Federal government COVID-19 tax updates

CPA Canada is a respected and influential voice relaying matters raised by our members to the Canada Revenue Agency (CRA) and working collaboratively to identify solutions. Be sure to check back regularly for updates.

Update: September 14, 2020

CRA consultation on Form T2200

As some of you may know, the CRA has started a process to consult with business groups on a new draft simplified version of form T2200, Declaration of Conditions of Employment. The simplified form is meant to address work-space-in-the-home expenses incurred by employees during the COVID-19 pandemic.

Under current rules, employees who are otherwise eligible to claim employment expenses also need to obtain a signed copy of a T2200 form that was signed by their employer. The draft T2200 short form focuses on individuals who were required to work at home during the pandemic who wish to claim home office expenses. Although the short form will be easier to complete and will provide better information on who can claim pandemic-related home office expenses when compared with the existing T2200 form, the federal government’s proposed process does not deal with our key concerns.

Our first key concern is the number of forms that will be required to be completed. Whether a short form or a longer form, the need to prepare potentially millions of individual forms for Canadian employees will require a significant amount of compliance time and resources on a cumulative basis for employers. With many businesses struggling with issues related to the pandemic and business recovery, we believe that the resources needed to complete these forms can be better spent on more productive activities.

Another key concern is the time it will take employees to understand the rules and make accurate home office deduction claims as many employees will be making a claim for the first time. To help deal with this issue, we had suggested that serious consideration be given to providing a simplified calculation as an alternative and we provided an example based on how Australia is dealing with this issue. Again, we have offered to participate in a process to identify alternatives to simplify deductions. A simplified deduction would also help address T2200 concerns.

As it appears more likely that the government will require the individual preparation of some sort of T2200 form, we will consult with our tax committees on specific issues associated with the draft form. We have already identified some potential issues. We will be providing our views through our ongoing framework agreement with the CRA. In addition, we will also continue to raise our concerns in discussions with senior government officials on the big picture issues.

Overall, we strongly believe that a more streamlined solution is possible that will reduce the administrative burden for employers and employees while allowing to CRA to administer the tax system. This should be fully investigated before a final decision on the T2200 form is made.


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Update: September 8, 2020

Canada Emergency Commercial Rent Assistance (CECRA) extended for one more month

On September 8, the federal government announced that the CECRA program would be extended by one month to cover rent for September. The government also stated that this will be the final extension of this program as the government explores options to support small businesses as they face the ongoing challenges of the COVID-19 pandemic.

Extended SR&ED deadlines announced by CRA

The CRA received a ministerial order to allow for the extension of certain deadlines imposed under the Income Tax Act, including some reporting deadlines for scientific research and experimental development (SR&ED) claims. The SR&ED reporting deadlines affected include any that occurred on or after March 13, 2020. No SR&ED reporting deadlines are extended past December 31, 2020. The CRA has posted further information on which SR&ED deadlines have been extended on their website.

 

Update: September 4, 2020

International income tax guidance update

On September 2, the CRA made additional changes to its international income tax guidance (updating the version posted to the CRA site on August 31). Specifically, section I-B on corporate income tax residency was updated to address an issue with corporate residency requirements as it relates to the surplus calculations of a foreign affiliate of a Canadian-resident corporation. A new section VI was added that deals with non-resident employer certification to address an issue for non-resident employers whose non-resident employees may have had to remain in Canada for an extended period as a result of the travel restrictions.

Note that the CRA has also included their guidance on how to obtain international waivers and certificate of compliance during the COVID-19 crisis.

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Update: September 1, 2020

Update on non-tax federal government pandemic programs

On August 31, the Government of Canada announced that the application deadline for the Canada Emergency Business Account (CEBA) has been extended from August 31 to October 31, 2020. The Business Credit Availability Program (BCAP) has also been extended to June 2021.

The government is also looking into ways to expand the CEBA program to include businesses with qualifying payroll or non-deferrable expenses that have been unable to apply thus far due to not operating from a business banking account. Further details on these changes will be announced in coming days.

On the Canada Emergency Commercial Rent Assistance (CECRA) program, no further extension has been announced (the last assistance period ended on August 31). The Finance Minister discussed this issue at a news conference and stated that federal and provincial governments are looking for new ways to provide assistance for fixed costs including rent and more information should be available very soon.   

CRA extends international income tax guidance

On August 31, the Canada Revenue Agency extended its international income tax guidance period, which is now from March 16 until September 30, 2020 (previously August 31). The CRA also mentioned that it does not anticipate any further extensions.

Update: August 28, 2020

New T4 reporting requirements

On August 26, the CRA announced it will be introducing additional T4 reporting requirements applicable to all employers and will involve reporting amounts paid for specific periods during 2020.

The CRA states that the new reporting will be used to validate benefit payments under the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Response Benefit (CERB), and the Canada Emergency Student Benefit (CESB).

Additional details on the new reporting requirements can be found on the CRA’s COVID-19 update page. We will be in discussions with the CRA to clarify some issues and will provide an update as we learn more.


Update: August 27, 2020

Extended temporary measure enabling electronic signatures for individual and corporate T183s

On August 25, the CRA announced an extension of its temporary administrative measure of recognizing an electronically signed Form T183 or T183CORP as having met the signature requirements of the Income Tax Act for the remainder of the current filing season (we will follow up with the CRA to see if there is a more precise end date).

In order for the CRA to continue to accept an electronic signature from a taxpayer whose identity has been verified by the filer, the electronic signature will generally need to be provided in one of the following ways:

  • It may be provided if the taxpayer sends the information return, including the electronic signature using the electronic address most recently provided by the taxpayer to the electronic filer.
  • It may be provided in person by the taxpayer, in the presence of the electronic filer. e.g. using a stylus or finger on a tablet.
  • It may be provided through an access controlled, secured electronic location such as a secure website, that is accessible to the taxpayer only because the location of the secure website has been made known to the taxpayer and access has been granted by the filer.

The CRA has also highlighted that it will continue to pursue the regulatory approval necessary to implement these measures permanently.

New tax blog post: COVID-19 tax updates: Latest information on deadline extensions and relief

The CRA announced additional tax deadline extensions and relief from interest and penalties. Our latest blog post has a summary of these changes and updates on questions we asked the CRA.

 

Update: August 20, 2020

New tax blog post: New CEWS tools and guidance

The CRA launched more tools and guidance to help businesses and practitioners apply for the Canada Emergency Wage Subsidy (CEWS). Get insights into these and other developments in our latest blog post.

Government announces next phase of COVID-19 income support for individuals

The government announced today proposed changes to the Employment Insurance (EI) program, the introduction of three new income support benefits and an extension of the Canada Emergency Response Benefit (CERB). The Government of Canada intends to introduce legislation to support the delivery of the new recovery benefits.

The proposed changes to the EI program will make it available to more Canadians by relaxing many qualification requirements. Those receiving EI will be eligible for a taxable benefit rate of at least $400 per week, or $240 per week for extended parental benefits, and regular benefits will be accessible for a minimum duration of 26 weeks. The EI insurance premium rates for both employees and employers will also be frozen for two years.

The three new income support benefits include:

  • The Canada Recovery Benefit (CRB) will provide $400 per week for up to 26 weeks, to workers who are self-employed or are not eligible for EI and who still require income support and who are available and looking for work.
  • The Canada Recovery Sickness Benefit (CRSB) will provide $500 per week for up to two weeks, for workers who are sick or must self-isolate for reasons related to COVID-19.
  • The Canada Recovery Caregiving Benefit (CRCB) will provide $500 per week for up to 26 weeks per household, for eligible Canadians unable to work because they must care for a family member or dependents under various scenarios.

The government also proposes to extend the CERB by an additional four weeks to a maximum of 28 weeks. Further details can be found in Employment and Social Development Canada’s backgrounder.

 

Update: August 17, 2020

Government update on cybersecurity issues

As reported in the media, there have been cyber attacks on CRA’s ‘My Account’ service as well as ‘GCKey’ accounts for other online services. The number of individuals affected is somewhat unclear as the accounts attacked were a combination of CRA’s ‘My Account’ and ‘GCKey’ accounts used for other government services, however, it appears that CRA ‘My Account’ access will be closed for approximately 5,500 individuals.

The government provided an update on August 17 and the highlights from the press conference are as follows:

  • The attack was referred to as “credential stuffing,” where automated bots attempt to sign onto a website using usernames and passwords obtained from prior breaches of other sites. This tactic preys on users who use the same usernames and passwords at different sites.
  • The CRA also confirmed that the attackers were able to bypass the security question protections on the CRA site. This issue is being addressed.
  • My Business Account access has been restored and CEWS applications can be made.
  • My Account and Represent a Client are still offline for all users. Service is expected to resume by Wednesday, August 19, except for those whose accounts were specifically attacked.
  • For the 5,500 individuals where access to My Account was closed, letters will be mailed to them by the CRA this week explaining what they will need to do to restore access.

If there are any further developments, we will provide an update.

Applications for CEWS claim period 5 are now open

The CRA is accepting applications for the Canada Emergency Wage Subsidy (CEWS) claim period 5 (July 5 to August 1) as of August 17, 2020.  Applicants can apply for the wage subsidy online through My Business Account, Represent a Client, or the Web Forms applications. In addition, the CRA has updated their applications guide to reflect the new program rules introduced in Bill C-20, which apply generally for CEWS claim periods 5 and onwards. Although My Business Account access was suspended over the weekend, access to that service was restored on August 17.

CRA provides an update on SR&ED deadlines

Bill C-20 provided the ability for the Minister of National Revenue to extend the Scientific Research and Experimental Development (SR&ED) reporting deadlines for up to six months, starting March 13, 2020 and not past December 31, 2020, however in order to do so, the Minister must obtain approval from Parliament in the form of an order. The CRA recently updated their website with the following information:

“Since this order has not yet been issued, claimants with a SR&ED reporting deadline on or after March 13, 2020, and who were unable to file an SR&ED claim because of the COVID-19 pandemic, are encouraged to file their claim on the expectation that such an order will be released. Claimants are encouraged to submit their SR&ED claims as early as possible, preferably with their income tax return.”

 

Update: August 14, 2020

CRA’s ongoing updates to the CEWS calculator

CRA has developed and implemented the enhanced Canada Emergency Wage Subsidy (CEWS) calculator (which includes the online calculator and the calculation spreadsheet) under a tight timeframe. We understand that CRA is continually updating these tools, as glitches and improvements are highlighted. We wanted to remind you that it is important for you to check their webpage often to ensure you are using the latest version. For the online calculation, this will happen automatically when you access it, but the Excel spreadsheets are being updated as issues are identified.

Update: August 13, 2020

CRA updates the CEWS attestation

The CRA has recently uploaded an updated Form RC661, Attestation for owner/managers and/or senior employees. The key changes include adjustments to reflect the new periods (i.e. Periods 5 to 9) along with adding the elections related to assets sales, the alternative approach for determining the revenue drop for periods 5 to 9, and the alternative methods for determining baseline remuneration.

Update: August 11, 2020

Update on CEWS calculator and further guidance

Further to our posting on August 6, the CRA has released its enhanced Canada Emergency Wage Subsidy (CEWS) calculator, a CEWS support page, and revised CEWS FAQs. All have been updated to take into account the new CEWS program rules (see our blog for further details) and are designed to assist employers and their advisors in determining the amount of CEWS they may be eligible for. The CRA also announced that CEWS applications under the revised rules will be accepted beginning on August 17. We will provide more details as they become available.

 

Update: August 10, 2020

CRA updates 10 per cent Temporary Wage Subsidy guidance

The CRA recently updated their website to provide more detailed guidance on reporting the 10 per cent Temporary Wage Subsidy (TWS), and on form PD27 (Temporary Wage Subsidy Self-identification Form for Employers) in particular. All employers eligible for the TWS are expected to file. For those eligible employers who claimed no amount for the TWS (or a reduced amount) because they also claimed the Canada Emergency Wage Subsidy, they must also complete the PD27. As the CRA will use the information on this form to reconcile the subsidy to the employer’s payroll program account, CRA is encouraging employers to complete this form by the end of 2020.

Note that we have identified an issue in the certification section of the PD27 web form in Represent a Client. We have asked the CRA to reconsider this wording given that the representative is preparing the form on behalf of the employer.

 

Update: August 6, 2020

CRA to release an enhanced CEWS calculator and further guidance

The CRA has informed us that they are currently working on an enhanced Canada Emergency Wage Subsidy (CEWS) calculator that takes into account the new CEWS program rules (see our blog for further details) and is intended to assist employers and their advisors in determining the amount of CEWS they may be eligible for. In addition to the enhanced calculator, the CRA has indicated they are developing further FAQs to address the revised CEWS program rules. We will update you as we learn more about the calculator and guidance, including the timing of their launch.

 

Update: July 31, 2020

Government updates on CERB and CECRA programs

On July 31, the federal government provided updates on the Canada Emergency Response Benefit (CERB) and the Canada Emergency Commercial Rent Assistance (CECRA).

During a press conference on July 31, the Prime Minister announced that the government plans to transition current participants of the CERB program to Employment Insurance (EI) when the CERB program comes to an end. In addition, the government proposes to amend the EI rules to create new benefits for current CERB recipients who would not otherwise qualify for EI. More details will be provided before the end of August.

On the CECRA program, the Finance Minister announced that the program will be extended by one month to provide assistance to eligible small businesses for August rent. No other changes to the program were announced.

Update: July 28, 2020

CRA updates income tax deadline summary

Further to the CRA’s July 27 announcement on interest and late filing penalties for T1, T2 and T3 returns, the CRA has also updated its income tax deadline summary page. However, we have noted some inconsistencies and uncertainties. We have sent a note to the CRA to clarify, and we will provide more information when we hear back.

CRA releases 10% Temporary Wage Subsidy (TWS) self-identification form

The CRA has released Form PD27, 10% Temporary Wage Subsidy Self-identification Form for Employers. Eligible employers of the TWS will be required to complete this self-identification form for each of their payroll program accounts. The CRA will use the information on this form to reconcile the subsidy to the employer’s payroll program account. Further information on the TWS can be found on the CRA’s FAQ page.


Update: July 27, 2020

CRA extending payment deadline and applying relief to interest on existing debt

On July 27, the CRA issued a news release announcing a further extension to the payment due date for current year individual, corporate, and trust income tax returns, including instalment payments, from September 1, 2020, to September 30, 2020. Penalties and interest will not be charged if payments are made by the extended deadline of September 30, 2020. The previously extended filing due dates for individual, corporate, and trust income tax returns remain unchanged, however the CRA will not impose late-filing penalties provided the return is filed by September 30, 2020.

The CRA is also waiving interest on existing tax debts related to individual, corporate, and trust income tax returns from April 1, 2020, to September 30, 2020 and from April 1, 2020, to June 30, 2020, for goods and services tax/harmonized sales tax (GST/HST) returns.


Update: July 24, 2020

New tax blog: Summary of changes to CEWS program

The federal government is extending the Canada Emergency Wage Subsidy (CEWS) until December 19, 2020, among other important changes. Find out the details announced on July 17, 2020 and included in Bill C-20 in our latest blog post.

Relief for flow-through share issuers

The federal government is also proposing to assist flow-through share issuers by extending the timelines for spending the capital they raise via flow-through shares by 12 months. Finance Canada’s backgrounder has more details on the proposed changes and states that legislative amendments will follow “in due course.”


Update: July 20, 2020

Bill C-20 introduced with changes to CEWS and more

Further to the July 17 announcements by the government, Finance Minister Bill Morneau has introduced new legislation in the House of Commons (Bill C-20) which includes changes to the Canada Emergency Wage Subsidy (CEWS) and enhanced support for persons with disabilities. We will keep you updated as this bill progresses and will provide our analysis of the changes to the CEWS in this week’s tax blog.

In addition, Bill C-20 contains the proposals to address issues relating to legislative time limits and deadlines that were first released on May 19. It should be noted that it does not include the proposed changes to the Canada Emergency Response Benefit (CERB) that were contained in Bill C-17.


Update: July 17, 2020

Details announced for latest CEWS extension

Finance Minister Bill Morneau confirmed that the federal government will extend the Canada Emergency Wage Subsidy (CEWS) to December 19, 2020. He also announced details on how the program will be revised to take into account feedback that the government has received.

Today’s proposed changes included in the government’s draft legislative proposals would:

  • allow the extension of the CEWS until December 19, 2020, including redesigned program details until November 21, 2020
  • make the subsidy accessible to a broader range of employers by including employers with a revenue decline of less than 30 per cent and providing a gradually decreasing base subsidy to all qualifying employers
  • introduce a top-up subsidy of up to an additional 25 per cent for employers that have been most adversely affected by the pandemic
  • provide certainty to employers that have already made business decisions for July and August by ensuring they would not receive a subsidy rate lower than they would have had under the previous rules
  • address certain technical issues identified by stakeholders
    • this includes the amendments previously announced plus additional changes, including new rules to assist eligible employers who have acquired assets – an issue we raised in discussions with government

We will provide more information once we have reviewed the announcement more thoroughly.

For more details, see the Finance Canada news release and backgrounder. Draft legislation is also available.

New details to support persons with disabilities

The Minister of Employment, Workforce Development and Disability Inclusion announced that the government will propose legislation to make the one-time tax-free payment to persons with disabilities available to more people by expanding it to recipients of any of the following programs or benefits:

  • a Disability Tax Credit certificate provided by the CRA
  • Canada Pension Plan disability benefit or Quebec Pension Plan disability benefit
  • disability supports provided by Veterans Affairs Canada

Additional support will also be provided to eligible seniors.

We will provide more information once we have reviewed the announcement more thoroughly.

For more details, see the Employment and Social Development Canada news release.


Update: July 15, 2020

COVID-19 tax updates: Draft Regs on RPPs and DSLPs, CEWS changes and disputes, and more

Our discussions with the CRA continue as the government evolves its COVID-19 tax measures and administrative practices. Find out the latest key announcements and changes made in the past few weeks in our latest blog post.


Update: July 13, 2020

Canada Emergency Wage Subsidy (CEWS) extended through to December 2020

The Prime Minister announced today that the government will extend the CEWS through to December 2020. No further details were included in the Prime Minster’s announcement. We will update you as more information is provided.


Update: July 10, 2020

CEWS FAQ update: Vacation pay, recourse process, and more

On July 9, the CRA updated its Canada Emergency Wage Subsidy (CEWS) FAQ page. Some of the key changes are as follows:

  • Various updates were made to reflect the government’s extension of CEWS. Note that the regulation to extend CEWS and maintain the rules for the fourth period was released on June 29, 2020. The extension and rules for the fifth and sixth periods have not yet been released.
  • Question 6-4 on amalgamations and wind-ups has been re-worded, however there is no substantive change.
  • Question 17-3 provides guidance on how sick pay, vacation pay, and statutory holiday pay is included in eligible remuneration. The CRA confirms that to be eligible, the sick, vacation or holiday pay must be paid to the eligible employee in respect of a particular week in the claim period.
  • Question 36 provides guidance on the recourse process when the CRA denies a CEWS claim.
  • A number of other new questions have been added including:
    • Question 3-01, which deals with the proposals around tax-exempt trusts
    • Questions 6-7 and 6-8 deal with foreign exchange fluctuations and functional currency elections
    • Question 8-01 deals with employers electing under paragraph 125.7(4)(d) and the use of a foreign currency in computing qualifying revenue
    • Question 12-2 states that form RC661 is where an employer should indicate that elections have been made

We will be providing a more in-depth analysis of some of these changes in our next tax blog early next week.


Update: June 30, 2020

Updated CRA GST/HST FAQ page now available

The CRA recently updated its GST COVID-19 FAQ Page for the Finance Canada announcement that there will be no extension of the relief that was originally announced by the CRA on March 27, 2020.

In addition, the CRA has added new FAQs on electronic signatures for GST/HST documents. As a temporary measure, the CRA will be accepting electronic signatures for GST/HST documents submitted online. The CRA indicates that effective July 6, 2020, businesses will be able to use a new electronic service to submit a GST/HST document with an electronic signature. The link to this new service will be found on the MyBA main web page of the GST/HST program account menu. This temporary measure does not apply to GST/HST returns and forms filed by paper.

Canada Emergency Commercial Rent Assistance (CECRA) extended by one month

The Prime Minister has announced that the Canada Emergency Commercial Rent Assistance (CECRA) program will be extended by one month. The purpose of the CECRA program is to provide relief to small businesses experiencing financial hardship due to COVID-19 by way of unsecured, forgivable loans to eligible commercial property owners to reduce the rent owed by their impacted small business tenants and meet operating expenses on commercial properties.

Update: June 29, 2020

GST/HST and Customs Duty payment deferral ending as planned on June 30

The Department of Finance Canada announced that the GST/HST and customs duty payment deferral is ending as planned on June 30.

Finance states that businesses that continue to experience difficulty in remitting GST/HST and customs duty amounts owing can contact the Canada Revenue Agency (CRA) and Canada Border Services Agency (CBSA) to make a request for the cancellation of penalties and interest, and/or for a flexible payment arrangement with the CRA. 

CRA’s guidance on international income tax issues extended to August 31

As noted in prior postings, the Canada Revenue Agency (CRA) released guidance on several international income tax issues on May 19. On June 26, a revised version of the guidance was posted to the CRA’s website, which includes an extension to August 31 (the original guidance was set to expire today). Apart from the extension, there were no other significant changes.    

CRA’s Business Resumption Plan

The Canada Revenue Agency (CRA)  recently published its National Business Resumption (NBR) Plan. Over the past three months, the CRA has shifted its resources to providing critical services which include activities around benefit payments and the federal government’s response to the COVID-19 pandemic. While the CRA will continue its activities in these critical areas, it indicates in the NBR Plan that other services and functions will be resumed in a phased approach over the next six to nine months.

The NBR Plan outlines the services that will resume over the summer months (July to August 2020), and provides an estimated time frame for all other services. It is important to note that the plan builds on the list of critical services already in operation.

Services to resume over the summer (July to August 2020)

Here are some of the key services that will resume over the summer:

  • Appeals Branch – Remaining functions in the Appeals Branch will be fully operational by the end of the summer, including the Objections Program and the Taxpayer Relief Program.
  • Assessment, Benefit, and Service Branch –  Resumption of all remaining functions based on ability and capacity to support normal and COVID-19 priorities simultaneously, with a few exceptions (e.g. T183 monitoring activities).
  • Collections and Verification Branch – CRA paused most collections activities over the last few months. The NBR Plan indicates a number of services will resume over the summer including: Debt Management Call Centres, processing of insolvency filings and proofs of claim to trustees, responding to taxpayer request calls and correspondence.
  • Also of note, the CRA will be launching CEWS and CERB post payment compliance activities over the summer and into September 2020. It is unclear what this might entail, but we will keep you posted as we learn more on this.
  • Compliance Programs Branch - In addition to high risk audit work already underway, the CRA indicates it will be resuming audit programs focused on high net worth compliance, GST/HST refund integrity and GST/HST large business compliance.

Services to resume after the summer

Beyond the summer, the NBR Plan provides some anticipated timelines for remaining services but indicates they are still being assessed to confirm the optimum time for resumption.

It appears that many of the Collections and Verification Branch activities will begin to slowly resume normal activities beginning in September 2020.  Finally, the CRA estimates that collections officers will resume their more traditional approach to collections (e.g. where legal warnings will be issued by officers if a payment arrangement is not negotiated) in January 2021.

With respect to audit activities, the plan indicates that audits of small-medium sized enterprises will resume over October 2020 to January 2021.

Sending Correspondence to CRA during COVID-19

Due to the COVID-19 crisis, the Canada Revenue Agency (CRA) has closed many of its offices, and has been operating under a critical services mode.  As many CRA employees continue to work remotely, services can be delayed. CRA continues to recommend that taxpayers and advisors use CRA’s online portals (such as My Business Account or Represent a Client) to the extent possible when corresponding with the CRA. In addition, payments should be made electronically – including online banking or MyPayment – to ensure they are received by the CRA on time, or in person at a financial institution.

In the event you have to mail correspondence to the CRA, we have summarized where things should be sent to ensure their timely receipt.

Status of Tax Services Offices (TSOs)

Not all TSOs are open during this time, however the four Tax Centres (TCs) (Jonquière, Prince Edward Island, Sudbury, and Winnipeg) are open. CRA has indicated however that only the drop boxes at the TCs in Jonquière, Sudbury, and Winnipeg are being monitored regularly and remain open.

While some of the TSOs are open, some are only open partially and auditors, examiners and collectors are all working remotely. As such, CRA suggests sending mail, faxes and payments directly to one of the TCs. As mentioned, online portals or direct contact with your auditor to arrange for email exchange is probably the best approach.

Special electronic mailboxes

The CRA has created a temporary procedure allowing taxpayers and their representatives to electronically submit the following urgent requests:

To correspond with a CRA agent for any of these purposes via email, CRA indicates you should send an email to the relevant email address stating that you want to correspond with CRA by email. A CRA officer will respond to your email, send you the requirements to authorize email communication, and tell you when/if you are permitted to submit your application or request by email.

Non-resident GST registration

CRA’s website indicates that all non-resident GST registrations should be directed to the London-Windsor TSO at this time:

GST HST Non-Resident Registrations & Security
London-Windsor TSO
451 Talbot Street
London, ON N6A 5E5

Requests for municipal determinations for GST/HST purposes

The CRA has confirmed with us that requests for municipal determinations (for all provinces except Quebec) for GST/HST purposes can continue to be sent to:

Director
Public Service Bodies & Governments Division
Excise & GST/HST Rulings Directorate
11th floor, Tower A
Place de Ville
320 Queen Street
Ottawa, ON K1A 0L5

If you are in the province of Quebec, send the request for municipal determination or designation to Revenu Québec at:

Directeur des Taxes à la consommation
Direction générale de la législation
Revenu Québec
3800, rue de Marly, secteur 5-2-2
Québec, QC  G1X 4A5

Update: June 26, 2020

Reminder: Deadline for SRED filings remains unchanged

Please keep in mind that the filing deadline for the Scientific Research and Experimental Development (SR&ED) claims has not changed and remains due 18 months after a corporation’s year-end. For corporations that have a December 31, 2018 year-end, the corporation has until June 30, 2020, to file a SR&ED claim.

Although Bill C-17 would give the Canada Revenue Agency the ability to provide relief for late-filed claims, the bill has not progressed since its introduction on June 10. 

 

Update: June 25, 2020

Update on extension for Subsection 216(4) personal returns

In an item posted on June 24, we mentioned that the CRA extended the due date for filing subsection 216(4) returns for non-resident individuals and paying amounts owing to September 1, 2020. On their tax deadline page, the CRA mentioned that penalties and interest will not be applied if returns are filed and payments are made by September 1, 2020, but did not confirm that there would no negative impacts to those individuals who previously filed an NR6 form.

We have received confirmation from the CRA that there will also be an administrative extension to the undertaking referred to in the NR6 form and, therefore, the CRA will not issue a default assessment against the agent for a non-resident taxpayer who fails to file their subsection 216(4) return until after the extended September 1 due date has been missed.

Update on key GST issues

On a recent conference call with the CRA, we discussed a number of GST priority issues and we wanted to update you on a few of the key issues:

Voluntary disclosures
The CRA has indicated the Voluntary Disclosures Program (VDP) has resumed operations and that taxpayers can submit VDP applications. Registrants must include payment of the estimated tax owing with their VDP. The CRA’s website indicates that the online submission method remains the best option to submit an application at this time.

Non-resident GST registrations
We had feedback from members indicating that there seemed to be significant delays in the processing of Non-Resident GST Registrations as a result of the impact of COVID-19 on CRA’s operations. The CRA has confirmed that the Non-Resident GST Registrations group is now fully operational and there are no significant delays in their processing. As per the CRA’s website, non-resident registrations should be directed to the Non-Resident Registration section of the London-Windsor TSO for now.

Upcoming GST obligations
We also wanted to remind you of the upcoming GST payment and filing deadlines. On payments, the deadline for GST/HST payments or remittances that become owing on or after March 27, 2020, and before June 2020, was extended to the end of June. For GST/HST returns, the deadline for businesses to file their returns is unchanged. However, the CRA won’t impose penalties where a return is filed late provided that it is filed by June 30.

Further payment extensions and late filing relief have not been announced to date.

Update on CRA’s guidance on international income tax issues

As we first noted in a posting on May 20, 2020, the CRA released guidance on several international income tax issues. The CRA states that its guidance will apply until June 29 and at that time, the CRA would decide whether an extension is necessary. CPA Canada contacted the CRA to ask whether the guidance will be extended and we understand the decision is still being considered. We will post an update when more information becomes available.


Update: June 24, 2020

Update on CRA’s Canada Emergency Wage Subsidy (CEWS) FAQs

The CRA has updated their CEWS FAQ page to reflect a number of changes that were recently announced. Details of each of these changes were discussed in our previous postings and blogs, and include:

  • The proposed extension of the CEWS for an additional twelve weeks. The FAQ reconfirms that all the rules related to the CEWS for the proposed fourth period will be identical to the ones for the preceding third period. It also highlights that an announcement of the potential changes to the program’s framework for the fifth and/or sixth periods will be made shortly. The regulations for this extension have not yet been released.
  • The proposed expansion of the CEWS to capture employers who did not have a payroll account (RP) but instead use a payroll service provider (i.e. paymaster) who make their payroll remittance on the provider’s RP account (see Bill C-17).
  • The proposed change to allow corporations formed by amalgamation of two or more predecessor corporations (or where a corporation is wound up into another) to calculate benchmark revenue using combined revenues (see Bill C-17). 

The CRA confirms in its FAQs that these proposed changes will only be administered and applied once the legislation has received Royal Assent. At present, Bill C-17 has not progressed since receiving first reading.

Calculating qualifying revenues for recently incorporated businesses

In new question 6-5, the CRA clarifies that where a sole proprietor’s business was recently incorporated, the corporation cannot compare its revenue to that of the proprietorship for either the corresponding period in 2019 or to January and February of 2020 when applying the revenue test (depending on when incorporation took place). In other words, it will be treated as a brand-new business (see discussion on the Alternative Approach in Question 5 and Example 4 of the FAQ for new businesses).   

Qualifying revenues and adjustments for operational changes

New question 6-6 highlights that prior or current reference period qualifying revenues cannot be adjusted to reflect operational changes that have taken place in the business. An eligible employer should use its normal accounting practices when determining its qualifying revenue and that there are no provisions (other than the “special rules” referred to in the FAQ) that allow an eligible employer to adjust qualifying revenue from prior or current reference periods for changes in operation levels. As examples, operational changes that cannot be adjusted for include a supply chain disruption causing a loss of revenue in a prior period or a business or asset purchase in a current period that increases revenue.

Note that we have raised the business acquisition issue in multiple discussions with Finance Canada. 

When employers need to repay the CEWS

In question 28-1, the CRA provides information on circumstances where an employer needs to repay the CEWS. 

The CRA has also provided instructions on how to repay either entire or partial amounts received on the “after your apply” section of its CEWS landing page

Employers may be subject to interest on excess wage subsidies received and penalties may apply on all fraudulent claims.

New deadlines for non-resident individuals

The CRA has provided additional filing and payment extensions, to September 1, for T1 returns for non-residents electing under either subsection 216(4) or section 217 who would have otherwise had a filing deadline of June 30, 2020. Penalties and interest will not be applied if returns are filed and payments are made by September 1, 2020. See the new “Section 216(4)” and “Section 217” items on the CRA’s tax deadline page.

However, the information on CRA’s tax deadline page does not deal with additional implications of a late-filed subsection 216(4) T1 return where the individual previously filed form NR6. According to the NR6 form, the CRA states in respect of the rental agent “you as agent will have to pay to the Receiver General for Canada the full amount of tax that would otherwise have been required to be remitted in the year” if the return is not filed on time. This means that where Part XIII tax was withheld on net rental income during the year and the return is late, the agent must calculate tax on gross rental income and remit that to the CRA.

As this issue goes beyond simple interest and late-filing penalties (i.e. an amount of tax potentially owing by the agent) and was not addressed specifically, we have asked the CRA for clarification.


Update: June 18, 2020

COVID-19 tax updates: CEWS, CRA interpretations, deadlines, international issues and more

With many COVID-19 emergency tax measures now enacted, we continue our regular series of updates with the latest on the Canada Emergency Wage Subsidy (CEWS), related CRA interpretations, time limits and more. Read our latest blog.

Update: June 16, 2020

Federal government extends CERB for an additional eight weeks

The Prime Minister announced that the government will extend eligibility for the Canada Emergency Response Benefit (CERB) by eight weeks – enabling those who are trying to find work to keep claiming the $2,000/per month benefit. Read the news release for more details.

CEWS revenue test threshold remains 30 per cent for period 4

On June 10, the CRA sent an email to stakeholders on the Canada Emergency Wage Subsidy (CEWS). In addition to some general information and a reference to the recently completed consultation, the CRA stated that:

“Any potential changes would commence as of periods 5 (July 5 to August 1) and/or 6 (August 2 to August 29). Further details on this will be forthcoming.”

The same message has now been posted to the main CEWS page. Based on this, the 30 per cent revenue threshold will continue to apply for period 4.
 

Update: June 15, 2020

Finance consults on potential CEWS changes: CPA Canada provides feedback

The Department of Finance Canada consulted with Canadians on potential changes to the Canada Emergency Wage Subsidy (CEWS). Find out about our feedback on improving this vital program for supporting employers affected by COVID-19.

Update: June 11, 2020

Federal government introduces Bill C-17

The federal government introduced Bill C-17 on June 10. While the focus of the bill is on the Canada Emergency Response Benefit (CERB), some key Canada Emergency Wage Subsidy (CEWS) issues were also addressed.

CEWS amendments

One concern we have been focused on are paymasters and other arrangements where one entity administers a payroll for a second entity. In such a case, only the payroll administrator has a payroll account with the CRA, which makes the second entity ineligible for a CEWS claim under the existing rules. Bill C-17 proposes to amend the definition of qualifying entity to include an entity where payroll administration for its employees is undertaken by a “payroll service provider” and that provider has a payroll account with the CRA which is used to make source deduction remittances in respect of the employees of that entity. This change comes into force on the same date the CEWS initially received Royal Assent (April 11, 2020).

The proposed legislation also amends the CEWS rules to implement the changes announced in the May 15 Department of Finance Canada backgrounder. This includes:

  • allowing corporations formed on an amalgamation of two or more predecessor corporations (or where a corporation is wound up into another) to calculate benchmark revenue using combined revenues
  • introducing a new alternative baseline remuneration period
  • adding restrictions to the eligible entity definition for tax-exempt trusts

CERB amendments

The proposed legislation contains amendments to the CERB rules, which include:

  • support to individuals who experience a short-term loss of employment, quarantine themselves or care for someone diagnosed with COVID-19, whereby they will be allowed to make a claim for a two-week period rather than a four-week period under the current program
  • tightening eligibility requirements whereby an individual will not be eligible for benefits if that individual fails to return to work after an employer requests their return or fails to resume self-employment, when it is reasonable to do so, and where an individual declines a reasonable job offer if they are able to work
  • penalties for claimants whose applications include information that is deliberately “false or misleading,” and for those who “knowingly fail” to disclose sources of income or other relevant information in their CERB application
    • it appears that the new penalties can apply retroactively to claims made before the introduction of this legislation

A number of administrative rules were also included.

Other amendments

Other amendments included in the bill will:

  • provide support to Canadians with disabilities to deal with extra expenses during the COVID-19 pandemic, as previously announced by the federal government
  • enact recently released legislative proposals that address issues relating to time limits and deadlines

Update: June 9, 2020

New blog post on Canada Emergency Wage Subsidy (CEWS) and other COVID-19 related issues

Read our latest blog post, which provides updates from the CRA, including amending CEWS claims, CEWS and corporate groups, recent rulings, and other COVID-19 related issues.


Update: June 8, 2020

Support for Canadians with disabilities to address challenges from COVID-19

The federal government has announced support to help Canadians with disabilities deal with extra expenses during the COVID-19 pandemic. This support includes a special one-time, tax-free payment to individuals who are certificate holders of the Disability Tax Credit as of June 1, 2020, as follows:

  • $600 for Canadians with a valid Disability Tax Credit certificate
  • $300 for Canadians with a valid Disability Tax Credit certificate and who are eligible for the Old Age Security (OAS) pension
  • $100 for Canadians with a valid Disability Tax Credit certificate and who are eligible for the OAS pension and the Guaranteed Income Supplement (GIS)

Read the news release.


Update: June 3, 2020

Updated summary of identified COVID-19 tax issues (non-CEWS)

Read the latest version of the summary of identified COVID-19 tax issues complied by CPA Canada and the Canadian Tax Foundation. This update includes new issues as well as any developments on existing issues since the May 4, 2020 version. We continue to work with the federal government on outstanding issues and will keep you updated as further information becomes available. 


Update: June 1, 2020

CRA tax deadline summary revised

Further to our May 28 tax deadline webinar and May 29 tax blog, the Canada Revenue Agency (CRA) has updated their tax deadline summary to clarify some uncertainties that they had previously confirmed with us. In particular, the CRA page now states:

  • For T2 corporate returns:
    • For returns otherwise due after March 18 and before May 31, 2020, these are due June 1, 2020.
    • For returns otherwise due on May 31, or in June, July, or August 2020, these are due September 1, 2020.
  • For T3 trust returns:
    • For returns otherwise due after March 30 and before May 31, 2020, these are due June 1, 2020.
    • For returns otherwise due on May 31, or in June, July, or August 2020, these are due September 1, 2020.
  • For other information returns, elections, designations and information requests:
    • Unless otherwise noted, filings and responses due after March 18 and before May 31, 2020 are due June 1, 2020.
    • Unless otherwise noted, filings and responses that would have been due on May 31, or in June, July, or August 2020 are due September 1, 2020.

Specifically, this means that T2 returns for November 30, 2019 year ends and partnership returns normally due on May 31, 2020 are now due on September 1, 2020, as previously reported.

The other information in the summary is largely unchanged from the previous version. In particular, forms such as the T106, T1135 and other schedules and elections will be due at the same time as the return in question, including the extension.


Update: May 29, 2020

Updated CEWS FAQ posted to CRA site

The CRA has updated the FAQ summary for the Canada Emergency Wage Subsidy (CEWS). It appears that the main changes were the addition of four questions:

  • In question 6-3, the CRA confirms that when using the accrual method in accordance with normal accounting practices, it would not generally be possible to deduct bad debts (or an allowance for bad debts), when determining qualifying revenue.
  • In question 9-1, the CRA has provided more information on consolidations where some of the affiliated eligible employers are non-resident. One key question has been whether the requirement for activities to be carried on in Canada (in the definition of “qualifying revenue”) would be applied on a consolidated basis. The CRA states that “an amount representing a portion of the revenue from a sale to a third party by a non-resident member of the group may be included in computing the qualifying revenue of the eligible employer if it can be demonstrated that it arose in the course of the ordinary activities of the group in Canada.”
  • In question 10-2, the CRA discusses consolidation issues where affiliated corporations are not part of the same ownership chain.
  • In question 18-1, the CRA has re-confirmed that it is not possible to retroactively pay remuneration to increase baseline remuneration.

New tax blog post: Filing extensions, international guidance and more

Read our new tax blog post, which includes an update on further income tax filing extensions, CRA’s guidance on international tax issues arising from COVID-19 and more.


Update: May 28, 2020

Webinar: Further filing extensions for COVID-19 tax measures

Watch our latest webinar for updated information on tax deadlines. Following up on our ongoing discussions with the CRA, this session focuses on interest and penalty relief for personal returns as well as extensions for corporate and trust returns, and other deadlines. This information is presented by CPA Canada’s vice-president, Taxation, Bruce Ball.


Update: May 26, 2020

ALSO VIEW: CEWS and other COVID-19 tax updates webinar

Watch this recorded webinar, which reviews recent COVID-19 tax-related developments with a primary focus on the Canada Emergency Wage Subsidy (CEWS). CPA Canada’s vice-president, Taxation, Bruce Ball and senior principal, Taxation, Vivian Leung cover developments reported in the May 14 tax blog and provide an update on the CEWS priority issue list, which we had previously provided to the Canada Revenue Agency (CRA). This recording also covers the May 15 Department of Finance Canada backgrounder which extended and updated the CEWS.

CPA Canada originally intended to also address recently announced deadline extensions. However, we are still waiting for additional clarity from the CRA on several issues. Once further information is received, we will provide another recording.

Key CPA Canada resources for CEWS:

More information released by CRA on tax deadlines

In addition to the interest and penalty relief for 2019 noted below, the Canada Revenue Agency (CRA) has also announced filing extensions for corporate (T2) and trust (T3) income tax returns.

The CRA has also updated their tax deadline page, which incorporates these extensions and the interest/penalty relief for individuals announced on May 22. It also includes confirmation that penalties will not apply to form T1135 for individuals and any elections, forms and schedules that must be filed with the T1 return, provided that they are filed by September 1, 2020.

For 2019 and 2020 T2 returns otherwise due in June, July or August, these returns will now be due on September 1, 2020. It appears that this does not include returns due on June 1, 2020 due to the previous tax filing deadline extension, but we have asked the CRA to confirm. We have also asked whether the due date has been extended for November 30, 2019 year-ends since May 31 fell on a Sunday (meaning that the return was due on June 1). As previously announced, any Part I income tax balance due on or after March 18 and before September 1 will also be due by September 1, 2020. In particular, the CRA notes that this extension would apply to forms T1135 and T106 and any elections, forms and schedules that must be filed with the T2 return, provided they are filed by September 1, 2020.

For T3 returns, the deadline for trust returns that would otherwise be due in June, July or August, has also been extended, to September 1, 2020. We have asked CRA to confirm that the due date for T3s due on June 1 as a result of the previous extension have not been extended further. Since the deadline for form T1135 is based on the T3 deadline, the filing due date for that form has also been extended. As previously announced, any income tax balance due on or after March 18 and before September 1 will also be due by September 1, 2020.

A number of other issues have been raised, and we are following up on them.


Update: May 25, 2020

CRA announces late-filing relief on 2019 personal tax returns

As we previously reported, we have been in discussions with the Canada Revenue Agency (CRA) on personal and corporate tax deadlines and the need for extensions or relief for late-filing penalties. On 2019 personal returns, although the CRA ultimately decided not to provide a further extension, they have provided relief on penalties and interest, including late-filing penalties where returns are filed after June 1.

In the announcement, the CRA states that:

“Penalties and interest will not be charged if payments are made by the extended deadlines of September 1, 2020 [which was previously announced]. This includes the late-filing penalty as long as the return is filed by September 1, 2020.”

Unfortunately, the message for self-employed individuals and their spouses/partners was not clear. We have specifically confirmed with the CRA that these taxpayers can make use of the general waiver of interest and penalties described above if the return is filed after June 15 and by September 1, 2020. We have also communicated that public messaging on this is needed.

In addition, we asked the CRA to confirm that the extension applies to the T1135 form and any election or other form that is normally filed with the T1 return.

Although we know that some of you wanted specific filing extensions, the CRA was concerned that a formal extension to September 1 could cause significant disruptions to income-tested benefits.

The due date for the June 15, 2020 personal tax installment has been extended to September 1, 2020.

We understand that an announcement on corporate and trust returns will be made soon. We will provide further updates as more information becomes available. 

Update: May 22, 2020

New webinar: CEWS and other COVID-19 tax updates

We will be releasing a new webinar recording early next week to provide an update on a number of COVID-19 tax issues, with a primary focus on the Canada Emergency Wage Subsidy (CEWS). This update will be presented by CPA Canada’s vice-president, Taxation, Bruce Ball and senior principal, Taxation, Vivian Leung. The update will cover a number of our recent postings, including developments reported in the May 14 tax blog and an updated version of the CEWS priority issue list which we had previously provided to the Canada Revenue Agency. We will also cover the May 15 Department of Finance Canada backgrounder which extended and updated the CEWS. Given the volume of updates, we will not have time to provide a recap of the basic rules, as these were addressed in our April 17 recorded webinar.


Update: May 21, 2020

Federal government announces support program for large employers is open for applications

The federal government’s support for large employers through LEEFF will be delivered by a subsidiary of the Canada Development Investment Corporation (CDEV), in cooperation with Innovation, Science and Economic Development Canada (ISED) and the Department of Finance. Additional information on the application process is available on the CDEV website. Broader sectoral dynamics for LEEFF applicants will be considered through processes led by Innovation, Science and Economic Development Canada. Read the news release.


Update: May 20, 2020

CEWS prioritized questions and issues document

CPA Canada and the Canadian Tax Foundation have updated the Canada Emergency Wage Subsidy (CEWS) prioritized questions and issues document to reflect new developments. The document addresses the May 15 federal government announcement to extend the CEWS and make some technical changes. Also included are issues raised during the recent CRA / CPA Canada conference call, in addition to information provided through the CRA FAQ or the application guide.

CRA posts updated version of CEWS FAQ

The CRA posted an updated version of its FAQ for the CEWS on May 19, 2020. In addition to providing examples related to the release of Regulation 8901.1, the FAQ also provides an update on cost sharing/paymaster arrangements and the interaction of the CEWS with the Temporary Wage Subsidy (TWS). 

On cost sharing/paymaster arrangements, the CRA states in question 3-8 that “Employers who did not have their own business number and payroll program account with the CRA on or before March 15, 2020 would not meet the eligibility criteria, and subsequently, would not be eligible for the wage subsidy. The third party cannot apply for the wage subsidy on behalf of an employer by using their own business number and payroll program account.” This conclusion will have serious consequences in many arrangements, and CPA Canada will continue to discuss this issue with the federal government. 

On the interaction of the CEWS and TWS, the CRA had previously stated that CEWS claims must be reduced by TWS amounts that could be claimed. In other words, the CEWS amount would be reduced whether or not a TWS application was actually made. As some relief, the CRA states that it is possible to elect zero per cent as the prescribed percentage for the TWS which would eliminate the need for detailed calculations. In particular, the CRA states in question 21:

“Note: If an eligible employer completes their CEWS application and does not enter any amount for the 10% temporary wage subsidy, the CEWS will be determined as if the employer is electing 0% as the prescribed percentage for calculating their 10% temporary wage subsidy and requesting the maximum CEWS. However, the eligible employer should indicate the 0% election on the self-identification form under the 10% temporary wage subsidy program.”

CRA issues guidance on international income tax issues raised by the COVID-19 crisis

The CRA has released guidance on international tax issues, including the following:

  • income tax residency
  • carrying on business in Canada/permanent establishment
  • cross-border employment income
  • waiver requests – payments to non-residents for services provided in Canada
  • disposition of taxable Canadian property by non-residents of Canada

Update: May 19, 2020

CEWS regulations released

Further to the changes to the Canada Emergency Wage Subsidy (CEWS) announced on May 15, 2020, the federal government also released regulations on the CEWS changes as well as regulations on the Temporary Wage Subsidy (the 10 per cent rate, the $1,375 maximum per employee and the $25,000 maximum for the employer).

On the CEWS changes, the regulations extend eligible entity status to a number of employers as prescribed entities. See the posting on May 15 for a summary of employers that have been prescribed. 

Expanded eligibility criteria for the Canada Emergency Business Account (CEBA)

The Prime Minister announced an expansion to the eligibility criteria for the CEBA to include many owner-operated small businesses. The program will now be available to a greater number of businesses that are sole proprietors receiving income directly from their businesses, businesses that rely on contractors, and family-owned corporations that pay employees through dividends rather than salary. The CEBA provides interest-free loans of up to $40,000 to small businesses and not-for-profits to help cover operating costs during a period when revenues have been reduced, due to the pandemic. Find more details here.

 

Update: May 15, 2020

CEWS extension and technical changes announced

Finance Minister Bill Morneau announced that the federal government will extend the CEWS by an additional 12 weeks to August 29, 2020. The government will also consult with key stakeholders over the next month on potential adjustments to the program to incent jobs and growth, including the 30 per cent revenue decline threshold. 

In addition, eligibility for the CEWS will be extended to the following groups:

  • partnerships that are up to 50 per cent owned by non-eligible members
  • Indigenous government-owned corporations that are carrying on a business, as well as partnerships where the partners are Indigenous governments and eligible employers
  • registered Canadian amateur athletic associations
  • registered journalism organizations
  • non-public colleges and schools, including institutions that offer specialized services, such as arts schools, driving schools, language schools or flight schools

Additional proposed amendments would also:

  • provide flexibility for employers of existing employees who were not regularly employed in early 2020, such as seasonal employees
  • ensure that the CEWS applies appropriately to corporations formed on the amalgamation of two predecessor corporations
  • better align the treatment of trusts and corporations for the purpose of determining CEWS eligibility

We will provide more information once we have reviewed the announcement more thoroughly.

For more details, see the Finance Canada news release and backgrounder.


Update: May 14, 2020

New tax blog post: CEWS Q&A and other COVID-19 tax developments

Read our new tax blog post which includes highlights from our Canada Emergency Wage Subsidy (CEWS) Q&A session as well as an overall update on CEWS and other COVID-19 tax measures that developed from our ongoing discussions with the CRA.


Update: May 12, 2020

Conference call with the CRA about the Canada Emergency Wage Subsidy (CEWS)

As part of our commitment to delivering timely and relevant information to members, CPA Canada co-hosted a conference call with the Canada Revenue Agency (CRA) focusing on the Canada Emergency Wage Subsidy (CEWS). Listen to a recorded version of this session.

The CRA addressed questions previously raised by members during the call as well as some questions CPA Canada had previously asked the CRA. We have noted the questions that were not answered on this call and will provide updates on key issues, as received from the CRA, on this page or in future tax blog posts.

Panelists:

  • Bruce Ball, vice-president, Taxation, CPA Canada (host)
  • Harry Gill, director general, Small and Medium Enterprises Directorate, CRA
  • Randy Hewlett, director general, Legislative Policy Directorate, CRA
  • Mark Mayer, manager, Business Number Policies, Procedures, and Corporate Support Section, Business Returns Directorate, Assessment and Benefit Services Branch, CRA

Additional measures to support Canadian seniors

The Prime Minister announced additional measures to help Canadian seniors and provide them with greater financial security in this time of crisis. These measures include:

  • Providing $2.5 billion for a one-time tax-free payment of $300 for seniors eligible for the Old Age Security (OAS) pension, with an additional $200 for seniors eligible for the Guaranteed Income Supplement (GIS). This measure would give a total of $500 to individuals who are eligible to receive both the OAS and the GIS.
  • Temporarily extending GIS and Allowance payments if seniors’ 2019 income information has not been assessed. This measure is aimed at ensuring that the most vulnerable seniors continue to receive their benefits when they need them the most. To avoid an interruption in benefits, seniors are encouraged to submit their 2019 income information as soon as possible and no later than by October 1, 2020.

Update: May 11, 2020

Additional support for Canadian businesses

The federal government announced new measures to support large and medium-sized businesses so they can keep their workers and their operations going in this crisis. As part of the government’s COVID-19 Economic Response Plan, it will:

  • establish a Large Employer Emergency Financing Facility (LEEFF) to provide bridge financing to Canada’s largest employers, whose needs during the pandemic are not being met through conventional financing
  • use key guiding principles in providing support through the LEEFF – including protecting taxpayers and workers, ensuring financing is applied in a consistent manner, and adhering to a standard set of economic terms and conditions
  • expand the Business Credit Availability Program (BCAP) to mid-sized companies with larger financing needs
  • continue to provide financing to businesses through Farm Credit Canada, the BDC, and EDC, including through the Canada Account

Find more information.


Update: May 8, 2020

Canada Emergency Wage Subsidy (CEWS) to be extended

The federal government has announced that the CEWS will be extended beyond June to help kickstart Canada’s economy and boost job creation. More details are expected next week and will be posted here.

CPA Canada is hopeful that, when the federal government releases more information on the CEWS, it will also announce a decision on the CEWS eligibility requirements for certain partnership arrangements – such as private/public partnerships and partnerships involving pension funds. Currently, many of these businesses do not qualify and we have been discussing the issues with Finance Canada.

Clarification from CRA on recent SR&ED update

There was some uncertainty around the CRA’s April 30, 2020 stakeholder communication on the Scientific Research and Experimental Development (SR&ED) program. In particular, the CRA stated that “claims accepted at this time may be subject to review/audit at a future date to ensure eligibility.” We followed up with the CRA to see if we could get more information.

The CRA has provided the following points of clarification to us:

  • The immediate goal of the SR&ED program is to respond quickly to the extraordinary circumstances of this pandemic to expedite refunds and issue credits where possible. Program requirements must still be met, and claims accepted as filed at this time may be subject to review or audit at a future date to ensure eligibility.
  • The CRA is focused on willful non-compliance and will continue to use a risk-based approach to identify claims that may require a future review or audit to ensure eligibility. The CRA is thinking about claimants, not just claims, and recognizes that most businesses submit compliant claims.
  • Maintaining the integrity of the program is as important as ever and the CRA relies on businesses and tax professionals to continue submitting quality claims during this time.
  • If businesses have questions about the status of their SR&ED claims, the CRA continues to be available to help and answer questions. Contact information for the SR&ED program is on the CRA’s site.

Update: May 7, 2020

New tax blog post: New developments on CEWS and other concerns

Read our new tax blog post with updates about the Canada Emergency Wage Subsidy (CEWS) and other tax issues related to COVID-19.


Update: May 6, 2020

NOTE: Participation details for next week’s CRA conference calls will be provided in advance of the sessions – see the May 5 update below for dates

Updated summary of identified COVID-19 tax issues (non-CEWS)

CPA Canada and the Canadian Tax Foundation have updated the summary of identified COVID-19 tax issues with new issues, as well as any developments on existing issues since our last published version on April 20, 2020. We continue to work with the federal government and will to keep you updated as we get clarification on these points.

CRA releases revised CEWS FAQ

On May 5, 2020, the CRA released a revised FAQ on the Canada Emergency Wage Subsidy (CEWS) with more details. Among other things, the FAQ:

  • confirms that investment income, such as interest and dividends, should be included in the revenue test (question 6-1)
  • discusses government assistance, appearing to indicate that most COVID-19-related amounts will be considered as extraordinary items for CEWS purposes (question 6-2)
  • provides more information on affiliated groups of eligible entities, and the CRA states where members of an affiliated group elect to calculate qualifying revenue on a consolidated basis (i.e. under subparagraph 125.7(4)(b)), the election must be applied by the entity and all affiliated entities to be valid (questions 10 and 10-1)
  • confirms that the rules for calculating qualifying revenue in a claim period (i.e. paragraphs 125.7(4)(a)–(d)) do not have to be applied for all claim periods if they are used in one claim period (question 12-1)
  • provides additional commentary on the impact of rehiring employees in receipt of the Canada Emergency Response Benefit (question 14-1)
  • discusses how to treat tips as remuneration for the CEWS (question 17-1)
  • delivers some bad news for owner-managers in that dividends paid to owner-managers are not remuneration for CEWS purposes and if no remuneration was paid during the baseline period from January 1, 2020 to March 15, 2020 to an owner-manager, no amount can be claimed for that owner-manager (question 17-2)

View the revised FAQ for more details.


Update: May 5, 2020

Live session with the CRA about the Canada Emergency Wage Subsidy (CEWS)

As part of our commitment to delivering timely and relevant information to members, CPA Canada will co-host English and French conference calls with the Canada Revenue Agency (CRA) focusing on the CEWS.

The CRA will address questions previously raised by members through CPA Canada on issues raised about the subsidy. Members will also have an opportunity to submit additional CEWS-related questions during the call. Recorded versions of the English and French sessions will be posted shortly after the live sessions.

English session: May 11, 2020, 2 pm – 3 pm EDT
Panelists:

  • Bruce Ball, vice-president, Taxation, CPA Canada (host)
  • Harry Gill, director general, Small and Medium Enterprises Directorate, CRA
  • Randy Hewlett, director general, Legislative Policy Directorate, CRA

French session: May 12, 2020, 2 pm - 3 pm EDT
Panelists:

  • Jean-François Thuot, CPA, CGA, PwC (host)
  • Marc LeBrun, deputy assistant commissioner, Compliance Programs Branch, CRA
  • Randy Hewlett, director general, Legislative Policy Directorate, CRA

Space is limited for the live sessions and will be provided on a first come, first served basis – more information will be available on this page in advance of the sessions.
 

Update: May 1, 2020

CPA Canada’s president & CEO, and vice-president of Tax, appear before the House of Commons Finance Committee

President and CEO Joy Thomas and vice-president of Tax, Bruce Ball, appeared before the House of Commons Standing Committee on Finance to speak to the committee’s study on the government’s response to the COVID-19 pandemic. During the video conference session, CPA Canada raised concerns expressed by its members that identify some significant gaps in the federal government’s COVID-19 Economic Response Plan.

While CPA Canada supports the government’s plan, Thomas and Ball brought a number of key issues to the attention of Members of Parliament regarding the CEWS program, including:

  • Certain partnership arrangements are not eligible – such as private/public partnerships and partnerships involving pension funds.
  • Some cost sharing or paymaster arrangements remain problematic.
  • The monthly revenue test does not work in some situations – for example, for seasonal businesses or other businesses where revenue does not occur on a consistent monthly basis.
  • More information is needed on a number of technical issues with the program.

In addition, CPA Canada stated the need for further extensions to other tax deadlines and confirmed that discussions on these concerns have taken place with the Canada Revenue Agency. View our comments and list of issues.

CRA provides an update on SRED services

The CRA has provided an email update to business stakeholders on Scientific Research and Experimental Development (SRED) services during the COVID-19 crisis. View the stakeholder email.


Update: April 30, 2020

Update on CEWS and Indigenous businesses

Under the current Canada Emergency Wage Subsidy (CEWS) legislation, many Indigenous businesses may not qualify for the CEWS as they would not fall under the current “eligible entity” definition. This issue is on our CEWS priority issue listing, and we have discussed it with the Department of Finance (Finance Canada) and the Canada Revenue Agency (CRA).

As some of you may be aware, Indigenous Services Canada recently announced that the eligibility criteria for the CEWS will be amended. According to the email sent to stakeholders, the program “will apply to corporations carrying on a business that are at least 90 per cent owned by one or more Indigenous governments, as well as partnerships carrying on a business where the partners are Indigenous governments, eligible Indigenous government-owned corporations, and other eligible employers.”

Finance Canada has not made a similar announcement, nor has draft legislation been released on this matter. The CRA has also let us know that they can only administer the CEWS program based on enacted legislation. As such, we would caution Indigenous businesses and their advisors to keep in mind that the announcement made by Indigenous Services Canada has no legislative authority at this point.

Note that we had also brought other eligible entity concerns involving partnerships to the government’s attention, and we believe that these issues are still being considered even though no announcement has been made.


Update: April 29, 2020

Application of GST credit and other amounts against personal tax owing

It has been brought to our attention that the special GST/HST Credit (GSTC) payment has been applied against 2019 personal tax owing for some taxpayers. As we know, the balance owing is now due on September 1, 2020. For taxpayers that have been negatively impacted, the CRA will be sending them a refund and a letter advising them of the corrective measures taken. The GSTC Covid-19 Q&A has also been updated to reflect the corrective measures taken.

Similar issues have also been encountered by Ontario resident taxpayers receiving the Ontario Trillium Benefit (OTB). We are told that the Ontario Ministry of Finance has had a long-standing position of offsetting the OTB against all outstanding Ontario personal tax liabilities, which the CRA applies on their behalf. This would also apply to 2019 tax liabilities. As a result of the pandemic, the policy has recently been changed, but we’ve been advised corrective measures cannot be implemented before June 2020.

CRA updates CEWS FAQs: New examples for subsidy computation

The CRA has updated their Canada Emergency Wage Subsidy (CEWS) FAQ page. Of note, the CRA has provided some examples on how the wage subsidy is computed when an employee is paid on a monthly basis (see FAQ Question #26, Examples 16 and 17). We have been asking the CRA for guidance on how to compute the subsidy when the employer does not follow a weekly or bi-weekly pay cycle, so these new examples are helpful.

The CRA has also added Question 15B, which addresses what an employee must do to repay the Canada Emergency Response Benefit (CERB) if they are rehired by their employer or find a new job.

We understand that the CRA will continue to update the FAQ page. We will continue to monitor it and provide you with relevant updates.

CEWS: Register for direct deposit to receive emergency funding faster

The federal government is partnering with many Canadian financial institutions to support businesses in signing up for CRA Direct Deposit so they can receive funds from the CEWS program as soon as possible. Direct deposit offers Canadian businesses a faster, convenient and more secure way to ensure you receive your payments on time during this crisis. View more information.


Update: April 28, 2020

CEWS and revised Represent a Client confirmation page

As an update, we have received a communication from the CRA that Page 3 of the Canada Emergency Wage Subsidy (CEWS) application will be updated this evening with a new confirmation to be completed by representatives that are filing on behalf a client. The CRA has provided us with the revised wording and has confirmed that representatives who filed yesterday or today will be considered to have answered the revised confirmation.


Update: April 27, 2020

Update on CEWS and Represent a Client concerns

We continue to work with the CRA on the issue we communicated earlier today on Canada Emergency Wage Subsidy (CEWS) applications and Represent a Client. We believe that a resolution has been reached which we expect to be able to communicate tomorrow in more detail. If all goes according to plan, there will be a “workaround” that can be used sometime tomorrow and the issue should be fully resolved by early Wednesday. Please continue to watch for this page updates.

Use of Represent a Client in CEWS applications: Professional concerns

Please note that as part of the current application process for the Canada Emergency Wage Subsidy (CEWS) in Represent a Client, the representative is being asked to state that the CEWS “application is, to the best of my knowledge true and complete and is not false or misleading in all material respects.” Also, the representative is being asked to confirm that the person signing the employer attestation form is the one described under the legislation. We became aware of this issue on Friday afternoon, and despite best efforts over the weekend, this wording could not be changed in time for the launch of the application process this morning.

We have been working with the CRA and we believe that we will find wording that will be acceptable to the CRA that will not cause professional issues for our members. We will communicate the revised wording once it has been approved along with an update on when the application process in Represent a Client will be revised.

Please be aware that we previously communicated to CRA that requiring members to provide assurance or an opinion as part of the process would be problematic. Also, the legislation does not require representatives to provide an attestation.


Update: April 24, 2020

New tax blog post: CRA clarifies wage subsidy questions and other issues

Read our new tax blog post with news from our ongoing discussions with the Canada Revenue Agency (CRA) about the Canada Emergency Wage Subsidy (CEWS) and other COVID-19 relief.
 

Update: April 21, 2020

Canada Emergency Wage Subsidy (CEWS) tool introduced

The federal government has announced the Canada Emergency Wage Subsidy calculator to support employers as they prepare to apply for the CEWS. The CEWS calculator and other information can be found on the CRA’s Canada Emergency Wage Subsidy page. CPA Canada has been in constant contact with the CRA and the page incorporates some feedback received from our organization and others. It outlines who can apply for the subsidy, how eligibility is assessed, and how the subsidy is calculated. The calculator also includes a printable statement feature that employers can use to view their claim at a glance and, as of April 27, 2020, enter required information into the CEWS application form. We will continue to work with the CRA to provide more clarity on other questions that were not addressed today. 

One issue addressed by the CRA is whether employees who have been laid off or furloughed can be rehired retroactively. In the commentary for the calculator, the CRA states this is possible, as long as the employer rehires them and their retroactive pay and status meet the eligibility criteria for the claim period. The CRA adds that employers must rehire and pay such employees before they include them in their calculation for the subsidy. The CRA also provides additional information on returning Canada Emergency Response Benefit amounts where the employee no longer qualifies for that program due to the change in employment status. 


Update: April 20, 2020

Updated summary of COVID-19 tax issues

CPA Canada and the Canadian Tax Foundation have updated the original summary document of COVID-19 related tax issues, excluding issues related to the Canada Emergency Wage Subsidy (CEWS). This summary now includes updates for items from the April 8, 2020 version and new items have been added.

In regard to the CEWS summary of issues, we have received many questions about the legislation and are working on a third version of that summary to incorporate this feedback, along with prior issues which remain unresolved.


Update: April 17, 2020

New CRA stakeholder email

The CRA has sent an email update to business stakeholders. It contains a summary of previously announced programs and changes along with an update on CRA services. Although most of the information isn’t new, it does provide a recap of where things stand. View the stakeholder email.

New webinar: Update on the Canada Emergency Wage Subsidy (CEWS)

Our new webinar recording (above) provides additional updates on the CEWS now that the federal government has passed Bill C-14: A second Act respecting certain measures in response to COVID-19. This information is presented by CPA Canada’s vice-president, Taxation, Bruce Ball and senior principal, Taxation, Vivian Leung. In advance of watching this webinar you may want to review our most recent tax blog post and the updated summary document on issues raised about the CEWS.

Update: April 16, 2020

Enhancements to the Canada Emergency Business Account (CEBA)

The federal government announced that it will be changing the eligibility thresholds for the CEBA – an interest-free loan program.  Now, businesses that spend between $20,000 and $1.5 million in total payroll in 2019 will be eligible to receive the loan. Read the announcement.

Canada Emergency Commercial Rent Assistance (CECRA)

The federal, provincial and territorial governments will work together to increase rent support for businesses that are most impacted by the COVID-19 pandemic. The CECRA program will seek to provide loans – including forgivable loans – to commercial property owners who in turn will lower or forgo the rent of small businesses for the months of April (retroactive), May and June.

CRA extension for filings under Part XVIII and Part XIX of the Income Tax Act

The Canada Revenue Agency (CRA) has announced that it will allow filers to defer, until September 1, 2020, the filing of information returns under Part XVIII and Part XIX of the Income Tax Act (related to reporting for certain financial institutions). More information is available in this stakeholder email


Update: April 15, 2020

Updated summary of issues on the Canada Emergency Wage Subsidy (CEWS)

CPA Canada and the Canadian Tax Foundation updated the original summary document about the CEWS now that the federal government has passed Bill C-14:  A second Act respecting certain measures in response to COVID-19.

Unresolved issues will be consolidated with emerging issues in a new summary document that is being developed.  

Canada Emergency Response Benefit (CERB) update

The federal government announced that the CERB will be expanded to allow more workers access to the program. Changes to the eligibility rules include:  

  • allowing people to earn up to $1,000 per month while collecting the CERB
  • extending the CERB to seasonal workers who have exhausted their EI regular benefits and are unable to undertake their regular seasonal work as a result of the COVID-19 outbreak
  • extending the CERB to workers who have recently exhausted their EI regular benefits and are unable to find a job or return to work because of COVID-19

In addition, the federal government will work with its provincial counterparts to top-up the salaries of essential workers earning less than $2,500 per month. See the Department of Finance backgrounder.

Update: April 13, 2020

Revised tax blog post on the 75 per cent Canada Emergency Wage Subsidy (CEWS)

Read our updated tax blog post which reflects the federal government CEWS legislation that enacted on April 11, 2020.


Update: April 11, 2020

Legislation released on the Canada Emergency Wage Subsidy (CEWS)

New legislation relating to the 75 per cent Canada Emergency Wage Subsidy has been introduced in Parliament. It is expected that the legislation will receive Royal Assent later today. In addition to the legislation, the government has also released a revised backgrounder.

The legislation is generally consistent with the April 8th backgrounder, but we want to highlight two new beneficial measures that were included today:

  • The revised backgrounder states that special rules for the computation of revenue would be provided to take into account certain non-arm's length transactions, such as where an employer sells all of its output to a related company that in turn earns arm's length revenue. As well, affiliated groups would be able to compute revenue on a consolidated basis.
  • The government is also announcing that, in order to provide certainty to employers, once an employer is found eligible for a specific period, the employer would automatically qualify for the next period.  

Update: April 9, 2020

New tax blog post: Canada Emergency Wage Subsidy (CEWS)

Read our new tax blog post about key rules and issues on the 75 per cent CEWS. This post is based on the information released by the Department of Finance on April 8, 2020. Legislation has not yet been released. Once it is, we will provide an update as needed. 

Tax webinar update

The tax webinar recording, originally posted April 3, 2020, has been removed as the information is out of date with the April 8 federal government announcement pertaining to the Canada Emergency Wage Subsidy. We are planning a second webinar based on updated information and government measures.


Update: April 8, 2020

Canada Emergency Wage Subsidy (75 per cent subsidy)

The government released more details on the Canada Emergency Wage Subsidy (CEWS). At an initial glance, it appears that the revised rules will deal with only some of the key issues that CPA Canada has brought forward to senior officials at the CRA (see this list in the April 7 update below).

Summary of Identified COVID-19 Tax Issues (Non-CEWS)

CPA Canada, in conjunction with the Canadian Tax Foundation (CTF), has received many inquiries about tax issues generally related to the COVID-19 pandemic. Together, we documented this input and compiled a summary of the key matters. This was recently forwarded to the federal government and we look forward to the clarification of these points. View the summary.


Update: April 7, 2020

Summary of identified COVID-19 tax issues (CEWS)

CPA Canada, in conjunction with the Canadian Tax Foundation (CTF) has received many inquiries about the Canada Emergency Wage Subsidy (CEWS). Together we documented this input and compiled a summary of the key matters. This was recently forwarded to the federal government and we look forward to the clarification of these points. View the summary.


Update: April 6, 2020 

Canada Emergency Response Benefit

Today is the first day that Canadians can apply for the Canada Emergency Response Benefit (CERB). We were informed by an applicant that tried the system this morning of the following:

  • The taxpayer does not require the full access version of MyAccount to apply. They can apply for CERB using the limited version of MyAccount which is granted to them while they wait for the access code in the mail
  • The CRA will deposit the funds into the same account as a taxpayer’s prior year tax return refund unless indicated otherwise

CRA has confirmed with us that the CERB application will not be available on Represent a Client since attestation is needed.

We encourage you to visit “Frequently Asked Questions” website for important updates made over the weekend. For more general information on CERB please also refer to the CRA’s general guide and CERB Application Page.

Message from CRA on portal use to assist Canadians making CERB applications

In support of Canadians applying for the Canada Emergency Response Benefit (CERB), as a temporary measure, we ask that you avoid accessing the CRA portals from Monday to Thursday, April 6 – 9, 2020. Instead, we encourage you to continue to use the services within your certified software such as electronic authorizations, Auto-Fill My Return and Client Data Enquiry, Express NOA and ReFILE. Some of these services may use the same log-in credentials as the portals but are accessed via web service rather than through the portals directly.


Update: April 3, 2020

Update on sending returns, correspondence and payments to the CRA

More information has been provided on sending returns, correspondence and payments to the CRA.


Update: April 2, 2020

Update on federal government wage subsidy programs

On April 1, 2020, the Department of Finance released additional details on the Canada Emergency Wage Subsidy (CEWS) program. This is the new 75 per cent subsidy program that was first announced last week by the Prime Minister.

It should be noted that the original 10 per cent subsidy program announced on March 18, 2020, called the Temporary Wage Subsidy (TWS), will remain available.

Despite some initial uncertainty, individuals and partnerships can qualify for both programs, subject to the conditions of each programs.

With two programs, it will be important to determine which program applies. For employers who meet the 30 per cent decline in revenue test for the CEWS, they can also claim the TWS but any benefit from the TWS “would generally reduce the amount available to be claimed under the CEWS”. We assume this means the total subsidy claimed by such an employer can’t exceed the benefit under the CEWS.

For employers that do not meet the conditions for the CEWS, they can claim the TWS, assuming that they meet the conditions for that program, which have not changed.

For more information, see:

CRA’s position on transfer pricing deadlines

We received the following statement from CRA on contemporaneous documentation:

“This message provides more information for taxpayers regarding requests for transfer pricing contemporaneous documentation issued by the Canada Revenue Agency (CRA).

The CRA recognizes that taxpayers are experiencing challenges and have limited resources during the COVID-19 outbreak, and that administrative relief may be necessary on various issues.

Requests for contemporaneous documentation that were made prior to April 1, 2020 having a deadline of March 18, 2020 or later will be considered cancelled and will be re-issued at a later date, providing the maximum amount of time of 3 months to submit the documentation.

We anticipate that a more formal communication will be provided but wanted to provide early confirmation of our planned approach.”


Update: April 1, 2020

New 75 per cent wage subsidy details announced

The Department of Finance has released additional information on the new 75 per cent Canada Emergency Wage Subsidy. The new program will be available to a wide group of employers in the event their revenue has decreased by 30 per cent or more. For more details, see the Department of Finance backgrounder.

The original 10 per cent Temporary Wage Subsidy will continue to be available to employers who don’t qualify for the 75 per cent subsidy.

Updates on government announcements:

Deadlines for GST/HST returns – In a new Q&A page on GST/HST, the CRA made the following statement on the deadlines for GST/HST returns: “The deadline for businesses to file their returns is unchanged. Those who are able to, should continue to file their GST/HST returns on time, reporting their net tax for the reporting period to help facilitate tax compliance and administration. However, recognizing the difficult circumstances faced by businesses, the CRA won’t impose penalties where a return is filed late provided that it is filed by June 30th.”

The Quebec government will apply the same policy for QST returns.


Update: March 31, 2020

Updates on government announcements:

  • CRA posts revised income tax deadline list – As many of you know, the CRA had posted a list of income tax deadlines over the weekend. This list now incorporates the deadline extensions announced on March 26 and 27, 2020.
  • Deadlines for GST returns – Despite comments made by the Quebec government, the federal government has not announced an extension for GST returns. We are expecting a statement from them soon to clarify this issue.

Update: March 30, 2020

Update on wage subsidy

The Prime Minister announced a few details on the 75 per cent wage subsidy that will be available to qualifying Canadian businesses. According to the federal government, if an employer’s revenue has decreased by 30 per cent as a result of the COVID-19 pandemic, that business will be eligible for the wage subsidy. The federal government has said that it will cover 75 per cent of the first $58,700 of income earned, which works out to $847 per week. This subsidy will be retroactive to March 15, 2020. The Prime Minister also advised that the wage subsidy will apply to all non-profit organizations, charities, and companies of all sizes. We anticipate that partnerships and sole proprietors will also be eligible based on Bill C-13 even though the Prime Minister did not mention these employers specifically. More substantive details are expected to be announced Tuesday March 31 by the federal government.


Update: March 27, 2020

The government announced additional support for businesses and employees. The tax measures announced include:

  • Enhanced wage subsidy – The wage subsidy rate will be increased to 75 per cent from 10 per cent for qualifying businesses. More details, presumably including revised per employee and per employer limits, should follow soon.  
  • GST deferral – Generally, GST/HST remittances can now be deferred until June 30, 2020. Deferrals will similarly be available for customs duty and sales taxes for importers. It is unclear whether GST/HST returns will have to be filed while the deferral is in effect and we are following up with the government. 
  • Objections - For any objection request due March 18 or later, the deadline is effectively extended until June 30, 2020.

For more details, please see the Department of Finance backgrounder

Keep in mind that the Canada Revenue Agency also announced tax deadline extensions on March 26, 2020 (see below).


Update: March 26, 2020

Federal government announces broad tax measures

The federal government announced additional extensions to many tax-related deadlines. Most federal tax filing deadlines have been extended to June 1, 2020, including the March 31 deadline for T1134 forms and T2s. The filing deadline for the T5013 partnership return and other information that individuals will need to complete their T1 returns has been extended to May 1, 2020. The deadline for most T1 returns remains June 1, 2020. 

Note that some returns and payments will still be due at the usual time.

Find more information on the announcement.


Update: March 23, 2020

As discussed in our previous update, we are continuing to communicate with CRA on the issues related to COVID-19 and the relief that the government announced.  The highlights include:

  • CPA Canada has developed a list of issues and questions related to the COVID-19 crisis, and we have sent that to the CRA. Please keep in mind that the CRA wants to deal with issues raised as quickly as they can, but since they are operating at a reduced capacity, we will work with them to prioritize the list. Also, the CRA is giving priority to keeping the benefits and transfer system operating for lower income and vulnerable Canadians.
  • We also are working on a plan for posting the key questions online, both those that have been answered and those that are awaiting a response. We will provide more details on this process once it has been finalized.
  • CPA Canada will continue to regularly communicate with the CRA until the crisis has subsided. We will use these communications to discuss key issues and updates. 

On some of the key issues we know that you are concerned about, we have a few updates:

  • Filing deadlines. We continue to discuss the upcoming deadline for partnership returns with the CRA, and it appears more likely that an extension will be given (note that Quebec has announced an extension to May 1, 2020).
    • Although discussions continue, the CRA has not announced specific extensions for other key deadlines arising during the next 45 days. This includes due dates for T2s for September and October year-ends, NR4 forms and slips, foreign reporting forms such as the T1134 and GST returns/payments.
    • Note that the deadline for the T1135 form is the taxpayer’s filing due date, so the T1135 deadline for individuals and trusts eligible for a filing extension will be the same as the revised due date.
  • Tax payments deferral includes provincial income tax. On the income tax payment deferral deadline, it is our understanding that the payment extensions announced will apply to provincial income tax in those provinces where the federal government collects tax. Alberta and Quebec have announced their own extensions.
  • Relief for other corporate taxes. We have also asked whether relief will be provided for other corporate taxes such as under Part IV and Part VI.1. On other tax-related payments such as payroll remittances, GST/HST and withholding taxes under Part XIII, we do not expect that payment relief will be announced, as some or all of these amounts relate to amounts withheld or collected from other taxpayers. We understand that there may be misinformation circulating on the source deduction remittances – the CRA has re-confirmed that these payments are not eligible.
  • Alternatives for filing paper forms. We are exploring alternatives with CRA whereby forms and other documents that are normally filed in paper only could be filed by tax advisors electronically.
  • Wage subsidy. CRA is aware that many are asking for more detailed information on the wage subsidy announced by the Department of Finance.
  • Mail sent to CRA. We have been made aware that there have been issues with mail and courier deliveries to the CRA, and they are looking into these issues. We also understand that some drop boxes have been shut down.

We will continue to provide updates on a regular basis. 

Finally, we strongly recommend that you monitor the CRA’s COVID-19 page, as the CRA will be updating this page as more information becomes available. And, you should sign up for one of CRA’s social media channels on Twitter, Facebook or LinkedIn as they are providing updates through social media. A deferral for charity returns was announced late Friday as an example.


March 19, 2020  

On March 18, 2020, the federal government released information on tax extensions and other changes that have become necessary due to the COVID-19 crisis. Although this was welcomed news, there is still some uncertainty as the announcement did not provide a comprehensive update on all tax deadlines that are soon approaching.

The specific measures in the announcement include the following

  • Personal returns — The deadline for filing T1 returns that were due on April 30, 2020 has been extended to June 1, 2020. Individuals expecting a refund or benefits should file sooner if possible, as the Canada Revenue Agency (CRA) will process refunds.
  • Trust returns — For trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred until May 1, 2020.
  • Income tax payments for all taxpayers — The CRA will allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to income tax balances due, as well as instalments and no interest or penalties will accumulate on these amounts during this period.

Despite requests made by CPA Canada to specifically address the filing deadlines for many partnerships coming at the end of March, no mention of an extension was made for those returns.  Also, no information was provided for corporate tax returns which are due near-term.

It should also be noted that no mention was made on relief for GST/HST for businesses. A key concern is that businesses that continue to operate will have to collect and remit HST/GST but may not be paid immediately by their customers, or at all in the case of bad debts. This could create significant cash flow issues.

As relief for income tax preparers, to reduce the necessity for taxpayers and tax preparers to meet in person during this difficult time, effective immediately the CRA will recognize electronic signatures as having met the signature requirements for T183 and T183Corp forms, as a temporary administrative measure.

We will continue to discuss issues of concern with CRA with a goal of providing more clarity, and in particular, whether extensions can be provided for other key tax deadlines that are approaching. We do believe from our discussions with CRA that relief will be provided for returns and other filings and we will continue to ask for more clarity.

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