COVID-19 TAX UPDATE Federal and Ontario Governments Economic Response Measures
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COVID-19 TAX UPDATE
Federal and Ontario Governments Economic Response
Measures
(Released March 30, 2020)
The Canadian and Ontario governments have pledged over $124 billion to fight the COVID-19
pandemic through announcements made up to March 30, 2020. Many of the programs and
initiatives are geared towards keeping the economy moving by assisting businesses, the public
sector and individuals through these challenging times by alleviating cash flow pressures many
are facing. Both levels of government’s economic measures aim to achieve this goal through:
· direct cash infusions including wage subsidies, tax credits and benefits;
· reducing cash outflows including deferrals of various federal and Ontario tax payments; and
· increasing access to cash by way of interest-free loans for small businesses and incentivizing
financial institutions to extend credit by guaranteeing credit facilities or sharing default risk.
In many cases, the logistics of the programs and initiatives, such as how funds will flow or how application
processes for wage subsidies will work, are still being developed. We will update our newsletter as the
plans are fleshed out.
However, given the large volume of announcements made to date, we wanted to provide an easy to follow
summary of the key economic initiatives announced through March 30, 2020. The summary is separated
by businesses, charities/NPOs and individuals so you can hone in on the measures meant for you.
Group Federal Programs & Initiatives Ontario Programs & Initiatives
Businesses
· Small and medium · Canada Emergency Business Account (CEBA) to · Hydro rates reduced to “off-peak” rates
enterprises (SMEs) provide $25 billion in funding to financial for 24 hours/day for 45 days for eligible
institutions to provide interest-free lines of credit small businesses.
of up to $40,000. CEBA loans are available to · Increasing the Employer Health Tax (EHT)
employers with 2019 total payroll between exemption from $490,000 to $1 million
$50,000 to $1 million. for 2020, retroactive to January 1.
· Loan repayment by December 31, 2022 will result
in 25% loan forgiveness up to $10,000.
· Export Development Canada (EDC) to guarantee
up to $20 billion in new operating credit and cash
flow term loans issued by financial institutions to
SMEs. Each loan is capped at $6.25 million with
EDC guaranteeing 80% of each loan. Loans are due
within one year.· Business Development Bank of Canada (BDC) will
issue incremental credit to eligible SMEs of up to
$6.25 million per eligible SME, jointly with
financial institutions with BDC taking on 80% of
the risk. This co-lending arrangement will make up
to $20 billion of financing available to SMEs.
· Between the EDC and BDC lending programs,
eligible SMEs can access up to $12.5 million in
credit facilities.
· CRA will not contact any SMEs to initiate post-
assessment GST/HST or income tax audits for the
next 4 weeks.
· All enterprises · A 75% wage subsidy for eligible employers for · Five (5) months of interest and penalty
salaries paid since March 15, 2020. This replaces reliefiv on unfiled returns or unpaid
the previously announced 10% subsidy. amounts on most provincially
· The subsidy will be 75% of the first $58,700 administered taxes including:
earned per employee. This equates to a subsidy Ø EHT;
of $847/week per employee. Ø Fuel and gas tax;
· Available to all employers facing a revenue Ø International fuel tax;
decline of 30% or more. Ø Tobacco tax;
· Deferrali until September 1, 2020 payment of any Ø Wine and spirits tax;
income tax amounts that become owing on or Ø Mining tax;
after March 18, 2020 and before September 1, Ø Insurance premium tax;
2020. Relief applies to tax balances due and Ø Retail sales tax; and
instalments under Part I of the Income Tax Act. Ø Race tracks tax.
No interest or penalties will accumulate on these · Deferral of WSIB payments for up to 6
amounts during this period if paid by September months.
ii
1, 2020. · Introducing the Regional Opportunities
· Deferral of all GST/HST payments until June Investment Tax Credit (ROITC), a 10%
2020.iii refundable tax credit for investments in
· Extension of the EI Work Sharing Program (EIWSP) capital property that:
from 38 to 76 weeks for businesses affected by Ø are made by a Canadian-controlled
COVID-19 related downturn in business and for private corporations (CCPCs) that
companies in the forestry, steel and aluminum build, renovate or acquire commercial
sectors. and industrial buildings that are either
Class 1 or Class 6 assetsv for capital
cost allowance purposes;
Ø have a cost between $50,000 to
$500,000; and
Ø are available for use on or after March
25, 2020 in a designated Ontario
region.vi
· Suspension of audit interactions with
most businesses and their representatives
during April 2020.
· Charities and non- · A 75% wage subsidy for eligible employers for · $148 million in funding for social service
profit organizations salaries paid since March 15, 2020. This replaces organizations such as food banks,
(NPOs) the previously announced 10% subsidy. homeless shelters, churches and
· The subsidy will be 75% of the first $58,700 emergency services. Funding will be
earned per employee. This equates to a subsidy provided directly by regional Consolidated
of $847/week per employee. Municipal Service Managers and District
· Available to all charities and NPOs facing a Social Service Administration Boards.
revenue decline of 30% or more.· Canada Emergency Business Account (CEBA) to
provide $25 billion in funding to financial
institutions to provide interest-free lines of credit
of up to $40,000. CEBA loans are available to
employers with 2019 total payroll between
$50,000 to $1 million.
· Loan repayment by December 31, 2022 will result
in 25% loan forgiveness up to $10,000.
· Filing deadline for charity returns extended to
December 31, 2020.
· Charities Directorate has suspended all operations
until further notice, including call centres,
registration and audit activities.
Individuals
· Without paid leave · Waiving of one-week wait period to claim EI
only sickness benefits (if quarantined).
· Waiving requirement to have a medical certificate
to access EI sickness benefits.
· Canada Emergency Response Benefit (CERB)vii.
The CERB provides a $2,000 monthly taxable
benefit, up to 4 months. The following are
eligible:
Ø workers who cannot work due to COVID-19
without access to paid leave or other
support;
Ø workers who are quarantined, sick with
COVID-19 or caring for family members sick
with COVID-19;
Ø working parents who must stay home with
children due to school or daycare closures;
Ø workers who remain employed but unpaid
due to lack of work; and
Ø self-employed individuals.viii
· With paid leave but · Canada Emergency Response Benefit (CERB)ix.
face job loss or hour The CERB provides a $2,000 monthly taxable
reductions benefit, up to 4 months. The following are
eligible:
Ø workers who cannot work due to COVID-19
without access to paid leave or other
support;
Ø workers who are quarantined, sick with
COVID-19 or caring for family members sick
with COVID-19;
Ø working parents who must stay home with
children due to school or daycare closures;
Ø workers who remain employed but unpaid
due to lack of work; and
Ø self-employed individuals and contractors.
· EI Work Sharing Program (EIWSP) to provide EI
benefits for up to 76 weeks to workers who agree
to reduce their working hours.· Low and modest · Special one-time payment in early May 2020 · Special one-time payment to parents of
income families through the Goods and Services Tax Credit (GSTC). $200/child and $250 if a child has special
Expected average income boost for singles is needs.
close to $400 and close to $600 for couples. · $9 million expansion in energy bill
· Increasing the Canada Child Benefit (CCB) support to families eligible for the Low-
maximum by $300 per child and paying the income Energy Assistance Program
increase as a one-time payment in May 2020. (LEAP).
· Canada Emergency Response Benefit (CERB). The
CERB provides a $2,000 monthly taxable benefit,
up to 4 months. The following are eligible:
Ø workers who cannot work due to COVID-19
without access to paid leave or other
support;
Ø workers who are quarantined, sick with
COVID-19 or caring for family members sick
with COVID-19;
Ø working parents who must stay home with
children due to school or daycare closures;
Ø workers who remain employed but unpaid
due to lack of work; and
Ø self-employed individuals.x
· Seniors · 25% reduction in minimum RRIF withdrawals for · Increasing the Guaranteed Annual Income
the 2020 year. System (GAINS) maximum payment to
$166/month for singles and $332/month
for couples for up to six months, starting
in April 2020.
· Subsidized delivery of meals, medicines
and other essentials.
· All individuals · Six (6) month interest-free moratorium on the · Six (6) month relief for Ontario Student
repayment of Canada Student Loans to Assistance Program (OSAP) loan and
September 30, 2020. interest for student borrowers, in
· CRA will defer, until September 1, 2020, payment partnership with the federal government.
of any income tax amounts that become owing on · Hydro rates reduced to “off-peak” rates
or after March 18, 2020 and before September 1, for 24 hours/day for 45 days for
2020. Relief applies to tax balances due and tax consumers.
instalments under Part I of the Income Tax Act. No
interest or penalties will accumulate on these
amounts during this period.
· Deferral of personal tax instalments due June 15
to September 15, 2020.
· Tax filing deadline extended from April 30, 2020
to June 1, 2020.xi
· If self-employed, deferral of all GST/HST pay-
ments until June 2020.xiii
Please refer to our Tax Filing Deadline and Payment Measures newsletter for more details on filing and payment
deferral provisions the Federal government has put in place for businesses, charities/NPOs and individuals.
ii
Please note these measures do not apply to GST/HST or payroll taxes.
iii
Includes custom duties on imports.
iv
Businesses are not required to provide any notification or reasoning for delays in filing or payment to the
Ministry of Finance.
v
As defined by Schedule II of the Income Tax Regulations.
vi
Please refer to the annex to Ontario’s March budget update for a listing of designated regions.
https://budget.ontario.ca/2020/marchupdate/annex.html#ca-2
vii
Replaces the previously announced Emergency Care Benefit that was available to individuals without paid leave.
viii
Including contractors.
ix
Replaces the previously announced Emergency Support Benefit for workers with paid leave who are ineligible for
EI and facing unemployment.
x
Including contractors.
xi
However, individuals who expect to receive a refund or benefits under the GSTC or the CCB are encouraged to
not delay the filing of their returns.
xii
Includes custom duties on imports.You can also read
