How COVID-19 government updates affect you and your taxes
Since the onset of COVID-19, the federal government has introduced measures to support Canadians during these challenging times. It’s been a lot to take in, so as the crisis continues to evolve, we will be providing regular updates to help you navigate these changes. Continue to check this page for regular updates.
New Tax Filing Deadlines
The federal filing deadline for income tax returns has officially been extended to June 1, 2020. In addition, if you have a balance owing, it does not have to be paid until September 1, 2020.
Penalties and interest will not be charged if payments are made by the extended deadline. This includes the late-filing penalty as long as the return is filed by September 1, 2020.
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. This will ensure 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, 2020 until September 1, 2020.
For businesses, the federal government has deferred the payment of any income tax amounts owing after March 18, 2020 and before September 1, 2020 without interest or penalties.
The government will also be deferring GST, HST, and customs duties until June 30, 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 would also have received 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 September 1, 2020.
For Quebec businesses, the payment of instalment payments and tax amounts owing is suspended until September 1, 2020.
Measures for Businesses
To support businesses that are facing revenue losses, and to help prevent lay offs, the government announced several new measures:
Canadian Emergency Response Benefit
The Canadian Emergency Response Benefit (CERB) is a payment of $2,000 every four weeks, for a total of up to 16 weeks. A maximum of $8,000, will be paid to workers who lost their income as a result of COVID-19. Eligible workers include Canadians who have lost their job, are sick or quarantined, or are taking care of someone who is sick with COVID-19. In addition, working parents who must stay home without pay to care for children who are at home due to sickness or school and day care closures are also covered. Seasonal workers and Canadians who have recently exhausted their Employment Insurance (EI) benefits will also be eligible. The CERB would apply to wage earners, as well as contract workers and self-employed individuals who would not otherwise be eligible for EI. Originally you would have had to have lost all your income in order to qualify for CERB. However, this was subsequently changed so that workers with income up to $1,000 per month would also qualify.
Like Employment Insurance benefits, taxes won’t be deducted at the source, meaning you’ll get the full $2,000 payment. However, this means that taxes will be owing when you file your taxes in 2021 for the 2020 tax year. How much you owe will depend on your tax bracket and how much tax was withheld from your other income.
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 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:
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.
Click here to see a handy infographic outlining the changes that may affect you.