. Applicants will not be required to provide a medical certificate, but will have to re-attest every two weeks that they meet the eligibility requirement.
COVID-19 Response Fund (announced March 11)
The purpose of this fund is to allow businesses to make flexible arrangements with the CRA to meet payment obligations, where they face difficulties related to COVID-19.
The Fund will also allow workers in quarantine or those directed to self-isolate, to receive Employment Insurance sickness benefits earlier. Effective March 15 the one-week waiting period will be waived for affected individuals.
Additional Credit Arrangements for Business (announced March 11)
$10 billion in funds will be available through the Business Development Bank, for businesses struggling to deal with the effects of the virus. Application details to come.
Large financial institutions (Banks / Credit Unions) will be provided with an additional lending capacity of $300 billion.
Bank of Canada overnight interest rate reduced from 1.25% to .75%
Additional Credit for Agriculture Sector
Increase the near-term credit available to farmers and the Agri-food sector through Farm Credit Canada.
Registered Retirement Income Funds (RRIF)
Minimum withdrawals from RRIF’s reduced by 25% for 2020. Similar considerations for those receiving benefits from a Registered Pension Plan.
Student Loan Repayment
Six-month interest-free moratorium on the repayment of Canada Student Loans.
GST Tax Credit
One-time special payment to eligible individuals receiving the GST Tax Credit of approximately $400 per individual or $600 per couple in May 2020
Mortgage Payment Deferral
Arrangement with the major Chartered Banks to allow homeowners to defer mortgage payments for up to six-months. Possible other payment deferrals being considered.
Cross Border Trade with the United States
While the Border is being closed for recreational and visitor travel, the border will remain open for commercial traffic and shipment of emergency goods.
Work Sharing Program
Temporary changes to the Work-Sharing program will provide income support to employees eligible for EI benefits who work a temporarily reduced work week while their employer recovers.
- Extend Work-Sharing agreements from 38 weeks to 76 weeks
- Wave the mandatory waiting period between agreements
- Easing of the recovery plan requirements.
Supplemental Unemployment Benefits
Employers should consider using the existing Supplemental Unemployment Benefit (SUB) plan. The SUB plan can increase an employees’ weekly earnings when they are unemployed due to a temporary stoppage of work, training, illness, injury or quarantine.
Payment from SUB plans that are registered with Service Canada are not considered as earnings and are not deducted from EI benefits.
MORE TO COME
These programs and initiatives are evolving daily. We will endeavor to provide additional information and details as they become available.
Please call with any questions you may have or for additional explanations.
Raincoast Business Advisors
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