UPDATED:  August 31, 2020,  4:25 PM MDT

 

Summary of  recent major updates:

 

8/31/2020:  CEBA Application deadline extended to October 31, 2020.

7/27/2020:  Tax payment due dates for 2019 individual tax returns, 2019 or 2020 corporations, trust returns as well as installment payments are further extended till September 30, 2020. 

7/31/2020:  CECRA (rent relief) extended to August  2020.;   CERB set to end September 26, 2020

7/27/2020:  Tax payment due dates for 2019 individual tax returns, 2019 or 2020 corporations, trust returns as well as installment payments are further extended till September 30, 2020. 

7/17/2020:  Announced extension of CEWS till December 19, 2020.   For claim periods between July 5, 2020 – November 21, 2020, Employers would qualify for Base CEWS of 20% – 65% depending on the claim period and the  percentage of revenue drop.   Businesses can qualify for 25% Top-up CEWS if there is more than 50% decline in revenue when compared a)  preceeding three months against the same months of the prior year or b) average monthly revenue in the preceeding three months against average monthly revenue in January and February of 2020. 

6/16/2020:  CERB Benefit extension for additional two months ( eight weeks ) was announced by the Prime Minister.

6/15/2020:  CEBA Loan expanded and businesses who did not qualify under Payroll requirement may be eligible under Non-deferrable  expense stream..

 

 

  

Since March 18, 2020, when the Federal Government released Canada’s Economic Response Plan to assist Canadians against the escalating Covid-19 pandemic, there has been a flurry of announcements , clarifications and new legislations as well.   Details on some of these relief measures are still in the works and clarifications  regarding administration of these benefits are expected in the future   Major items from the Federal  and Alberta Government’s  economic support announced till date include:

 

FOR INDIVIDUALS RE: TAX COMPLIANCE RELIEF

 

  • The personal tax return filing due date was extended till June 1, 2020.    If you are expecting tax refunds,  GST credits or the Canada Child Benefit, you are encouraged to file as soon as possible to ensure that certain benefits are administered correctly.
  • Any personal tax amount owing is due by September 30, 2020.  This includes 2019 personal tax balance owing and your June 15, 2020 Installment that became due on or after March 18th will be due by September 30, 2020.
  • CRA will temporarily recognize electronic signatures on Form T183 so that tax documents can be signed remotely.

 

 

FOR BUSINESS RE: TAX COMPLIANCE

 

  • Federal corporation income tax amounts owing ( including  most tax balances and Installments ) on or after March 18 will be extended till September 30, 2020.   Please note that this deferral may not apply if your taxes are triggered due to rental or investment income.
  • Federal Corporation Income tax filing due date Any Corporations with filing due date between March 18, 2020 to May 31, 2020 was extended till June 1, 2020.  Businesses with filing due date between in May 31 – August 31, 2020 is extended till September 1, 2020.  CRA will not charge late-filing penalties as long as it is filed by September 30, 2020.
  • Alberta Corporation Income tax filing due date Any Corporations with filing due date between March 18, 2020 to May 3, 2020 was extended till June 1, 2020.  Businesses with filing due date in June, July and August was extended till September 1, 2020.
  • Payroll taxes owing.   Payroll tax payments remain unchanged.  Payment relief for payroll is not expected as it is withheld from other taxpayers.
  • [Alberta] Any Alberta Corporation income tax amounts owing ( including tax balances and Instalments ) on or after March 18  are also extended to September 30, 2020.
  • GST return filing due date remains unchanged.  Any Federal GST/HST amounts owing ( including tax balances, Installments ) on or after March 18 will be deferred until June 30, 2020.  
  • T3 Trust returns, Partnership returns (T5013) and NR4 Statements of amounts paid or credit to non-residents are required by May 1, 2020.
  • T3010  Charities – Filing due between March 18, 2020 and December 31, 2020 is extended to December 31, 2020.

 

FOR BUSINESSES RE: ECONOMIC SUPPORT

 

  • Canada Emergency Wage Subsidy will provide up to 75% of temporary wage subsidy to eligible employers for wages paid between March 15, 2020 to August 29, 2020.   Applications must be submitted by September 30, 2020.

 

Who is eligible? –   Most employers (including Individuals,  most partnerships, taxable corporations, non-profits and registered charities) who see a drop in their revenue for month of March, April & May 2020 and had a payroll account registered with Canada Revenue Agency as of March 15, 2020.    Eligible remuneration may include salary, wages and other remuneration for which employers would generally be required to withhold & remit payroll taxes to CRA.  For new start ups, the eligibility will be determined by comparing monthly revenue to the average of January and February 2020 revenue.  

 

Period of coverage: The subsidy can be applied for eligible remuneration paid for following  periods  : 

 

                       Period 1 – March 15 to April 11, 2020 – ( 15% Revenue drop  – March 2020 compared against March 2019 or Jan/Feb 2020 average)

 

Period 2 – April 12 to May 9, 2020 – (30% Revenue drop in April 2020 )

 

Period 3 – May 10 to June 6, 2020 – (30% Revenue drop in May 2020)

 

Period 4 –  June  7 to July 4, 2020 – (30% Revenue drop in June 2020) 

 

Period 5 –  July  5 to August 1 2020 – (Base  CEWS of upto 60% + Top up 25% if 3 month revenue decline of over 50% –  Max 85% of the remuneration paid during the claim period.  Entities can chose to use the  new CEWS design or the previous CEWS design which is 75% of the actual remuneration or the pre-crisis pay when the revenue drop is more than 30% ) 

 

Period 6 –  August  2 to August 29 2020 – (Can either use the new CEWS program or the previous CEWS design if revenue drop is more than 30%) 

 

Period 7 –  August 30 – Sept 26, 2020 – (Base  CEWS of upto 50% + Top up 25% if 3 month revenue decline of over 50% ) 

 

Period 8 –  September 27 –  Oct 24, 2020 – (Base  CEWS of upto 40% + Top up 25% if 3 month revenue decline of over 50% ) 

 

Period 9 –  October 25 –  November 21, 2020 – (Base  CEWS of upto 20% + Top-up 25% if 3 month revenue decline of over 50% ) 

 

Period 10 –  November 22 –  December 19, 2020 – (TBD ) 

 

How is the drop in revenue calculated?: Eligible employers who see a drop in revenue of 15% for March and 30% for April or May 2020 against either  a) the same month in 2019 or b) average of their revenue in January and February of 2020.   

 

The business may use cash or accrual accounting method and the same benchmark (accounting and the comparative ) has to be used for the duration of the program.  Special rules apply for revenue from related parties and when affiliated corporations are involved in revenue calculation.

 

Amount of subsidy:  The subsidy can be calculated using the CRA online calculator.  This grant will cover up to 75% of the employee’s current pay or average weekly pay between January 1 – March 15, 2020, which ever is more, up to a maximum of $847 per week per employee.     Employee “A” who used to be paid $1,500/week before the crisis is hired back for a revised pay of $900,  So the subsidy for his salary will be the full $847/week rather than 75% of the new pay).   Special rules apply for salary to related party employee.  The subsidy for each claim period must be paid to the employee before applying for the subsidy.

 

How to apply:  Application for eligible employers can be done through a) CRA’s My Business Account b) by  us as your Authorized Representative or c) through CRA web portal.  Businesses can now also requested adjustments to applications already submitted .

 

  • Canada Emergency Business Account (CEBA) provides loan up to $40,000  – Eligible businesses may access interest-free loan of upto $40,000.  CEBA Applications must be completed at your primary financial institution by latest October 31, 2020.

 

    • Eligibility?    The loan is available for Canadian business operating as of March 1, 2020 and  either a) has 2019 payroll of  $20,000 to $1.5 million or b) have non-deferrable expenses of between $40,000 – $1.5 million and have filed 2018 or 2019 tax returns.
    • Upto $10,000 may will be forgiven if the loan is repaid by December 31, 2022.
    • Any unpaid balances as at December 31, 2022 will be converted to a three-year term loan at 5% interest.
    • This loan cannot be used to fund any payments or expenses such as prepayment/refinancing of existing indebtedness, payment of dividends, distributions and increases in management compensation.

 

  • Canada Emergency Commercial Rent Assistance (CECRA)  is intended to provide up to 75% rent relief for small businesses for the month of April – August 2020 . The Government will provide forgivable loans to qualifying commercial property owners for up to 50% of the monthly rents when they agree to reduce the rent to tenants by at least 75%.
    Eligibility includes: businesses, non-profit and charitable organizations who a) pay less than $50,000 of monthly gross rent per location b) has less than $20 million in gross revenue and c) has experienced at least a 70% drop in revenue. 

 

  •  10% Temporary Wage Subsidy (TWS)   The 10% wage subsidy is a separate benefit available to employers for wages paid from March 18 – June 19, 2020.   This subsidy is capped off at $1,375 per employee and upto $25,000 for each business.

 

Who is eligible? – Any employer who may be an individual, non-profit organizations, registered charities or eligible Canadian Controlled Private Corporations (CCPC).   For a CCPC to be eligible, it must be allocated a portion of the small business deduction limit in the prior taxation year.

 

How is it calculated.  This subsidy is allowable  for 10% of the gross wages paid to all employees which can be reduced  from the payroll source deduction to be remitted to Canada Revenue Agency.  This subsidy will reduce the  75% Canada Emergency Wage Subsidy benefit.

 

  •   EI working sharing program  is expanded allowing employers  to reduce the work hours for employees with similar job duties for a longer period
  • [Alberta] – Alberta 2020 WCB Premiums will be deferred  to 2021.  Private business with less than $10 million in insurable earnings will be eligible for 50% premium reduction.  Any premiums already paid will be refunded automatically.

 

 

 

 FOR INDIVIDUALS RE: ECONOMIC  SUPPORT

 

  • Canada Emergency Response Benefit (CERB) On March 25, 2020, The Federal Government announced the Canada Emergency Response Benefit (CERB) which will provide a taxable benefit of $2,000 per month to eligible Workers for up to four month period between March 15 – October 3, 2020.
    • Who is eligible?  a) Canadian resident who is over 15 years of age  b) who have  not quit job voluntarily   c) Had income of at least  $5,000 in 2019 or in the 12 month prior to the date of application ( from employment, self-employment, maternity / paternity EI benefits, or non-eligible dividend) and d) do not expect to earn more than $1,000 for atleast 14 days in a row during the benefit period.
    • EI  benefit & CERB benefit:   If you became eligible for EI on or after March 15, 2020,  your claim will be automatically processed through the Canada Emergency Response Benefit and you do not need to reapply.  You retain your eligibility to receive EI benefit after you stop receiving the CERB and the period that you received the CERB does not impact your EI entitlement.   If you are currently under Maternity benefit, you may apply upon conclusion of your maternity/parental leave if work is not available as a result of COVID.
    • How much is the benefit payment?  If eligible, the benefit payment will be $2,000 per four-week period.
    • How do I apply?  The benefit can be applied through CRA MyAccount, My ServiceCanada Account or by calling 1-800-959-2019.   Applications will be accepted on the days assigned based on your month of birth. Everyone is encouraged to sign up for Direct Deposit for faster processing of the benefit.  You may be asked to provide additional documentation to verify your eligibility at a future date.
    • More information? Refer here https://www.canada.ca/en/services/benefits/ei/cerb-application.html
    • How do I repay/return CERB? If you get employment during the benefit period or need to return the CERB benefit, you will be able to return it through CRA My Acccount (after May 11, 2020) or mail a cheque payable to “Receiver General for Canada” to Revenue Processing – Repayment of CERB, Sudbury Tax Centre, 1050 Notre Dame Avenue, Sudbury ON P3A 0C3
  •   Canada Emergency Student Benefit  is intended for post-secondary students and recent graduates who are ineligible for the CERB or for EI benefit and cannot find full-time employment due to COVID-19.   The CESB will provide $1,250 per month for eligible students from May through August 2020 and $1,750 for students with dependents and those with permanent disabilities.   More details are expected soon.

 

 

 

  • Low and modest income individuals/families may receive special one-time payments in May 2020 for:
    • Increased GST credit payment of upto $400 for individuals and $600 for families.  This benefit was scheduled to be paid on April 9, 2020.

    • Additional $300 per child in Canada Child Benefit payment  for the 2019-2020 year starting with the May 2020 benefit cheque.
  • For workers who qualify for the EI sickness benefit, the one-week waiting period and the requirement for medical certificate are waived.
  • Six-month suspension on all interest and repayments on Canada Student Loans.
  • [Alberta] 6-month interest-free deferral of student loan payments on Alberta Student loans
  • The minimum RRIF withdrawal is reduced by 25% so that individuals will not be forced to liquidate their RRIF
  • [Alberta] Albertans can call their natural gas or electricity provider and request 90 days deferral of Utility payment.
  • [Alberta]  Emergency isolation support payment of $1,146 is now closed.  This benefit was designed to cover the period till the CERB benefit is processed for Albertans  who experienced total or significant loss of income due to self isolation and have no other source of compensation including federal EI benefit.
  • Canada’s large banks have confirmed that they may facilitate up to 6-month payment deferral for mortgages and provide relief on other credit products. They have also affirmed to work with customers to provide flexible solutions, on a case by case basis.  CMHC and other insurers offer tools for lenders to assist in restructuring debts by payment deferrals, loan re-amortization, capitalization of outstanding interest arrears and other eligible expenses.

     

    Sources:

     

    CRA COIVD-19 https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html

     

    Department of Finance https://www.canada.ca/en/department-finance/economic-response-plan.html

     

    [Alberta] https://www.alberta.ca/covid-19-support-for-employers.aspx

     

    For additional information ,please feel free to refer to our newsletter or contact us.

     

    WHAT YOU CAN EXPECT FROM US:

     

     

    • We will be continuing to work on your accounting, assurance and tax matters.

     

    • All of the same email and phone numbers will remain active and we will be communicating by these means throughout this situation.

     

    • Until further notice, we are suspending all in-person face to face meetings

     

    • Our office doors will be open between 10:00 AM to 2:00PM on weekdays.

     

    • For drop-offs, there is a marked box inside the building

     

    • Although we will be delivering most of your tax information through your portal at clienttrackportal.com, Pick-ups can be accommodated at a pre-arranged time.

     

    • Our  clienttrackportal.com will continue to operate, providing the ability to securely send and receive sensitive information.  Please let us know if you need to obtain or reset your log-in information.

     

    • You can also securely upload your documents directly to any of our member at http://www.horizongroupcpa.com/contact/

     

    Disclaimer: Above content is provided for general information only and may not be complete or applicable in certain particular  cases.   Eligibility criteria are also subject to change and hence may not apply at the time of your application.   

     

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