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Taxation

COVID-19: Federal and Quebec Governments Offer Assistance to Businesses and Workers

  • Émilie Rochette
  • Karine Jacques
  • Isabelle Tremblay
  • Gabriel Paradis
By Émilie Rochette , Karine Jacques , Isabelle Tremblay
The COVID-19 pandemic brings its share of disruptions around the world, but also in Quebec, affecting all spheres of the economy as well as employees, the self-employed and owners of small, medium and large businesses.

Aware of this sad reality, the federal and Quebec governments have announced measures to limit their negative impacts. Some of these measures are direct assistance while others are tax measures.

DIRECT ASSISTANCE

In its March 18 announcement, the federal government presented an assistance plan intended for individuals and businesses consisting of the following measures:

  • Eliminating the mandatory one-week waiting period for Employment Insurance sickness benefits;
  • Eliminating the requirement to provide a medical certificate in order to receive Employment Insurance sickness benefits;
  • Implementing the Employment Insurance Work-Sharing program, which provides benefits to workers who agree to reduce their normal work schedule due to new circumstances beyond the control of their employer;
  • Granting an emergency care allowance of up to $900 every two weeks, for a maximum period of 15 weeks, for people who are unable to remain at work due to illness, quarantine or caring for a family member and who do not benefit from paid sick leave or are not eligible for Employment Insurance sickness benefits including, especially, the self-employed (application for this type of benefit is expected to be available starting in April);
  • Granting an emergency support allowance of up to 14 weeks maximum for people who are not eligible for Employment Insurance and who will lose their job or see their hours of work reduced (according to available information, this benefit would be equivalent to Employment Insurance benefits);
  • For low-income and modest-income families, a one-time special payment through the Goods and Services Tax Credit;
  • Increasing the maximum Canada Child Allowance benefits for the year 2019-2020 by $300 per child starting in May;
  • A 6-month moratorium on the repayment of student loans;
  • A 25% reduction in the minimum required RRIF withdrawal requirement for 2020;
  • Granting a temporary 3-month wage subsidy to businesses eligible for the small business, NPO and charity deduction. This subsidy is equal to 10% of the remuneration paid during this period, up to a maximum of $1,375 per employee and $25,000 per employer;
  • Enhancing the Business Credit Availability Program to allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide additional support to businesses;
  • Introducing the Insured Mortgage Purchase Program (IMPP);
  • Changing the Canada Account to allow the Government of Canada to provide support to businesses through loans, guarantees or insurance policies.

In its March 19 announcement, the Government of Quebec presented social measures for workers and businesses, including the following:

  • Establishing the Temporary Aid for Workers Program (TAWP COVID-19), which provides a lump sum of $573 per week to workers who are in isolation and who are unable to benefit from their earnings or another compensation alternative, such as employment insurance;
  • Establishing the Concerted Temporary Action Program for Businesses (CTAPB) to provide a new loan to be granted or guaranteed by Investissement Québec for a minimum amount of $50,000 at advantageous rates to support the working capital of businesses operating in all sectors of activity and directly affected by COVID-19 (provided that certain conditions are met);
  • Relaxing the conditions of loans already granted by Investissement Québec; 
  • 25% reduction in the minimum required amount of mandatory RRIF withdrawals for 2020.

In addition to these measures, some municipalities are postponing the payment date of municipal taxes, including the cities of Montréal, Québec City and Lévis, to name a few.

In addition, financial institutions have proposed moratoriums on the payment of principal and interest on certain loans.

TAX ASSISTANCE

  •  New deadlines for filing income tax returns and making payments. Both Quebec and the federal government have decided that the deadlines for filing income tax returns, paying taxes due (without penalties or interest) and making instalments (without penalties or interest) have been changed for most taxpayers.  Currently, these additional deadlines do not apply to net tax remittances (GST and QST).

The following is a summary table of these reliefs:

 

 

Deadline before mesurements

Deadline following the measures announced - Quebec

Deadline following the measures announced - federal

Individuals - filing income tax returns and paying taxes due

April 30, 2020

June 1, 2020 for filing and July 31 for payment of any balance due

 

June 1, 2020 for filing and August 31, 2020 for payment of any balance due

Individuals and trusts – instalment payments

June 15, 2020

Postponed until at least July 31, July 2020 (details to come). September 15 and December 15, 2020 payments remain unchanged.

Postponed until at August 31, 2020 (details to come)). September 15 and December 15, 2020 payments remain unchanged.

Individuals in business - filing income tax returns and paying taxes due

June 15, 2020

June 15, 2020

June 15, 2020

Trusts - filing income tax returns and paying taxes due

March 30, 2020

May 1, 2020 for filing and July 31, 2020 for payment of any balance due

May 1, 2020 for filing and August 31, 2020 for payment of any balance due

Corporations - filing income tax returns and paying taxes due

 

6 months from the end of the fiscal year for the filing of the tax return and 2 months following the end of the fiscal year for the payment of the taxes.

6 months from the end of the fiscal year for the filing of the tax return, but the payment of any balance owing between March 17, 2020 and July 31, 2020 is deferred to a date later than July 31 to be clarified

 

 

6 months from the end of the fiscal year for the filing of the tax return, but the payment of any balance owing between March 17, 2020 and August 31, 2020 is deferred to a date later than August 31 to be clarified

Corporations – instalment payments

Monthly or quarterly

Payments due between March 17, 2020 and July 31, 2020 are deferred to a date later than July 31 July to be clarified

Payments due between March 17, 2020 and August 31, 2020 are deferred to a date later than August 31, 2020 to be clarified

 

  • Revenue Quebec announced that tax audit and collection activities are suspended and that it will be open and flexible with respect to the usual duration of payment arrangements related to tax debts.
  • The Canada Revenue Agency announced that it is temporarily suspending its communications with small and medium size enterprises to initiate or begin tax audits.

Furthermore, in the current context, you will find below a brief reminder of some tax concepts that may be useful to you in making certain decisions for the coming weeks.

  • Directors' liability. In the current economic context, some businesses may be tempted to use the amounts collected from GST, QST and DAS to reimburse a supplier or creditor. However, it is important to keep in mind that corporate directors may be held personally liable for failure to meet a corporation's obligations to withhold source deductions or remit net taxes.
  • Deadlines. The deadlines for objections (90 days) and appeals of decisions on objections (90 days) are still in effect and have not been modified by the announcements made by the federal and Quebec governments. However, the judicial time limits provided for under legislation administered by the courts may have been suspended for a certain period, as is the case for the Tax Court of Canada.
  • Request for relief from interest and penalties. In the event of an inability to pay a tax debt and that the failure is due to exceptional circumstances, the tax authorities may waive interest, penalties and other charges. Thus, the COVID-19 pandemic may, in our opinion, possibly arise for certain taxpayers whose precarious financial situation prevented them from paying their tax debts in full.
  • Tax losses. The use of various types of tax losses accumulated or resulting from stock market declines could be an alternative to allow taxpayers to minimize their taxes payable and thus preserve their liquidity.
  • TFSA and RRSP. Withdrawals from an RRSP may be preferable to withdrawals from a TFSA during a period when the taxpayer's tax rate is lower than normal. Finally, from an investment perspective, for the more optimistic who wish to take advantage of falling stock markets and anticipate potential gains, investing through TFSA funds may be preferable considering that the withdrawal of gains made within the TFSA is tax-free, unlike withdrawals from an RRSP.
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