Key Federal Tax Relief Initiatives for Canadian Individual and Corporate Taxpayers
The ongoing Covid-19 crisis has had a major impact on the ability of individual and corporate taxpayers to realistically comply with their tax filing, payment and remittance obligations. In an effort to address these concerning, the Government of Canada introduced the Covid-19 Emergency Response Act. The Act received first reading on March 24, 2020, following which it was swiftly enacted and received Royal Assent on March 25, 2020. The Act provides for a series of measures designed to afford interim relief to Canadian taxpayers who are facing challenges complying with their tax filing and payment obligations under the Income Tax Act and the Excise Tax Act.
The following is a summary of the key federal tax relief initiatives that are intended to provide some assistance to Canadian individual and corporate taxpayers, including certain administrative actions taken by the Canada Revenue Agency (the “CRA”) and the Tax Court of Canada.
Tax Return Filing Obligations
- For individuals (other than self-employed persons), the due date for filing T1 tax returns has been extended from April 30, 2020 to June 1, 2020. For self-employed individuals, the June 15, 2020 filing deadline remains unchanged.
- For corporations with a December 31 fiscal year-end, the June 30, 2020 filing deadline has remained unchanged.
- For corporations with a filing-due date between March 19, 2020 and May 31, 2020, the filing deadline is extended to June 1, 2020.
- For trusts with a December 31, 2019 tax year-end, the filing date is extended to May 1, 2020. For trusts that would have a filing date in April or May, 2020 the filing deadline is extended to June 1, 2020.
- The deadline for partnerships to file a T5013 information return is extended to May 1, 2020.
- The deadline for filing NR4 information returns reporting Part XIII withholding tax withholdings and remittances is extended to May 1, 2020.
- GST/HST returns that are due for filing before June 30, 2020 will not be subject to late-filing penalties if filed no later than June 30, 2020.
Tax Payment and Remittance Obligations
- For individuals, the payment-due date is extended from April 30, 2020 to September 1, 2020, with no penalties or interest accruing if the outstanding balance is paid by that date.
- For corporations, a payment deadline in respect of both instalments and balances due for Part I tax after March 17, 2020 is extended to September 1, 2020.
- For trusts with instalments and balances due after March 17, 2020 and before September 1, 2020 the payment deadline is extended to September 1, 2020.
- In respect of GST/HST remittances, for annual filers with a return/instalment due in March, April or May of 2020 the payment deadline for remittances of GST/HST collected in the previous fiscal year, and for instalments for the current year, is extended to June 30, 2020. For quarterly filers, the remittance deadline for GST/HST collected for the period commencing January 1, 2020 and ending March 31, 2020 is also extended to June 30, 2020. Finally, for monthly filers, the deadline for remitting GST/HST collected in each of February, March and April 2020 is extended to June 30, 2020.
- For Part XIII withholding tax withheld from payments to non-residents of Canada, the applicable deadline for remittance (the 15th day of the month immediately following the month in which the amount was paid/credited to the non-resident) remains unchanged.
- Similarly, there is no extension granted in respect of the obligation to make payroll source deduction remittances.
- As of April 20, 2020, the CRA has indicated that it generally will not contact small or medium businesses to initiate any post-assessment GST/HST or income tax audits until further notice.
- The CRA has also indicated that collections activities on new debts will be suspended until further notice, and that collections staff will address pre-existing situations on a case-by-case basis to prevent financial hardship.
- With respect to notices of objections (appeals) concerning benefits and credits, the CRA Appeals Directorate will continue to process these matters in an effort to avoid delays in resolving disputes. For existing objections concerning other matters (whether filed by individuals or businesses), the processing of these objections will be held in abeyance, and no collection action will be taken with respect these matters. As for the filing of new objections, the CRA has announced that the deadline for objections that are due between March 18, 2020 and June 30, 2020 has been extended to June 30, 2020.
- On April 17, 2020, the Chief Justice of the Tax Court of Canada issued an Order (superseding a prior Order issued on March 23, 2020) providing that the period of time beginning on March 16, 2020 and ending on the day that is 60 days after the Tax Court and its offices reopen for the transaction of business is to be excluded from the computation of time under the Rules of the Court or any Order of the Court. In effect, any deadlines provided for in the Court’s Rules (including a deadline for filing an appeal with the Court) or an existing Order is effectively extended by a number of days equal to this period of time.
It remains to be seen whether these rather unprecedented actions on the part of the Government of Canada and the Tax Court of Canada will afford meaningful relief to Canadian taxpayers as the Covid-19 crisis continues to unfold. We will monitor the Government’s actions to see if further relief becomes available, and will update our communications accordingly.