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Taxation

COVID-19: The Canada and Quebec Governments Offer Assistance to Businesses and Workers...New Announcements!

  • Émilie Rochette
  • Karine Jacques
  • Isabelle Tremblay
  • Gabriel Paradis
By Émilie Rochette , Karine Jacques , Isabelle Tremblay
On March 21st, the Therrien Couture Joli-Cœur team published a first version of this article. This article was updated following additional announcements made by both the federal and Quebec governments.

The COVID-19 pandemic brings its share of disruptions around the world, but also within Quebec, affecting all spheres of the economy as well as employees, self-employed workers and owners of small, medium and large businesses.

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

DIRECT ASSISTANCE

Through various announcements, the federal government introduced several measures aimed at individuals and businesses, including the following: 

  • Granting of a temporary 3-month wage subsidy available to businesses eligible for the small business deduction, NPOs and charities. This grant is equivalent to 10% of the remuneration paid during this period, up to a maximum of $1,375 per employee and $25,000 per employer. This grant and the Canada Emergency Wage Subsidy are not cumulative in that the amounts obtained by employers under the Temporary Wage Subsidy will reduce the amount that can be claimed as a Canada Emergency Wage Subsidy;
  • Granting of the 3-month Canada Emergency Wage Subsidy (March, April and May 2020) available to eligible Canadian businesses, including not-for-profit and charities, regardless of their size and sector of activity. This grant is equivalent to 75% of the wages paid during this period, up to a maximum weekly amount of $847 per employee. Considering the importance of this measure, our team has prepared a document explaining this new measure in more detail, entitled “Canada's Emergency Wage Subsidy: For Whom and How to Benefit?”;
  • Granting of the Canada Emergency Benefit of $500 per week for up to 16 weeks is available to employees who are unable to remain at work due to illness, quarantine or caring for a family member;
  • Granting of the Supplementary Unemployment Benefit Plan, which allows an employer to top up the salary of an employee who is receiving Employment Insurance benefits, as long as the program is recognized by the government;
  • Granting of the Employment Insurance Sickness Benefit that eliminates the mandatory one-week waiting period and 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;
  • For low- and modest-income families, providing a special one-time payment through the Goods and Services Tax Credit;
  • Increasing the maximum Canada Child Tax Benefit for the year 2019-2020 by $300 per child starting in May;
  • 6-month moratorium on student loan repayments;
  • Reducing by 25% the minimum required RRIF mandatory withdrawals for the year 2020;
  • Enhancing the Business Credit Availability Program which allows the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide additional support to businesses;
  • Changing the Canada Account to allow the Canadian government to provide support to businesses through loans, guarantees or insurance policies;
  • Granting $5 billion in financial assistance to farmers through loans from Farm Credit Canada;
  • Granting an emergency account for businesses to access loans of up to $40,000 from a financial institution, with EDC's assistance.

For its part, as part of the various announcements, the Government of Quebec has presented social measures for workers and businesses, including : 

  • 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;
  • Implementing 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);
  • Easing the conditions of loans already granted by Investissement Québec; 
  • Reducing by 25% the minimum required amount of mandatory RRIF withdrawals for 2020.

In addition to these measures, some municipalities are postponing the date for payment of municipal taxes, the cities of Montreal, Laval, Longueuil, Quebec City and Lévis, to name a few.

Furthermore, financial institutions have proposed moratoriums on the payment of principal and interest on certain loans and some municipalities, including the City of Lévis, through local economic development organizations, have announced measures to help businesses.

TAX ASSISTANCE

  • New deadlines for filing income tax returns and making payments. In Quebec as well as in the federal government, 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. 

The following is a summary table of these reliefs:

 

Deadline before measures

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 September 1, 2020 for payment of any balance due

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

Individuals and trusts - instalment payments

June 15, 2020

Instalment payments are deferred until September 1, 2020. The September 15 and December 15, 2020 instalments remain unchanged.

Instalment payments are deferred until September 1, 2020. The September 15 and December 15, 2020 instalments remain unchanged.

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

June 15, 2020

June 15, 2020

June 15, 2020 for filing and September 1, 2020 for payment of any balance due

Trusts - filing income tax returns, paying taxes due, and making instalments

March 30, 2020

May 1, 2020 for filing and September 1, 2020 for payment of any balance due and June 15, 2020 instalment payments

May 1, 2020 for filing and September 1, 2020 for any payment of any balance due and June 15, 2020 instalment payments

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

Filing of income tax returns before May 31, 2020 is postponed to June 1, 2020 and September 1, 2020 for balances owing

 

Filing of income tax returns before May 31, 2020 is postponed to June 1, 2020 and September 1, 2020 for balances owing

Corporations - instalment payments

 

Monthly or quarterly

Payments due between March 17, 2020 and August 31, 2020 shall be deferred to September 1, 2020.

Payments due between March 17, 2020 and August 31, 2020 shall be deferred to September 1, 2020

Filing and remitting GST/QST returns

Returns due and remittances to be made between March 27 and May 31, 2020

Returns due and remittances to be made are postponed until June 30, 2020.

 

Returns due and remittances to be made are postponed until June 30, 2020

Deadline for filing a Notice of Objection

 

A Notice of Objection with a filing deadline between March 13 and June 30, 2020

Deadline for filing is postponed to June 30, 2020

Deadline for filing is postponed to June 30, 2020

 

  • The Quebec Revenue Agency announced the following administrative measures:
    • Activities related to tax audit (except fraud) and collection are suspended;
    • It will be open and flexible with respect to the usual duration of payment agreements related to tax debts;
    • Notices of Objection with a 90-day deadline between March 13 and June 29, 2020 are extended to June 30, 2020;
    • Administrative measures regarding income tax (except for deductions at source ("DAS") to be made between March 17, 2020 and May 31, 2020 are postponed to June 1, 2020.
  • The Canada Revenue Agency announced the following:
    • It is temporarily suspending its communications with small and medium businesses to begin or initiate tax audits (excluding fraud) for a period of 4 weeks;
    • It is also suspending the processing of notices of objection;
    • The deadline for notices of objection with a 90-day period between March 18 and June 30, 2020 is extended to June 30, 2020;
    • Income tax administrative measures (except for DAS) to be completed after March 18, 2020 are extended to June 1, 2020.

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

  • Responsibilities of Directors. 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 a corporation's failure to meet its withholding tax obligations. The directors' responsibility is not absolute, but they must be able to prove that a reasonable person in the same circumstances would have taken the same positive action to avoid any default.
  • Before the courts. In the Court of Quebec, there is a suspension of the computation deadlines for certain recourses, starting March 15 until the end of the health emergency measures and starting March 16, 2020 until May 1, 2020 in the Tax Court of Canada.
  • Request for relief from interest and penalties. In the event of an inability to pay a tax debt and 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, eventually arise for certain taxpayers whose precarious financial situation prevented them from paying their tax debts in full. In this context, we recommend that taxpayers properly document their file if they are unable to meet all their tax obligations.
  • Tax losses. The use of various types of tax losses accumulated, carried forward or resulting from the stock market downturn could be an alternative in order 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 would like 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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