Special Update – COVID-19: Government Tax Relief and Other Measures
In response to COVID-19, the Federal Government recently announced tax measures and other financial support for individuals and businesses totaling $82 billion. These measures will provide up to $27 billion in direct support to Canadian workers and businesses, plus $55 billion to meet the liquidity needs of Canadian businesses and households through tax deferrals. This Special Update highlights the key Federal Government announcements, as well as IG Wealth Management mortgage and banking measures that will be of interest to our clients. To better understand how they may affect you specifically, please contact your IG Consultant.
Tax Relief – Extension of Tax Filing Deadlines and Tax Payment Due Dates
Tax filing deadlines have been extended for individuals and trusts with December 31 year ends. As well, deadlines for the payment of taxes, including installments, have been extended for individuals, trusts and corporations, with no interest or penalties accumulating on these amounts during the extension period. The extension on payments applies solely to income tax payments and is not applicable to other payments, such as GST/ HST and payroll remittances.
"The deadline for filing 2019 personal income tax returns is postponed to June 1, 2020."
- The deadline for filing 2019 personal income tax returns is postponed to June 1, 2020. However, the Canada Revenue Agency (CRA) encourages individuals who expect to receive benefits under the GST Credit or the Canada Child Benefit not to delay the filing of their tax return to ensure their entitlements for the 2020-21 benefit year are properly determined.
- The deadline for paying taxes that become owing on or after March 18, 2020 and before September 2020 is deferred until after August 31, 2020. This includes taxes owing for the 2019 taxation year and installment payments for 2020.
TRUSTS WITH A DECEMBER 31, 2019 YEAR-END
- The tax return filing due date is deferred until May 1, 2020.
- The payment of taxes, including installments, that become owing on or after March 18, 2020 and before September 2020 is deferred until after August 31, 2020.
- The deadline for paying income taxes that become owing on or after March 18, 2020 and before September 2020 is deferred until after August 31, 2020. This relief applies to tax balances due as well as instalments (applicable to taxes under Part I of the Income Tax Act).
- No extensions to corporate tax return filing deadlines have been announced.
ELECTRONIC FILING AND ELECTRONIC SIGNATURES
Individuals and corporations are encouraged to e-file their tax returns if they expect a refund. As a temporary administrative measure, electronic signatures will be accepted to authorize electronic filing.
QUEBEC TAX FILERS
The Quebec government has announced similar tax filing and payment deadline extensions for individuals, trusts and businesses.
"Individuals and corporations are encouraged to e-file their tax returns if they expect a refund. As a temporary administrative measure, electronic signatures will be accepted to authorize electronic filing."
Measures Impacting Individuals
25% REDUCTION IN RRIF MINIMUM PAYMENTS FOR 2020
The required minimum withdrawals from RRIFs are reduced by 25% for 2020, recognizing that recent volatile market conditions impact many seniors’ retirement savings and providing some flexibility for those concerned that they may be required to liquidate RRIF assets to meet minimum withdrawal requirements. Similar rules will apply to individuals receiving variable benefit payments under a defined contribution registered pension plan.
Although no details have been provided for how financial institutions will be asked to apply this measure, any client who does not need the full current minimum should speak to their IG Wealth Management Consultant.
For Canadians without paid sick leave who are sick, quarantined or forced to stay home to care for children, the following measures were announced:
Effective As Of March 15 - Temporarily Waiving:
- The one-week waiting period for those individuals in imposed quarantine that claim Employment Insurance (EI) sickness benefits.
- The requirement to provide a medical certificate to access EI sickness benefits.
NEW EMERGENCY CARE BENEFIT
Providing up to $900 bi-weekly, for up to 15 weeks. This benefit will be administered through the Canada Revenue Agency (CRA) and provide 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, such as an elderly parent, but do not qualify for EI sickness benefits.
- Parents with children who require care or supervision due to school closures, and are unable to earn employment income, irrespective of whether they qualify for EI or not.
Application for the benefit will be available in April 2020 and will require individuals to attest (and re-attest every two weeks) that they meet the eligibility requirements.
For further details on the announced application process see the Department of Finance news release on Canada’s COVID-19 Economic Response Plan - https://www.canada.ca/en/department-finance/economic-response-plan.html
NEW EMERGENCY SUPPORT BENEFIT
Delivered through the CRA to provide up to $5.0 billion in support to workers who are not eligible for EI and who are facing unemployment. Further details on how this benefit will be administered are to follow.
GOODS AND SERVICES TAX CREDIT (GSTC)
For low and modest-income families, the Government is proposing to provide a one-time special payment by early May 2020 doubling the maximum annual GSTC payment amounts for the 2019-20 benefit year.
CANADA CHILD BENEFIT (CCB)
The Government is proposing to increase the maximum annual payment amounts for the 2019-20 benefit year by $300 per child. Qualifying families will receive an extra $300 per child as part of their May payment.
Mortgages and Banking Measures
Six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans.
MORTGAGES AND OTHER CREDIT RELIEF
- Canada Mortgage and Housing Corporation (CMHC) is providing increased flexibility for homeowners facing financial difficulties to defer mortgage payments on homeowner CMHC-insured mortgage loans. CMHC will permit lenders to allow payment deferral beginning immediately.
- Through Canada’s large banks, a deferral of up to six months for mortgage payments and possible relief on other credit products.
"IG Wealth Management and our partners at Solutions Banking have implemented specific mortgage and banking support measures for those clients directly affected by the global Coronavirus outbreak."
SUPPORT MEASURES FOR IG WEALTH MANAGEMENT MORTGAGE AND SOLUTIONS BANKING CLIENTS
IG Wealth Management and our partners at Solutions Banking have implemented the following support measures for those clients directly affected by the global Coronavirus outbreak:
- No new enforcement activity will occur at this time.
- Clients may contact us, and we will work with them on a plan that’s best suited to their needs. Plans may include payment deferrals or capitalization of payments.
- The Mortgage Contact Centre is open Monday to Friday, 7:00 a.m. to 7:00 p.m. (CST) at 1-800-328-6488 and a Client Service Representative can assist in arranging a mortgage payment deferral.
Solutions Banking clients
- Affected Solutions Banking clients may contact Solutions Banking to work with them to determine solutions, on a case-by-case basis, depending on their personal situation. These measures may include payment deferral on credit products, including the Solutions Banking Mortgage and All-in-One, or requesting alternate financing.
- Clients are invited to contact a Solutions Banking representative at 1-877-999-7575 to inquire about their specific file, Monday to Friday from 8:00 a.m. to 6:00 p.m. (EST).
Measures Impacting Businesses
TEMPORARY SMALL BUSINESS WAGE SUBSIDY
- Eligible small employers can receive a temporary wage subsidy for a period of up to three months. The subsidy is equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
- Businesses can benefit from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers eligible for this subsidy include corporations eligible for the small business deduction, as well as non-profit organizations and charities.
INCREASING CREDIT AVAILABLE TO BUSINESSES
- The new Business Credit Availability Program, announced on March 13, 2020, will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support to businesses experiencing cash flow difficulties.
- The near-term credit available to farmers and the agri-food sector will be increased through Farm Credit Canada.
EMPLOYMENT INSURANCE WORK SHARING PROGRAM
As announced on March 11, 2020, the EI Work Sharing Program will be implemented, which provides EI benefits to workers who agree to reduce their normal working hours as a result of developments beyond the control of their employers. This extends the eligibility of such agreements to 76 weeks, easing eligibility requirements, and streamlining the application process.
CRA Audit Activity
The Canada Revenue Agency will temporarily suspend audit interaction with taxpayers and representatives for the majority of businesses. For the next four weeks, the Canada Revenue Agency will not contact any small or medium businesses to initiate any post assessment GST/HST or Income Tax audits.
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Written and published by IG Wealth Management as a general source of information only. This information is believed to be accurate as of the date of publishing, however may be subject to change, in accordance with Government directives. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Consultant.
Investment products and services are offered through Investors Group Financial Services Inc. (in Québec, a Financial Services firm) and Investors Group Securities Inc. (in Québec, a firm in Financial Planning). Investors Group Securities Inc. is a member of the Canadian Investor Protection Fund. Investors Group Trust Co. Ltd. is a federally regulated trust company and the mortgagee. Mortgages are offered through I.G. Investment Management, Ltd. Inquiries will be referred to a Mortgage Planning (Agent) Specialist. Banking products and services are distributed through Solutions BankingTM. Solutions Banking products and services are provided by National Bank of Canada. TM Solutions Banking is a trademark of the Power Corporation group of companies. IG Wealth Management and design are trademarks owned by IGM Financial Inc. and licensed to its subsidiary corporations. National Bank of Canada is a licensed user of these trademarks.
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