The Department of Finance issued a Backgrounder on March 27, 2020 detailing the latest announcements from the Federal Government that provide additional support for Canadian businesses suffering from the impact of COVID-19.
Deferral of Sales Tax Remittance and Customs Duty Payments
Goods and Services Tax/Harmonized Sales Tax (GST/HST) remittances and customs duty payments are deferred until June 30, 2020. The deferral applies to GST/HST remittances and instalment payments that would have been due March 31 through to May 31, 2020. Although remittances can be deferred, the Feds have not specifically come out and said that the deferral applies to the actual filing of the returns. Therefore, it is advisable at this time to file the returns if possible. Note CRA has indicated that taxpayers who are unable to file a return by the due date because of COVID-19 can request a cancellation of penalty and interest charged to their account.
The government has also deferred the payment deadlines for customs duties and GST on imports which are due before the first day of the month following the month in which the Statements of Accounts are issued. Payment deadlines for statements of accounts for March, April, and May are being deferred to June 30, 2020.
New Loan Programs for Businesses
Canada Emergency Business Account
Small businesses and not-for-profit organizations that can show they paid between $50,000 to $1 million in total payroll in 2019 will be eligible for this program. The program makes available to these organizations an interest free loan of up to $40,000 to help cover operating costs during a period where their revenues have been temporarily reduced, due to the economic impacts of the COVID-19 virus.
If the loan is paid off by December 31, 2022, 25% of the loan will be forgiven.
Small businesses and not-for-profit organizations are being directed to contact their financial institutions to apply for these loans.
New Loan Guarantee for Small and Medium Sized Businesses
Small and medium sized businesses will have access to new operating credit and cash flow term loans of up to $6.25 million which will be guaranteed by Economic Development Canada (EDC). Businesses should contact their financial institutions for more information. So far, we don’t have any additional information regarding the types of entities that would qualify for this program.
New Co-Lending Program for Small and Medium Sized Businesses
An additional lending program has been created for eligible businesses to allow them to obtain incremental credit amounts of up to $6.25 million. This lending program will be supported in part by the Business Development Bank of Canada (BDC). There is no word yet on the eligibility criteria for this lending program.
Canada Revenue Agency’s Additional Measures for Individuals and Businesses
The Department of Finance also provided details of measures being taken by the Canada Revenue Agency to help deal with cash-flow challenges and difficulties filing income and benefit returns. The following extended deadlines were announced:
- Administrative income tax actions required of taxpayers by the CRA that are due after March 18, 2020, can be deferred to June 1, 2020. According to CRA, these administrative income tax actions include returns, elections, designations and information requests. The deferral does not apply to payroll deductions payments or related activities.
- The deadlines for trusts, partnership and NR4 information returns are all extended to May 1, 2020.
- For any objection request due March 18 or later, the deadline is effectively extended until June 30, 2020.
- CRA is extending the filing deadline to December 31, 2020, for all charities with a Form T3010, Registered Charity Information Return due between March 18, 2020 and December 31, 2020.
Additional CRA Measures
CRA has also announced the following relieving measures:
- Any objections related to Canadians’ entitlement to benefits and credits have been identified as a critical service and will continue to be processed during the COVID-19 crisis. As a result, CRA indicated there should not be any delays associated with the processing of these objections.
- With respect to objections related to tax matters other than those related to Canadians’ entitlement to benefits and credits, the CRA is currently holding these accounts in abeyance. No collection action will be taken with respect to these accounts during this period of time.
- In respect of CPP/EI appeals, appeals that are related to cases where EI benefits are pending will be treated on a priority basis. All other appeals will be actioned when normal services resume. CRA has also indicated that CPP/EI appeals to the Minister program will exercise discretion on a case by case basis when additional time is required to respond to a request.
- CRA will be suspending all audit activities, with certain exceptions. There is currently no indication of what those exceptions are. Specifically, CRA has indicated that;
- no new audits will be launched;
- no requests for information related to existing audits will be made; and
- no audits would be finalized and no reassessments would be issued.
- CRA has also indicated it would be suspending collections activities on new debt until further notice and that flexible payment arrangements would be available. Furthermore, CRA has indicated that those with concerns or who require contact with a Collections Officer, can contact CRA’s toll free number 1-800-675-6184 between 8:00 a.m. and 4:00 p.m. their local time.
- Banks and employers will not be required to comply or remit on existing Requirements to Pay (RTP) during this time.
It was also announced on March 27, 2020 that the Federal government will be providing a 75% wage subsidy for qualifying businesses for up to 3 months retroactive to March 15, 2020. Although we currently don’t have many details on the eligibility criteria, those details are expected to be communicated by the end of March. The government has indicated the eligibility criteria will be based in part on the impact of COVID-19 to the employer’s sales.