How the March 18 federal government announcement affects you and your taxes.
If you were one of the many Canadians who tuned into Prime Minister Trudeau’s national announcement on the morning of Wednesday March 18th, you heard him outline several tax changes immediately taking place. From changes in tax deadlines, to new credits and top-ups for everyone from seniors to students to small businesses, there was a lot to take in. Let us break it down for you.
New Tax Filing Deadlines
The federal filing deadline for income tax returns has officially been extended to June 1, 2020. In addition, if your return reveals that you have a balance owing, it does not have to be paid until September 1, 2020. So long as you file before June 1st, you won’t be subject to a late-filing penalty, nor will you start to accrue interest on the balance due until after the last day of August.
However, even with this extension, if you are receiving the Canada Child Benefit and/or GST/HST Credit, you should not delay filing any longer than is necessary to make sure your entitlement for the 2020-21 benefit year (which begins in July 2020) is properly determined.
In addition, if you are required to make instalment payments, you can put off paying any amounts that come due after March 18 until September 1, 2020.
Top-ups for CCB and GST/HST Credit Recipients
As a special bonus to help you get through these difficult times, the government will increase the maximum annual Canada Child Benefit (CCB) payment amounts for the 2019-20 benefit year by $300 per child. This top-up amount will be included with your May payment.
Also, if you are receiving the GST/HST Credit, you will also get an extra payment in April averaging $400 if you are single or $600 if you are a couple.
The Quebec government has also announced an extension of the filing deadline for TP1 tax returns to June 1 – the same as the federal extension. Just as is the case with the federal government, any amounts you may owe to the Quebec government won’t need to be paid until September 1st.
In addition, for those who pay income tax instalments, payment of the June 15, 2020 instalment is also suspended until July 31, 2020.
Measures for Businesses
To support businesses that are facing revenue losses, and to help prevent lay offs, the government announced a temporary wage subsidy for eligible businesses – small and large – who have experienced a 30% drop in revenue due to COVID-19. The subsidy will be equal to 75% of remuneration paid during the eligible period, and will be capped at $58,700 for a maximum weekly salary of $847 per week. Businesses will be able to benefit immediately from this support by reducing the amount of income tax they withhold on their employees’ remuneration. The wages the subsidy covers will be backdated to March 15.
Quebec’s small businesses may also be eligible for a provincial aid. Thanks to the Temporary Concerted Action Program for Businesses, eligible businesses, including non-profit organizations, can benefit from financial support that makes up for the lack of liquidity. Financing in the form of a loan guarantee is of a minimum of $ 50,000.
Reduction of RRIF Minimum Withdrawals
The minimum amount that seniors must withdraw from Registered Retirement Income Funds (RRIFs) in 2020 will be reduced by 25%. This provides flexibility to seniors whose RRIFs have dropped in value, so that that they will not have to liquidate their plans in order to meet minimum withdrawal requirements. Similar rules will apply to individuals receiving variable benefit payments under a defined contribution Registered Pension Plan.
The government has put several other measures into place, including:
- • A six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repayment. The same also applies for Quebec’s provincial student financial assistance program.
- • Temporarily waiving the one-week waiting period for collecting EI sickness benefits for claimants who are in imposed quarantine.
- • Allowing homeowners with CMHC-insured loans who are facing financial difficulties to defer mortgage payments.
If you have any questions about the impact of these changes on you and your taxes, H&R Block Tax Experts are here to help. Visit here for the latest information on how we’re making ourselves available to our clients during the COVID-19 crisis and how we can best serve you.