The Government of Canada announced some major changes in March to help the many Canadians who will have a drop in income due to layoffs and business closures. There are several measures that will be in place soon to help Canadians continue to pay for their living expenses. There may be more announcement depending on how long the COVID-19 epidemic continues.
Tax Filing Deadlines Extended
The normal April 30 deadline for personal taxes to be filed has been delayed to June 1 2020. For the self-employed and their spouses, the deadline is still June 15 2020 (at least at the time of this writing).
This is good news for many of us tax preparers that are taking longer to complete taxes because of changes in procedures (fewer in person interviews, more taxes completed by email and phone). And for those taxpayers that cannot or do not want to leave their homes, the extended deadline gives everyone more time.
For those of you that receive some income tested benefits like Canada Child Benefit or GST Credits or Guaranteed Income Supplement, I suggest you have your taxes filed by May 15 so the benefits are not interrupted. They are recalculated in July based on your 2019 net income.
Payment Due Date Extended
For those who have taxes payable, the deadline to pay has been extended to September 1 2020. This gives those who owe CRA more time to pay their tax bill before interest starts being added on.
This extended due date also applies to installment payments. Many taxpayers are required to make quarterly installment payments (March 15, June 15, September 15, and December 15). The June 15 payment can be deferred to September 1.
CCB Increase
For the month of May, there will be a one-time special payment. The Canada Child Benefit will increase by $300 per child for the one month only. Those who already receive the Canada Child Benefit do not need to re-apply.
GST Credits
There will be an extra GST credit paid in May for those who are currently eligible for GST credits. The amount paid in May will be the equal to the annual amount. So if you were receiving $70 every three months, you will receive an extra $280 in May. There is no need to apply for this payment. If you are eligible, you will get it automatically. But if you get it by cheque instead of direct deposit, you may want to update your banking info on CRA, My Payment, or send CRA a void cheque or banking info. If you need a form, contact our office.
Apply for Employment Insurance
If you were recently laid off or have reduced hours and you qualify for EI benefits, you can apply now. The Canadian government is waiving the one week waiting period for those individuals in an imposed quarantine. It is also waiving the medical certificate to access EI sickness benefits.
Canada Emergency Response Benefit (CERB)
New is the introduction of the Canada Emergency Response Benefit providing up to $2,000 per month for up to four months for workers whose incomes have dropped to zero and do not qualify for Employment Insurance benefits This includes all individuals regardless of why their income has been interrupted. It includes employees and the self-employed not covered by EI. And it also covers those who were on EI maternity or parental leave and do not have enough “hours” to qualify for regular EI.
This new CERB will be administered through CRA and provides income support to all workers who have earned income of at least $5,000 the previous year.
Application for the Benefit will be available early April 2020. You will access the application via your CRA My Account.
Applicants will also be able to apply via an automated telephone line or via a toll-free number.
If you have never signed up for CRA My Account (or have forgotten your user ID and password), I recommend you get access to your “CRA My Account” as soon as you can. When you sign up for CRA My Account, they send you a code in regular mail, so it takes time to get access. If you are already signed up for My Service Canada Account (used for accessing EI or CPP), you can access it there too.
If you have not previously signed up for direct deposit for your income tax refund, I recommend that once you have your CRA My Account activated, you update your banking info. Getting this benefit direct deposit will get the money to you much quicker than by cheque.
Canada Student Loans
Effective March 30 2020 there will be a six-month interest-free moratorium on the repayment of Canada Student Loans for those currently in the process of repaying these loans. This will provide some relief to those who are currently required to repay their Student Loans. No payment will be required and interest will not accrue during this time. Students do not need to apply for this repayment pause.
RRIF Minimums Reduced
The required minimum withdrawals required from RRIFs (Registered Retirement Income Funds) are reduced by 25%. If you have already withdrawn the required minimum, you will be able to “recontribute” up to 25%. I suggest you get some advice on whether you should or not, depending on your tax brackets now and in the future. A similar measure was offered in 2009. It’s not necessary in your best interest to do so, so find out if it is or not for you.
Role of Financial Institutions
Banks in Canada have affirmed their commitment to working with customers to provide flexible solutions, on a case-by-case basis, for managing through hardships caused by recent developments. This may include situations such as pay disruption, childcare disruption, or illness. Canada’s large banks have confirmed that this support will include up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit products.
If you your income has been interrupted, I recommend you contact your bank or credit union right away to make arrangements to have your payments deferred or find out how else they can help you reduce your monthly cash outflow.
CRA Collectors Back Off
I understand that CRA will not be contacting those who have outstanding debts with CRA for income tax or GST (business). This should allow those who owe CRA from previous years get a chance to get “back to normal” before CRA will start requesting payments again.
Be Careful of Scams!
It seems there are already scams out there, so be careful. CRA or Service Canada will never email you or text you directly without you first contacting them. If you get an email from CRA or Service Canada, it should only say “you’ve got mail… sign into MyAccount to view your mail”. The emails or texts will never have personal information or ask you for your personal information or banking information. If you are not sure, please call our office and we will try to help you confirm if it is legitimate or not!
Providing Small Businesses with Wage Subsidies
This is a new program just announced on March 27 so details are not known. The Government announced an up to 75% wage subsidy for qualifying businesses (includes non-profit organizations, registered charities and small incorporated businesses with payroll accounts) for up to three months, retroactive to March 15 2020. The subsidy will be taxable income to the corporation. This will help businesses to keep and return workers to the payroll. Check the Canada.ca website for more information.
Business Access to Credit
The Government will be announcing new programs for businesses, there are too many to mention and too little detail, so if you are a small or medium sized business, check out their website Canada.ca regularly to find out how your business can access the programs.
Ste Anne Tax Service Still Open
At the time of writing, we are still open and still processing taxes. We are not allowing clients into our office. We accept dropped off taxes and will communicate with you by phone, email, text, or at your car door. Contact us to find out how we can help you get your taxes completed. We try to prioritize those who are expecting refunds. If you normally owe Canada Revenue Agency when you file your taxes, we ask that you wait until May to drop off your tax documents. Remember the new deadline to file is June 1 2020. With changes in procedures, we are not working as efficiently as normal, so we hope you will be patient with our team as we try to get everyone’s taxes completed as quickly and as accurately as possible.
Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact Ste Anne Tax Service at 204.422.6631 or 36 Dawson Road in Ste Anne (near Clearview Co-op) or info@sataxes.ca