Tax Relief Measures – Part 2

The Lazer Grant Tax Team compiled the following information to share the announcements published by the government for businesses and individuals. We are providing this summary in advance of any future detailed articles. Here is what we know as of yesterday.

For Business:

  1. CRA corporation tax deadlines with due dates March 19th to May 31, 2020 – the filing date has been extended to June 1, 2020
  2. CRA corporation tax payments (for Part 1 tax) due March 19th to August 31, 2020 (balances due and installment payments) – the deadline is extended to September 1, 2020
  3. CRA has also extended deadlines for partnership returns, trust returns and T3010 charity returns, please give us a call if you need more information
  4. GST returns and remittances
    • Still have to file your return on time!
    • Defer payments for amount due between March 27, 2020 to May 31, 2020 – can defer to June 30, 2020 (includes regular balances due and remittances)
    • No interest will apply ~if~ you make your payment by June 30th
  5. Customs duty and sales tax for importers
    • Payment deadlines for statements of accounts for March, April, and May are being deferred to June 30, 2020.
  6. Source deductions – still due on time!
  7. Excise taxes and duties – still due on time!

Business – Avoiding layoffs and rehiring employees

  1. Extending the Work-Sharing Program
    • For businesses affected by Covid 19 – extending the maximum duration for work sharing program to 76 weeks.
  2. Temporary wage subsidy for employers (TWSE)
    • Based on wages paid = 10% of remuneration paid from March 18, 2020 to June 19, 2020 to a maximum of $1,375 per employee and maximum of $25,000 per employer
    • Note associated CCPCs will not be required to share the maximum subsidy
    • The subsidy has to calculated manually/ tracked by the employer or their payroll provider.
    • You do not need to apply for the subsidy. Once you have calculated the subsidy, you can reduce your current payroll remittance of Federal/provincial income tax that you send to the CRA by the amount of the subsidy. Note: you cannot reduce the amount of EI/CPP premiums to CRA, just the taxes
    • Employers are only eligible if they had a payroll program account with the CRA on March 18, 2020.
    • The subsidy has to be recorded in your bookkeeping as a reduction of your payroll liability and increase in taxable government grant revenue (keep it in a separate account to make it easier to track).
    • Keep good records!
    • Can claim this creditor or the Canada emergency wage subsidy but not both
    • More information: https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html#h3
  3. Canada Emergency Wage Subsidy (CEWS) https://www.canada.ca/en/department-finance/economic-response-plan/wage-subsidy.html
    • Eligible employers = individuals, taxable corporations, partnerships, non profit organizations and registered charities
    • This subsidy would be available to eligible employers that see:
      • a drop of at least 15% per cent of their March 2020 revenue
      • a drop of at least 30% per cent of their April and May 2020 revenue
      • Comparison is to prior year (same month) ~or~to the average of January and February 2020 revenue (must choose one method and stick with it)
      • Once an employer is found to be eligible for a specific period, the employer automatically qualifies for the next period.
      • See website noted above for eligible period details and examples
    • Types of revenue excluded:
      • Revenue on account of capital e.g. gain on sale of assets
      • Revenue from extraordinary items
      • Revenue from related companies with some exceptions
    • The subsidy for an employee on eligible remuneration paid between March 15 and June 6, 2020 the greater of:
      • 75% of the remuneration paid to a maximum benefit of $847 per week or
      • The amount of remuneration paid up to a maximum benefit of $847 per week or 75% of the pre-crisis weekly remuneration to a maximum or $847 per week, whichever is less
      • Special rules limit the subsidy for family members that work for the company, including the shareholder – contact us for more information
    • Eligible employee = work in Canada, has not been without remuneration for more than 14 consecutive days in eligibility period
    • Additional Subsidy
      • For each week employees are on leave with pay (i.e. does not perform any work for the employer) and
      • The employer is eligible to claim CEWS for those employees
      • The employer can apply for a refund of CPP/EI premium paid by the employer
      • Application is at the time of the CEWS application
      • CPP/EI still has to be paid to CRA by due dates!
    • No limit to the subsidy
    • Have to keep good records! (support for reduction in arm’s length revenues and remuneration paid to employees)
    • Have to apply – through MyCRA business account or special portal – System is not yet set up, we are waiting on details
    • Can claim this credit or the Canada emergency wage subsidy but not both
    • Get ready – set up for your MyCRA business account now! https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account/about-business-account.html
    • MyCRA business account log in page: https://www.canada.ca/en/revenue-agency/services/e-services/e-services-businesses/business-account.html

Access to Credit

Business Credit Availability Programs (BCAP)

  • In order to be eligible, businesses must have been impacted directly or indirectly by recent events and have been financially viable prior to the impact from COVID-19.
  • Business Development Bank of Canada (BDC) and Export Development Canada (EDC) are working with financial institutions
  • Programs start in Mid-April
  • Businesses will work with their current financial institutions
  • Loan Guarantees for small and medium sized enterprises
    • EDC & Financial institutions working together to issues new operating credit and cash flow terms of up to $6.25 million
  • Co-Lending program for small and medium sized enterprises
    • BDC & financial institutions to co-lend term loans for their operational cash flow requirements up to $6.25 million
      Canada Emergency Business Account
  • To qualify the organization will need to demonstrate they paid between $50,000 to $1Million in total payroll in 2019
  • Will provide interest free loans of up to $40,000 to small businesses and not for profits to help cover their operating costs while revenues have been temporarily reduced
  • Requirement: funds from this loan will only be used to pay for operating costs that cannot be deferred, such as payroll, rent, utilities, debt service, insurance, and property tax.
  • Applications start this week
  • Businesses will work with their current financial institutions

For individuals

CERB (Canada Emergency Responsive Benefit) has been expanded:

  • For workers residing in Canada, at least 15 years old, who have stopped working because of Covid-19 and have not voluntarily quit their job or are eligible for EI regular or sickness benefits (see website for additional eligibility rules). Must be without employment/self- employment income for 14 consecutive days in the first benefit period and NO employment/self-employment income in the subsequent periods.
  • Benefit – $500 a week for up to 16 weeks, Note must reapply at the start of each 4 week period.
  • If you became eligible for EI regular or sickness benefits on March 15, 2020 or later, your claim will automatically be processed through the CERB
  • Applications open April 6 to 9th – through CRA My Account for Individuals or 1-800-959-2019
  • https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra.html#start

Waiting for benefit payments? Speed up the process by registering for direct deposit: Get set up for direct deposit through CRA My Account or through your Banks website https://www.canada.ca/en/revenue-agency/services/e-services/cra-login-services/cra-user-password-help-faqs/registration-process-access-cra-login-services.html

GST – Special one-time payment staring April 9 for low/modest income family, average benefit will be $400 for single individuals.

Canada Student loans and Canada Apprentice loans– All student loan borrowers will automatically have their loan repayments and interest suspended until September 30, 2020

We hope that everyone is managing well in these uncertain and unprecedented times. We trust you find time during the day to pause and take a breath. We are here to help. If you have any questions or need assistance please communicate with your primary contact at Lazer Grant.