On March 18, 2020, the Prime Minister announced a new set of economic measures to help stabilize the economy during this challenging period. These measures, delivered as part of the Government of Canada’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses, but what does this really mean for you?
Support for Businesses
Income Taxes
- To date, there does not appear to be any extensions in the filing deadline for corporations with a year ended December 31, 2019. Tax returns continue to have a filing deadline of June 30, 2020.
- Any income taxes that become owing (including installments) between March 18, 2020, and August 31, 2020, are deferred until after August 31, 2020. An exact due date was not mentioned but we interpret this to mean amounts are due September 1, 2020.
- For the next four weeks (until April 15, 2020), any new CRA audit activity related to GST and income tax will cease.
The Alberta Government has followed the Federal Government’s lead in extending payment timelines for income taxes.
Payroll (Updated 04.05.2020)
The Government has proposed to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy is based on specific criteria and provides 75% of wages paid to employees, subject to certain limits. For those employers not qualifying for the 75% subsidy, there is a 10% wage subsidy available.
Additional details of both programs available here.
Canada Emergency Business Account (Updated 04.06.2020)
A new loan program for Businesses where banks will offer up to $40,000 in interest-free loans through December 31, 2022. 25% of the outstanding balance to a maximum of $10,000 of the loan can be forgiven if the loan is repaid in full by December 31, 2022. To qualify, businesses will need to demonstrate they paid between $50,000 to $1 million in total payroll in 2019. Applications are expected to be processed through online banking beginning the week of April 6th, 2020. Interested businesses should work with their current financial institutions. Additional information can be found here.
GST/HST (Updated 03.27.2020)
Business owners are able to defer payments of GST/HST to the CRA until June. No additional specifics have been released but are expected shortly.
Lending Announcements
Numerous changes have been made to the countries lending industry to help businesses survive these trying economic times.
- The Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses.
- The Office of the Superintendent of Financial Institutions (OSFI) announced changes that will allow Canada’s large banks to inject $300 billion of additional lending into the economy.
- The Bank of Canada cut the prime lending interest rate to 0.25% (updated 03.27.2020). This translates into the prime rate at the major Canadian banks of 2.75%.
Work-Sharing (WS) Program (Update 03.30.2020)
The Federal government has extended the maximum duration of the Work-Sharing program from 38 weeks to 76 weeks. The Work-Sharing program is offered to workers who agree to reduce their normal working hours because of developments beyond the control of their employers. More information is available in our blog post here, as well as, Employment and Social Development Canada here.
WCB (Updated 0.3.25.2020)
Small, medium and large private-sector Alberta employers can defer WCB premium payments until 2021.
- For small and medium businesses, the government will cover 50% of the 2020 premium when it is due in 2021 – saving businesses $350 million.
- Large employers will have their 2020 WCB premium payments deferred until 2021, at which time their premiums will be due.
Employers who have already paid WCB premiums in 2020 are eligible for a rebate or credit. The WCB has put together a great question and answer document that outlines how the process works, and anything employers should know, which you can view here.
Support for Individuals
Income Taxes
- For individuals, the return filing due date will be deferred until June 1, 2020.
- Any income taxes that become owing (including installments) between March 18, 2020, and August 31, 2020, are deferred until after August 31, 2020. An exact due date was not mentioned but we interpret this to mean amounts are due September 1, 2020.
Despite the extension of the income tax filing deadline, our preference is to continue working towards an April 30 filing deadline.
This is especially important if you are receiving benefits under the following programs: GST Credit, Canada Child Benefit, Old Age Security, Guaranteed Income Supplement and more. Many of these benefits rely on information from your 2019 income tax return to properly calculate your 2020/21 benefits.
The Alberta Government has followed the Federal Government’s lead in extending payment timelines for income taxes.
Income Support Programs (Updated 04.06.2020)
The Federal Government has introduced the Canada Emergency Response Benefit (CERB), a $500/week benefit program for those who have lost their income due to COVID-19. Details of the program can be found in our blog post here.
Alberta Emergency Isolation Program (Updated 04.07. 2020)
The Alberta Emergency Isolation Program is now closed and is no longer accepting applications. However, the Federal Government is reexamining the program and will potentially instate a new solution to aid individuals who were unable to apply. Further details will be added as they are released.
- A support fund of $50 million has been created. This will be a temporary program for working adult Albertans who must self-isolate because they meet the GOA’s published criteria for self-isolation. This fund will be distributed in a one-payment installment and will bridge the gap until the Canadian Emergency Response Benefit (CERB) payments begin in April.
- Eligible working Albertans can receive a one-time emergency isolation support payment of $1,146 if they:
- experienced total or significant loss of income as a result of having to self-isolate, or are the sole caregiver of a dependent who is self-isolating, and
- have no other source of compensation, such as workplace sick leave benefits or federal employment insurance benefits
Other Measures
- The Federal and Alberta government are providing a six-month interest-free period on the repayment of Canada and Alberta Student Loans.
- Reducing the required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020.
- $9 million of federal funding to the United Way to assist organizations assisting seniors with things like grocery delivery, regular check-ins and other general help.
- $7.5 million of federal funding for Kids Help Phone to train more volunteers – Call them at 1-800-668-6868 or text 686868 or kidshelpphone.ca.
- $200 million in federal funding for homeless and domestic violence shelters.
- For low- and modest-income families:
- one-time special payment by early May 2020 through the GST credit of close to $400 for single individuals and close to $600 for couples.
- increase the maximum annual Canada Child Benefit (CCB) payment amounts, only for the 2019-20 benefit year, by $300 per child. This benefit is expected to be paid in May 2020.
- Utility payment holidays:
- residential, farm and small commercial customers can defer payment of utility (electricity and natural gas) bill payments for the next 90 days to ensure no one will be cut off from these services during this time of crisis.
In addition to the above measures, Canada’s banks and credit unions have announced measures to work with personal and small business banking customers to defer mortgage payments for up to six months due to pay disruption related to COVID-19, childcare issues, and school closures. The banks will consider each case individually and so if you feel you are in this situation, it’s important to contact your bank directly.
Certain measures announced by the federal government today will require parliamentary approval. The government is planning to recall parliament briefly to pass the necessary legislative matters.
The Alberta government proposals may also require legislative approval which is expected to be forthcoming.
KBH is committed to working with you through this unprecedented situation. We will continue to provide updates as they are made available.
In Good Health,
KBH Chartered Professional Accountants