Tax updates in Canada in response to COVID-19

This article summarizes the latest tax updates from the Canada Revenue Agency (“CRA”) and certain provincial governmental authorities amid ongoing COVID-19 concerns. RSM Canada continues to closely monitor new developments and will provide updates as new information becomes available.

This tax alert was originally published on March 18 and has been updated as of March 24 to reflect the most recent tax developments.

Federal updates

The principal federal measures to help Canadians manage through the COVID-19 concerns relate to:

1. tax-filing deadlines and tax-payment deadlines
2. electronic tax filing and electronic communication
3. revised management of collections, audits and tax disputes
4. support for employers, and
5. legislative updates.

Each of these topics is briefly discussed below. For a complete list of the CRA updates, see the CRA official release.

INCOME TAX-FILING DEADLINES AND PAYMENT DEADLINES

Previously, the Government stated it would postpone the income tax-payment deadlines, thereby providing tax deferrals to individuals and businesses to help meet liquidity needs. The CRA has now confirmed the new tax-payment deadlines and, in some cases, new extended deadlines to file income tax returns. Tax returns filed by the new filing deadlines will not be subject to late-filing penalties. Interest will not accrue on any tax provided that it is paid by the new payment deadlines.

ELECTRONIC TAX FILING AND COMMUNICATION

1. The CRA is encouraging taxpayers to use the CRA’s suite of secure digital services to interact with the CRA and easily manage their tax affairs anytime, anywhere. These services can quickly help Canadians track their refund, view or change their return, check benefit and credit payments, view Registered Retirement Savings Plan (RRSP) limits, set up or update direct deposit, and receive email notifications.
2. The CRA is adapting its Liaison Officer service to support small businesses during COVID‑19. In particular, the Liaison Officer service is customizing information during these challenging times by ensuring small businesses are aware of any changes, such as tax-filing deadlines, tax-payment deadlines and proactive relief measures. Through this service, the CRA helps small business owners understand their tax obligations. Traditionally available in-person, this service is now available over the phone.
3. The CRA call centres will continue to be open from 9 a.m. to 9 p.m. Monday to Friday, and 9 a.m. to 5 p.m. on Saturdays (local time). However, to comply with social distancing measures and to protect the health and safety of employees, the CRA may have fewer agents answering calls. As a result, the CRA can only answer calls regarding 2019 income tax and benefit returns, receiving benefit payments or setting up the My Account service.
4. The CRA encourages those who need to update or access their tax information to use one of the CRA’s self-serve options, such as My Business Account or the CRA BizApp mobile web application.

COLLECTIONS, AUDITS AND TAX DISPUTES

The CRA has released an official statement providing updates on its collection, audit and objection strategy amid the COVID-19 concerns. The CRA is temporarily revising how it administers collection, audit and objection matters.

In addition to the temporary measures the CRA is implementing, the Tax Court of Canada (TCC) is closed between March 16, 2020 and May 1, 2020 and, as a result, is excluding this period from the computation of time for deadlines prescribed by the TCC Rules. However, this extension only applies to appeals that have already been instituted in the TCC – it does not extend a taxpayer’s deadline to initiate an appeal to the TCC. Taxpayers can initiate an appeal in the TCC using the TCC’s online filing system.

The Federal Court of Appeal (FCA) is excluding the period March 16, 2020 to April 17, 2020 inclusive (the suspension period) in the calculation of time for filing appeals and applications. Those commencing appeals and applications under the Federal Courts Act will be governed by mandatory deadlines. However, they may seek an extension of the deadlines.

SUPPORT FOR EMPLOYERS

1. On March 18, 2020, the government announced a temporary wage subsidy for employers for a period of three-months starting March 18, 2020. The government has now released a list of questions and answers (refer to the official release and RSM’s Economic Plan Summary) to help navigate through the technical interpretation and applicability of these measures.
2. The CRA has suspended all garnishment of employee wages (Requirement to Pay notices). As a result, employers are not required to remit amounts to the CRA for employee tax debts and employers will not be liable for failing to remit. The following Requirements to Pay (RTP) measures are in effect:

• Effective immediately, the CRA will not be sending any new RTPs to employers
• For RTPs currently in place, remittances are not required, until further notice
• The CRA also requests that employers not action any RTPs received this week

LEGISLATIVE UPDATES

1. After intense negotiations, on March 25, 2020, the House of Commons unanimously passed the COVID-19 Emergency Response Act, the legislation aimed at implementing the measures introduced by the federal government on March 18, 2020. The bill will now go to the Senate, which is expected to pass it later in the day on March 25. A royal assent ceremony – the final step before the bill becomes law – is also expected to happen before the end of the day.
2. The Ontario government passed emergency legislation on March 19, 2020, aimed at protecting workers forced to stay home due to the COVID-19 pandemic. The legislature will reconvene on March 25 when the Finance Minister Rod Phillips is set to deliver a scaled-back economic forecast instead of the planned full budget.

Provincial updates

QUEBEC UPDATES

• In the wake of the federal government’s announcements on March 18, 2020, the Québec government has harmonized its practices with those of the CRA and postponed the deadline for paying tax balances payable for the 2019 taxation year until Sept.1, 2020, both for individuals and corporations.
• The Ministère des Finances du Québec announced the postponement to June 1, 2020 of the personal income tax return filing-due date for the 2019 taxation year and the postponement to May 1, 2020 of the income tax return filing-due date for certain trusts (other than specified investment flow-through trusts) for the 2019 taxation year.
• Partnerships that had until March 31, 2020 to file the Partnership Information Return (TP-600-V) for the 2019 taxation year now have until May 1, 2020.
• Similar to the CRA, Revenu Québec has released a webpage to provide updates on fiscal measures to help Canadians manage their tax and benefit affairs as COVID-19 evolves.
• Revenu Québec will also adapt its own approach by limiting its audit and collection activities. With regard to collection measures, Revenu Québec will be open to extending payment agreements on a case-by-case basis.

ALBERTA UPDATES

• Alberta businesses with corporate income tax balances owing or installment payments coming due between March 18, 2020 and Aug. 31, 2020, can defer making these payments until Aug. 31, 2020. No penalties and interest would apply provided the payments are made by the new deadline.
• However, businesses are expected to continue to file their tax returns as required by legislation.

MANITOBA UPDATES

• Manitoba is extending the April and May deadlines to file payroll taxes by up to two months for small and medium-sized businesses with monthly remittances of less than $10,000.
• Businesses will have up to two additional months to remit retail sales taxes and the Health and Post-Secondary Education Tax Levy, commonly called the payroll tax.
• In its 2020 budget, Manitoba is reducing its provincial sales tax rate from 7 per cent to 6 per cent beginning on July 1, 2020.

SASKATCHEWAN UPDATES

• Businesses directly impacted by COVID-19 that are unable to file their provincial tax return(s) by the due date may submit a request for relief from penalty and interest charges on the return(s) affected. Penalty and interest waiver requests can be submitted electronically through the Saskatchewan eTax Service (SETS) located at sets.saskatchewan.ca, by email.
• Saskatchewan has deferred provincial sales tax (PST) remittances, audit program and compliance activities for three months starting March 20, 2020. During this time, businesses who are unable to remit their PST due to cash-flow concerns will not be charged any penalty and interest.
• Government of Saskatchewan will be establishing a Business Response Team and single window information webpage for businesses to access information and receive timely updates on provincial support initiatives.
  

BRITISH COLUMBIA (B.C.) UPDATES

• The B.C. government is increasing and expanding the B.C. Climate Action Tax Credit. An additional one-time payment will be made in July 2020 on top of the regular climate action tax credit payment. Eligible families of four will receive up to $564 and eligible individuals will receive up to $218 in an enhanced payment.
• Businesses with a payroll over $500,000 can defer their employer health tax payments until Sept. 30, 2020. Businesses with a payroll under this threshold are already exempt from the tax.
• B.C. is extending tax filing and payment deadlines for the PST, municipal and regional district tax, tobacco tax, motor fuel tax and carbon tax until Sept. 30, 2020.
• The scheduled April 1 increase to the provincial carbon tax, as well as the new PST registration requirements on e-commerce and the implementation of PST on sweetened carbonated drinks, will be delayed and their timing will be reviewed by Sept. 30, 2020.

MUNICIPAL TAX UPDATES

Vancouver, Edmonton, Toronto, Mississauga and Brampton, Ottawa, and Montreal are providing extensions, grace periods, or suspensions in respect of various municipal taxes including property taxes, education taxes and utility bills. More details of the measures taken by the municipal governments can be found at their respective websites.