Corporate tax information

In light of the recent threat of COVID-19 to the livelihoods of businesses, business-owners and employees, the Prime Minister announced on March 18th, 2020 the Government of Canada’s COVID-19 Economic Response plan which will provide up to $27 billion in direct support to Canadian workers and businesses.

Here are some of the main highlights for business owners of Canada’s COVID-19 Economic Response Plan, with many details and updates still to come:

For Businesses:

  1. Extension of Tax Deadlines and Delays on Audits
    • All businesses can defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020 for balances due and installments, with no interest and penalties to accumulate during these periods
    • The deferral will not apply to any tax withholdings such as payroll or Part XIII withholdings
    • MARCH 25th UPDATE:
      • GST/HST and Custom Duty payments:Businesses, including self-employed individuals, can defer payments of the GST/HST as well as customs duties owing on their imports to June 30, 2020.
      • The deferral will apply to GST/HST remittances for the February, March and April 2020 reporting periods for monthly filers; the January 1, 2020 through March 31, 2020 reporting period for quarterly filers; and for annual filers, the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year
      • Alberta tax has been deferred until August 31, 2020
    • CRA will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks
    • CRA will temporarily suspend audit interaction with taxpayers and representatives
  1. Temporary Wage Subsidy
    • To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months
    • Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration
    • To be an eligible employer you must be an individual (excluding trusts), partnership, non-profit organization, registered charity or CCPC eligible for small business deduction, have an existing business number and payroll account with CRA on March 18, 2020 and pay salary, wages, bonuses or other remuneration to an eligible employee
    • MARCH 25th UPDATE: Can be backdated to March 15th 2020
  2. Canada Emergency Wage Subsidy (CEWS)
    • MARCH 30th UPDATE: The Canada Emergency Wage Subsidy (CEWS) supports employers that are hardest hit by the pandemic, and protect the jobs Canadians depend on
    • The subsidy covers 75% of an employee’s wages – up to $847 per week – for employers of all sizes and across all sectors who have suffered a drop in gross revenues of at least 15% in March, and 30% in April and May
    • The drop in gross revenue will be measured based of a comparison to one month this year (ie: March 2020), to either one month earlier this year (ie: January or February 2020) or one month last year (ie: March 2019). If businesses use March to compare, they only need to show a 15% drop in revenue from halfway through the month
    • The program will be in place for a 12-week period, from March 15 to June 6, 2020
    • Employers who are eligible for the CEWS are entitled to receive a 100% refund for certain employer contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan paid in respect of employees who are on leave with pay
    • Applications will open April 27, 2020
  3. Changes to Canada Summer Jobs Program
    • The Canada Summer Jobs program provides opportunities for youth to develop and improve their skills within the not-for-profit, small business, and public sectors, and supports the delivery of key community services
    • Temporary changes will be made to allow employers to receive an increased wage subsidy, so that private and public sector employers can also receive up to 100 per cent of the provincial or territorial minimum hourly wage for each employee, extend the end date for employment to February 28, 2021, adapt their projects and job activities and hire staff on a part-time basis
  4. Business Credit Availability Program (BCAP) 
    • Will allow the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses
    • BDC and EDC are cooperating with private sector lenders to coordinate on credit solutions for individual businesses, including in sectors such as oil and gas, air transportation and tourism
  5. Lowering the Domestic Stability Buffer
    • The Office of the Superintendent of Financial Institutions (OSFI) announced it is lowering the Domestic Stability Buffer by 1.25%of risk-weighted assets, effective immediately
  6. The Bank of Canada Lowered Interest Rates
    • Cutting the interest rate to 0.75% as a proactive measure considering the negative shocks to Canada’s economy arising from COVID-19
  7. Canada Emergency Business Account (CEBA)
    • MARCH 25th UPDATE: The new Canada Emergency Business Account allows banks to offer $40,000 loans to qualifying businesses
    • Will be interest free for the first year
    • Under certain conditions, $10,000 of this loan can be forgivable if paid before the end of 2022
    • Small- and medium-sized businesses who paid between $20,000 and $1.5 million in total payroll in 2019 are eligible to receive a loan
    •  JUNE 15 UPDATE:To qualify under the expanded eligibility rules, CEBA applicants with payroll lower than $20,000 will need: 
      • A business operating account at a participating financial institution;
      • A Canada Revenue Agency business number;
      • A 2018 or 2019 tax return; and
      • Eligible non-deferrable expenses of between $40,000 and $1.5 million.
    • Visit your financial institution to apply
  8. Canada Emergency Commercial Rent Assistance (CERCA)
    • APRIL 24 UPDATE: This program will lower rent by 75 per cent for small businesses that have been affected by COVID-19
    • The program will provide forgivable loans to qualifying commercial property owners to cover 50% of three monthly rent payments that are payable by eligible small business tenants who are experiencing financial hardship during April, May, and June
    • The loans will be forgiven if the mortgaged property owner agrees to reduce the small business tenants’ rent by at least 75% under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The small business tenant would cover the remainder, up to 25% of the rent
    • Impacted small business tenants are businesses paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70% drop in pre-COVID revenues. This support will also be available to non-profit and charitable organizations
    • It is expected that CECRA will be operational by mid-May, and further details will be announced soon
  9. Large Employer Emergency Financing Facility (LEEFF)
    • The Large Employer Emergency Financing Facility (LEEFF) has been established to provide bridge financing to Canada’s largest employers, whose needs during the pandemic are not being met through conventional financing, in order to keep their operations going
    • The LEEFF program will be open to large for-profit businesses – with the exception of those in the financial sector – as well as certain not-for-profit businesses, such as airports, with annual revenues generally in the order of $300 million or higher
    • To qualify, eligible businesses must be seeking financing of about $60 million or more, have significant operations or workforce in Canada, and not be involved in active insolvency proceedings
    • This program will be delivered by the Canada Development Investment Corporation (CDEV), in cooperation with Innovation, Science and Economic Development Canada and the Department of Finance
    • More details will be available soon

Visit the CRA website for more details. Many details and updates are still to come; please check our social media pages for more information.

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