Federal Budget -> COVID-19 Financial Relief for Canadians
COVID-19 Financial Relief and Resources
We normally do all TaxTips.ca articles in-house. However, it's not possible for us to keep up with the rapidly changing COVID-19 financial relief provided by governments. For this reason, we're mostly providing links to other organizations with more resources, who have been diligent in keeping others educated about the various benefits being provided. We applaud them for doing such a good job!
See how much the $169.2 billion direct COVID-19 costs (federal only, doesn't include provincial) will increase the interest-bearing debt of Canada for every adult and child. Could this have been avoided?
Student Benefits, Canada Summer Jobs 2020
The 2019 personal tax return deadline is extended to June 1, and tax balances and instalments may be deferred till September 1st without interest or penalties. However, if you are expecting a refund, or if you receive or will receive the GST/HST credit, Guaranteed Income Supplement (GIS) or Canada Child Benefit (CCB), or other income-tested benefits (e.g. BC Pharmacare, for which you must register), it's best to file your return as soon as possible.
Businesses can also defer payment of any income tax amounts that become owing on or after March 18 and before September 2020, to September 1, 2020. This applies to tax balances due as well as instalments, under Part I of the Income Tax Act. This does not apply to remittances of payroll or other withholdings. These are amounts that are collected on the government's behalf by businesses, so the funds do not belong to the business. Update: GST/HST remittances can be deferred until June 30, 2020, but not GST filings. However, CRA won't impose penalties where a return is filed late, as long as it's filed by June 30th. Make sure that you can pay the GST/HST on June 30th. The director(s) of the company are personally liable for unpaid GST/HST.
See COVID-19 Economic Response Plan - Businesses and FAQ - Deferral of GST/HST Tax Remittances: CRA and COVID-19 on the Canada.ca website.
See Video Tax News Indirect Tax During COVID-19 with David Crawford, Partner, Indirect Tax from RSM Canada. Among other things, they talk about reviewing past payments to look for overpaid indirect taxes that could be recovered.
On May 12, the Prime Minister announced a one-time tax-free payment of $300 for seniors eligible for Old Age Security Pension (OAS), with an additional $200 for seniors eligible for the Guaranteed Income Supplement (GIS). This means, of course, that high-income seniors will also be receiving the $300 additional OAS payment. However, although the PM indicated it will be tax-free, we'll have to wait for the legislation to see if it will be clawed back.
GIS and Allowance payments will be temporarily extended if seniors' 2019 income information has not yet been assessed.
As per One-time tax-free payment for seniors, seniors eligible to receive the OAS or GIS in June 2020 will receive the tax-free payment. As per a June 4, 2020 announcement, the payment will be received during the week of July 6th.
New June 5, 2020: Canadians who are certificate holders of the Disability Tax Credit (DTC) as of June 1, 2020 will receive a one-time tax-free payment of up to $600. The payment will be reduced by the one-time tax-free payments for seniors eligible for OAS and GIS. See Canada's COVID-19 Economic Response Plan, and scroll down to People with disabilities. The payment date for these payments was not announced, and is not yet known, as of June 30, 2020. It depends on the passing of Bill C-17, which has only passed First Reading. The payment will be received automatically by those eligible.
The June 5th announcement also indicated that a National Workplace Accessibility Stream would be established to help people with disabilities find and keep a good job. For more on this see the June 6th news release from Minister of Employment, Workforce Development and Disability Inclusion, Carla Qualtrough. She also announced an additional $1.1 million to support national disability organizations through the Social Development Partnership Program - Disability Component, to enhance their communications and engagement activities to better address the impact of the COVID-19 pandemic on persons with disabilities.
A one-time special payment by the end of April 2020 will double the maximum annual payment amounts for the GST/HST credit for the 2019-20 benefit year. The additional payment will be made in April to individuals eligible for the GSTC, as well as to some who are not eligible for the regular GSTC. This will be based on 2018 tax returns that have been filed. See CRA's COVID-19 - FAQ re Increase to the GST/HST credit amount.
It is proposed to increase the maximum annual Canada Child Benefit (CCB) payment amounts, for only the 2019-20 benefit year, by $300 per child, as part of the May 2020 payment. Families who do not receive CCB may get a partial payment, depending on their income. This will be based on 2018 tax returns that have been filed. See the Video Tax News COVID-19 Economic Response Plan - Legislative Update - March 25, 2020 for more details.
The amount of mandatory minimum withdrawal from a RRIF in 2020 is reduced by 25%. This was announced by the federal government and the Quebec government. To determine your minimum withdrawal, calculate the usual minimum and then multiply by 75%. The age of the RRIF holder does not matter.
Note: Tax will only be withheld from withdrawals that are in excess of the original unreduced minimum amount. See Economic Statement - New Measure for Annuitants of Registered Retirement Income Funds.
Effective immediately, Canada Revenue Agency is accepting digital signatures on the T183 and T183CORP. These forms are normally signed in person every year to authorize tax preparers to file taxes.
- passed First Reading June 10, 2020, House of Commons now adjourned until Wednesday, July 8, 2020, when the federal economic update will be presented.
- includes provision that would allow a one-time payment to adults and children with disabilities.
- revises eligibility for Canada Emergency Wage Subsidy
- amends the Canada Emergency Response Benefit (CERB) Act
- received Royal Assent May 1, 2020
- Regulations are not available yet. The Regulations will determine the amount of the benefit, and the maximum number of weeks for which a student may receive the benefit. See Student Benefits below for information provided by the Department of Finance.
- received Royal Assent April 11, 2020
- Eligible Entities Prescribed for COVID-19 Wage Subsidy
- Deemed Remittance
- received Royal Assent March 25, 2020
- implements measures re
- creation of Canada Emergency Response Benefit (CERB) Act to authorize income support payments to workers for loss of income related to COVID-19.
- creation of Public Health Events of National Concern Payments Act to allow payment of "all money required to do anything in relation to that public health event of national concern". This Act is automatically repealed September 30, 2020.
- Amendments to many other acts.
- Student financial assistance for fall 2020 - proposal to change the Canada Student Loan Program's eligibility requirements in 2020-21 to allow more students to qualify for supports. Non-repayable Canada Student Grants will be doubled in the coming academic year.
- Canada Emergency Student Benefit (CESB) for those ineligible for CERB or EI, and unable to find full-time employment or unable to work due to COVID-19. CESB would provide $1,250 per month for eligible students from May to August 2020, and $1,750 for students with dependants and those with permanent disabilities.
Application process to begin May 15. CESB enquiries phone line is 1-833-966-2099.
Opened June 25, 2020: Canada Student Service Grant will provide up to $5,000 to support student's post-secondary education costs in the fall, for students who take part in national service activities.
See Video Tax News - PM's Update - Student Support - opened June 25, 2020, which also addresses paid work placements which are available.
Find volunteer positions through the I want to Help website.
- International students: for students working in an essential service or function, the restriction that allows international students to work only a maximum of 20 hours per week while classes are in session will be removed.
Federal Government Information:
- funded 100% up to the minimum hourly wage
- part-time placements may be offered
- placements can continue to February 28, 2021
The Canada Summer Jobs call for applications for the 2020 season closed on February 28, 2020.
Longer-term income support for workers to be delivered through CRA to provide support to workers who are not eligible for EI and are facing unemployment or reduced hours as a result of COVID-19. This includes parents with children who require care or supervision due to school closures, and aren't able to earn employment income.
CERB benefits are taxable. The amount received will be reported as income when your 2020 tax return is filed. No withholding tax is being deducted from CERB payments, so make sure you have the funds to pay the tax next April! You can use our Detailed Canadian Tax and RRSP Savings Calculator to estimate how much tax you will owe.
Applications can be filed online (see below link), in My Account or, if you do not have online access, by using the dedicated phone line 1-833-966-2099 (see Calls To CRA). Payments should be sent about 10 days later. Applications must be filed by December 2, 2020.
June 16 2020 Update: It was announced that the CERB would be extended by 8 weeks, making it available to eligible workers for up to a total of 24 weeks.
The CERB attestation will be modified to encourage Canadians receiving the benefit to find employment and consult Job Bank, Canada's national employment service which offers tools to help with job searches.
CERB is available to workers who:
- live in Canada and are at least 15 years old
- have stopped working because of reasons related to COVID019, or are eligible for EI regular or sickness benefits, or have exhausted their EI regular or fishing benefits between Dec 29/19 and Oct 3/20
- had employment and/or self-employment income of at least $5,000 in 2019, or in the 12 months prior to the date of their application
- have not earned more than $1,000 in employment and/or self-employment income per 4-week benefit period while collecting the CERB
- have not quite their job voluntarily
See below re penalties for fraudulent claims, and information on workers being ineligible for certain reasons. And, don't forget that CERB is taxable, but no tax is being deducted!
- provides for penalties of up to 3x the amount of the income support payments for individuals who submit fraudulent claims under the CERB.
- outlines a series of offences, including making false or misleading statements, failing to disclose all relevant income or receiving an income support payment for which a personal is not eligible.
- states that a worker is not eligible for income support if they fail to return to work when it is reasonable to do so and the employer makes a request for their return; fail to resume self-employment when it is reasonable to do so or declines a reasonable job offer when they are able to work.
Video Tax News information on the latest CERB FAQ updates - of interest to self-employed small business owners and others.
These measures are in the Canada Emergency Response Benefit Act.
See the Video Tax News information and 13 minute video on this topic at Canada Emergency Response Benefit Applications Now Open! Important Details.
Can employees refuse to return to work now they're earning more on CERB? by Howard Levitt, employment & labour lawyer.
May 25, 2020 Consultation on the CEWS to help inform potential changes - closed June 5, 2020. Participate by completing a short survey, or provide more detailed feedback by email.
The CEWS will be extended by 12 weeks to August 29, 2020. The 30% revenue decline threshold will be reviewed and possibly adjusted, and the government will consult with key business and labour representatives over the next month on other potential adjustments to spur jobs and growth. However, the 30% revenue threshold will continue to apply for period 4, the the 4-week period ending July 6.
Eligibility for CEWS will be extended to more employers. Legislation will be amended to make the CEWS more flexible, including provisions for seasonal employees, and ensuring that it applies appropriately to corporations formed on the amalgamation of two predecessor corporations.
The government also proposes to amend the CEWS to allow employers to choose one of two periods when calculating each employee's baseline remuneration. They would be able to use the existing provision, the average weekly remuneration paid from Jan 1 to Mar 15, 2020, or the average weekly remuneration paid from Mar 1 to May 31, 2019. The period can be chosen on an employee-by-employee basis, and this change is proposed to be retroactive to April 11, 2020. It would thus apply to the first qualifying period starting March 15, 2020 and subsequent periods.
The definition of "qualifying revenue" for CEWS allows the exclusion of funding received from government sources, for its current reference periods and all of its prior reference periods. This means that the taxable income from CEBA and CECRA will not affect the CEWS calculation.
There is process available in Represent a Client and My Business Account to allow CEWS claims applications to be revised.
April 11, 2020 Additional Details on the Canada Emergency Wage Subsidy (CEWS) from the Department of Finance and Backgrounder.
CRA Canada Emergency Wage Subsidy (CEWS) including a calculator
CRA: Calculate your Canada Emergency Wage Subsidy (CEWS) - includes the calculator - make sure you have the latest version.
- Applications can be done online starting April 27, using:
- My Business Account, or
- Represent a Client, or
CEWS - Contact the CRA - make sure you record the ID number of the agent who takes the call, and document what they say. If they are unsure of what they've said, ask them to repeat it.
Calls To & From CRA - they may contact you by telephone about your claim.
Caution: The Tax Templates Inc. CEWS Excel workbook follows the wording of the CEWS legislation regarding baseline remuneration, using the wages "paid" from Jan 1 to Mar 15. The CRA workbook does not appear to follow the legislation. However, on May 5th they revised some of their online information, and updated their frequently asked questions.
The CRA workbook seems to assume (but does not say) that the wording is baseline remuneration "means the average weekly eligible remuneration earned by the eligible employee during the period that begins on Jan 1 and ends on Mar 15." However, this would include payments for hours worked Mar 1-15 that were paid on April 1st, and this is not allowed according to the legislation.
The legislation says baseline remuneration "means the average weekly eligible remuneration paid to the eligible employee by the eligible entity during the period that begins on January 1, 2020 and ends on March 15, 2020, ..."
The key word is "paid". Example: part-time employee paid by the hour, on the 1st of the month for hours worked in the previous month. This employee would have been paid 3x from Jan 1 to Mar 15. In this case, the pay is for Dec 1 to Feb 29, so one would assume that the only way to calculate the average would be to divide by 13 weeks, the period during which it was earned. It would be helpful to have this confirmed by CRA, or defined in the legislation.
s. 125.7(2)A, re eligible remuneration paid from March 18 to June 19, 2020, uses "in respect of that week". Not so for the definition of baseline remuneration, which means that it can be in respect of the period during which it was earned, as noted in the example in the previous paragraph.
Note that if an employer qualifies for the CEWS for one claim period based on the % revenue reduction, it automatically qualifies for the following claim period, as per s. 125.7(9) of the Income Tax Act.
Are bonuses included as eligible remuneration? According to the legislation, yes, because eligible remuneration includes amounts described in s. 153(1)(a), which includes bonuses. There is no other wording in Bill C-14 which excludes bonuses. However, that brings up another question, because one must then determine the number of weeks which the bonus is "in respect of". It also brings up the question of whether the intention was to include bonuses. If not, a legislative change would likely be required.
CPA Canada and the Canadian Tax Foundation have formed a working group to review the CEWS, and are in communication with CRA to work out solutions to some of the problems. They are providing updates on this on their Federal government COVID-19 tax updates page.
Penalties may apply in cases of fraudulent claims, including fines or even imprisonment, so it may be wise to wait for clarification on this before applying.
Video Tax News Temporary Wage Subsidy Update April 1, 2020, with links to subsequent updates.
Wage Subsidy for Employers - Free Excel worksheets to help Canadian businesses and their advisers calculate the 10% and 75% subsidies, provided by Tax Templates Inc.
Moodys Tax April 13, 2020 Facebook Live Video re CEWS, with questions from viewers - close to 3 hours long
Contact your financial institution to enquire about up to a 6-month payment deferral for mortgages, and possible relief on other credit products. Check your online banking, as some options may be available online, such as skipping a mortgage payment (which may be available only certain hours of the day). Check your financial institution's website to see if they have an online booking tool to schedule a time to speak with them, or online applications for support.
- The Bank of Canada has reduced the target for the overnight rate three times in March. The rate has been reduced to 0.25% in that time, from 1.75%, where it had been since October 24, 2018.
- Financial institutions will assess the needs of small business banking customers on a case-by-case basis. Contact your advisor at your bank.
The CECRA and the forgivable portion of CEBA are taxable when received (ITA s. 12(1)(x)), but if and when repaid, are deductible when repaid (ITA s. 20(1)(hh)).
This means that the 25% (up to $10,000) forgivable portion of CEBA and 100% of CECRA will be taxable in 2020. If any of the forgivable portion is repaid, because requirements were not met, then this can be deducted in the taxation year when the amount is repaid.
Note: The fact that these items are taxable does not affect revenue for the Canada Emergency Wage Subsidy (CEWS) calculation. The definition of "qualifying revenue" for CEWS allows the exclusion of funding received from government sources, for its current reference periods and all of its prior reference periods.
The accounting treatment of the government assistance is similar to the tax treatment shown above.
For corporations using Accounting Standards for Private Enterprises (ASPE), ASPE section 3800 regarding government assistance, assistance for non-capital items can either be shown as revenue, as a deduction from expenses, or may be netted against expenses. If a portion of the assistance relates to expenses in a future accounting period, then that portion could be recognized in the future accounting period.
See the EY information Understanding ASPE Sections 3800 and 3805, Government Assistance and Investment Tax Credits.
For corporations using International Financial Reporting Standards (IFRS), the accounting treatment is the same as with ASPE. See BDO IAS 20 Government Grants.
Don't forget - only the 25% forgivable portion of the CEBA will be deducted from expenses.
Tax Tip: Get advice from your Chartered Professional Accountant (CPA) on both the accounting and tax treatment to ensure this is done properly!
Launched May 25, 2020 for 4 weeks - news release.
This is a national, bilingual service operated by the Canadian Chamber of Commerce. 125 Chartered Professional Accountants (CPAs) are available to provide customized financial guidance to the smallest business owners in the most urgent need and help them through this crisis.
Call 1-866-989-1089 (toll-free), 7 days/week from 8 am to 8 pm ET, for 4 weeks
The forgivable portion of the CEBA loan is taxable when received - see above re Tax Treatment and Accounting Treatment of Forgivable Loans such as CEBA and CECRA.
CEBA Payroll Stream
The federal government announced government-guaranteed bank loans of up to $40,000 which will be interest-free, and if the balance of the loan is repaid on or before December 31, 2022, 25% will not have to be repaid (up to $10,000). Applications are available through your bank, for businesses with payroll of $20,000 to $1,500,000. This is an online application only and cannot be accessed by telephone or your branch.
CEBA funds can be used to pay non-deferrable operating expenses including payroll, rent, utilities, insurance, property tax and regularly scheduled debt service. The funds cannot be used to fund prepayment/refinancing of existing debt, payments of dividends, distributions and increases in management compensation.
On May 19, 2020 the government announced the expansion of the CEBA program to include sole proprietors, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than payroll.
As with the CEBA payroll stream, this application is done online through your financial institution and cannot be accessed by telephone or your branch.
To qualify, applicants with payroll lower than $20,000 (Non-Deferrable Expenses Stream) per year would need:
- a business operating account at a participating financial institution,
- a CRA business number, and to have filed a 2018 or 2019 tax return, and
- eligible non-deferrable expenses between $40,000 and $1.5 million. This could include costs such as rent, property taxes, utilities and insurance.
The CEBA FAQ were updated on June 15th regarding applications under the expanded program, with further requirements for applications under the "Non-Deferrable Expenses Stream", including the submission of supporting documentation for 2020 eligible non-deferrable expenses. The process for this type of applications was supposed to be available starting June 19th, but the website indicates there will be a "slight" delay in making applications available - no timeframe supplied. The application process will take longer than the process for those done under the "Payroll Stream". Funding will be received within 10-15 business days for approved applicants.
Video Tax News has a good summary of the additional FAQ information released.
Update June 30, 2020: CEBA FAQ now has information on exactly which non-deferrable expenses are eligible for the non-deferrable expenses stream, and what documentation must be provided to support these expenses. See the Video Tax News article on this, which also links to the CEBA Upload Guide - very helpful.
The May 19th press release also said that "the government will work on potential solutions to help business owners and entrepreneurs who operate through their personal bank account, as opposed to a business account, or have yet to file a tax return, such as newly created businesses". Nothing more has been said on these topics.
The CECRA forgivable loan is taxable when received - see above re Tax Treatment and Accounting Treatment of Forgivable Loans such as CEBA and CECRA.
The day you register depends on your province and number of tenants. Once registered, you can log in later to upload documents and complete your application.
If you have a problem entering the landlord address, because it pops up with 2 choices and you have to confirm one, if the correct address is showing as the "suggested" address, choose that one and confirm. Choosing the address you entered, even if both are the same, may result in an error message.
The registration requires a mobile telephone number to be provided. What they neglect to tell you is that they will text you your password once the registration is complete. The login name is sent in an email. Hopefully you're not in an area with limited cell service!
If you have problems you can call 1-800-668-2642 or 1-833-610-0515. The morning of the portal opening it was not possible to speak to anyone because these lines were too busy.
The deadline to apply is August 31, 2020.
Update July 1, 2020: CECRA has been extended through the end of July 2020. Only the tenants approved for the April to June CECRA are eligible for the July support, and they are automatically eligible. This is based on their April and May revenue and their forecast for June revenue. Clawback provisions are being removed retroactively. See the CECRA application portal for more information and changes to their Program Details. For a good summary of changes see Video Tax News CECRA - July extension, 70% test, FAQ update and more.
Existing applicants will be notified, and CMHC will let them know when the extension application process can be done. Not all tenants need to be included in the July application. A landlord may feel it is not necessary to include a tenant who has their business back up and running and revenues back on track.
Legislation is not yet available. The application portal will open on May 25.
Eligibility for the 70% revenue reduction factor will be determined on the average of April, May and then, forecasting June revenues, and comparing to April, May and June 2019, or to the average of January and February 2020.
The landlord must apply for all 3 months at the same time. Multiple applications can be submitted, provided that each application is for a different property. The property owner can only apply for the program once per property, so attestations for each impacted tenant at that property must be included with one application. There is no indication of what happens if the forecast for June is off by enough to make the revenue decline less than 70%.
The CECRA is administered by the Canada Mortgage and Housing Corporation (CMHC).
The CECRA will lower rent by 75% for small businesses affected by COVID-19, by providing forgivable loans to qualifying commercial property owners to cover 50% of 3 monthly rent payments, for April, May and June.
Eligible small business tenants:
- paying less than $50,000 per month in rent,
- generating no more than $20 million in gross annual revenues, calculated on a consolidated basis (at the ultimate parent level), and
- have experienced at least a 70% drop in pre-COVID-19 revenues from the April to June 2019 revenues, or from the average of January and February 2020 revenues.
The loans will be forgiven on December 31, 2020, if the property owner agrees to reduce the eligible small business tenants' rent by at least 75% for the 3 months, and agrees to not evict the tenant while the agreement is in place.
In applying for this program, the property owner agrees to forego profit for a 3-month period, according to the original Ontario information. This was not mentioned in the Prime Minister's announcement, nor is it mentioned in the CMHC information, and was subsequently removed from the Ontario information.
CFIB Templates for Businesses re COVID-19 - includes tenant and landlord templates re CECRA.
BDO Canada CECRA to Bring Rent Relief to Small Business Tenants - includes information on provincial announcements re the CECRA.
Baker Tilly Support for Businesses - includes CECRA general eligibility test decision tree.
- to provide bridge financing to Canada's largest employers.
May 11, 2020 Announcement by Prime Minister Trudeau
- Announced May 13, 2020 to provide nearly $962 million to help "regional economies and small and medium businesses" that may require additional help to recover from the COVID-19 pandemic, but have been unable to access existing support measures. The relief will be provided through Regional Development Agencies (RDAs).
Service Complaints and Compliments / Kudos
When you have any dealings with CRA, you may submit complaints regarding your experience, and you can also submit compliments, or kudos, regarding a positive experience or a particular agent. This is done through the CRA Submit service feedback page.
Calls From CRA
CRA may call you in regard to a subsidy claim - they have already started doing this, in order to speed up claims processing. However, it's important to determine that the call is not a scam. Document any call you receive - caller ID on your phone display, and any information asked for or given by the agent. Also document the responses you provide.
CRA may call regarding a subsidy claim if your payroll has had a big increase, direct deposit information has changed, or other changes that generate questions for them. Ask them why the call is being made. Get their name and agent identification number - they are required to provide the ID number when requested. Ask them some questions to confirm that they already know details about your account that CRA should know.
The agent should already be familiar with the details of your subsidy claim, and should be able to relate this to you - amount, when submitted, etc. They may ask you for information to verify your identity, such as your name, date of birth, address, business account number, or the last 3 digits of your social insurance number - NEVER provide your full social insurance number.
Someone trying to impersonate a CRA agent may ask for a bank account number, or ask for payment, personal credit information. They may be aggressive, say they will get the police involved, or demand immediate payment. A CRA agent will never do this.
See What to expect when CRA contacts you for more information.
Calls To CRA
The telephone number for calls about CERB or CEWS is 1-833-966-2099. Their hours are 9 am to 9 pm local time. High call volumes means you can expect long wait times.
Make sure you document
- the date and time of your call,
- the ID number of the agent who takes your call,
- their answers to your questions. If you are unclear on their answer, ask them to repeat it, or to explain it in a different way.
A response given by an agent may be correct at the time, or correct according to a CRA interpretation at the time, but then at a later date the interpretation or legislation may change, causing the earlier response to be incorrect. They are doing their best to administer relief benefits that were put together in record time, so questions and incorrect interpretations are inevitable. Hopefully all the details will eventually be sorted out.
Video Tax News COVID-19 Updates and Resources for Accounting Professionals - updated daily or as changes occur
Canadian Federation of Independent Business (CFIB) - resources for businesses
Quickbooks Canada: Credits available for small business owners, list of benefits by province.
Government of Canada
Revised: July 03, 2020
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