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COVID-19: Top five tax questions for individuals and businesses answered

Updated as of March 27, 2020.

As schools and businesses close down across the country, Canadians are dealing with unprecedented challenges. While tax obligations are often overlooked in these difficult times, many have started to ask about postponements of tax deadlines and related tax filing obligations. This article seeks to provide answers to some of the most frequently asked questions regarding tax obligations that have arisen during this global outbreak. While legal obligations are to be assessed on a case-by-case basis, the following summarizes, at a high level, the current guidance available and the applicable principles.

1. When will the federal government deliver the budget?

On the day COVID-19 was declared a global pandemic by the World Health Organization, the Canadian federal budget was tabled for March 30, 2020. The House of Commons, however, is suspended for five weeks in light of the pandemic, and its next scheduled sitting is April 20, 2020. While the federal budget has been delayed, a new date has yet to be set.

2. When do personal income tax returns need to be filed and payments made by?

Federal Taxes:

On March 18, 2020, the government announced it would extend the personal income tax filing deadline by one month (from April 30, 2020 to June 1, 2020) because of COVID-19.

All other provinces and territories’ deadlines (with the exception of Québec) should be extended by virtue of the federal deadline extension.

The federal government is also recognizing electronic signatures as a temporary administrative measure. Notably, this applies to authorization forms T183 and T183CORP, which are usually signed in person to authorize tax preparers to file taxes on others’ behalf.

For more information, see the federal government announcement here.

Québec Taxes:

On March 17, 2020, the Québec government announced they would extend their tax filing deadline to June 1, 2020. The deadline to make payments without incurring penalties and interest is also postponed to July 31, 2020.

3. When do corporate income tax returns need to be filed and payments made by?

Update as of March 27, 2020

Tax Filing Deadlines

Corporations may defer administrative tax actions required under the Income Tax Act (Canada) that are due after March 18, 2020, until June 1, 2020.

  1. For example, if a corporation has a December 31 year-end, and the tax return is due June 30, 2020, the filing deadline for the tax return has not been extended. However, corporations with off calendar year-ends whose tax returns are due before June 1, 2020 now have until June 1, 2020 to file.
  2. This measure does not apply in respect of prescribed forms relating to scientific research and experimental development expenses and investment tax credits.
  3. Trust, partnership, and NR4 information returns are now due on May 1, 2020.

Goods and Services Tax/Harmonized Sales Tax (GST/HST) remittances are deferred until June 30, 2020. More specifically:

  1. Monthly filers (vendors with annual sales of more than $6 million) may defer remittance for amounts collected for February, March and April 2020 reporting periods;
  2. Quarterly filers (vendors with annual sales of $1.5 million to $6 million) may defer remittance for amounts collected for the January 1, 2020 to March 31, 2020 reporting period;
  3. Annual filers (vendors with annual sales of less than $1.5 million) may defer amounts on returns or installments due in March, April or May 2020; amounts collected and owing for their previous fiscal year; and instalments of GST/HST in respect of their current fiscal year.

Payment deadlines for customs duties are also deferred to June 30, 2020 for statements of accounts for March, April, and May 2020.

Payroll deductions and related activities must continue to be completed on time. No extension is available.

Employers do not need to comply or remit on existing requirements to pay (RTPs) for employees.

 

On March 18, 2020, the federal government announced that businesses could also defer, until after August 31, 2020, payments of any income tax amounts that are owed on or after March 18, 2020 and before September 2020. This relief applies to Part I tax balances due, as well as installments, under the Income Tax Act (Canada). Interest and penalties do not accumulate during this time.

Small- or medium-sized businesses will not be contacted to initiate GST/HST or income tax audits in the next four weeks. For the majority of businesses, the CRA will suspend audit interactions temporarily.

The federal government has not announced any extension to corporate tax return filing deadlines.

4. Is relief available from taxpayer obligations, interest and penalties?

In situations of hardship, consideration is typically given to making an application under taxpayer relief legislation to request the cancellation or waiver of interest and penalties. Hardship in the current circumstances is relative. It appears that the federal and provincial governments are working to provide relief from taxpayer obligations by extending deadlines and introducing various benefits and subsidies.

It may be that these extensions are sufficient to allow the majority of taxpayers to file their taxes on time, but others may be impacted differently. For instance, a taxpayer who is hospitalized between now and the new deadline because of COVID-19 may still not be able to fulfill their filing obligations. In such circumstances, existing taxpayer relief legislation contemplates a request to cancel or waive of interest and penalties for that taxpayer. Facts will need to be considered on a case-by-case basis.

Saskatchewan:

Saskatchewan Finance issued a Notice to businesses directly impacted by COVID-19. Should the business be unable to file provincial tax return(s) by the due date due to issues related to the COVID-19, the business can request relief from penalty and interest that may be assessed.

The waiver request can be submitted:

  • Electronically through the Saskatchewan eTax Service (SETS) located at sets.saskatchewan.ca;
  • By email (sasktaxinfo@gov.sk.ca); or
  • In writing to the address below:

Ministry of Finance
Revenue Division
2350 Albert Street, Regina, Canada S4P 4A6

Provincial tax returns can be filed electronically via the Saskatchewan eTax Services website.

Payments can be made electronically.

For more information, review the Saskatchewan government’s Notice on the matter here.

5. Are the courts staying open? Do court filing deadlines continue to apply?

Updated as of March 23, 2020

All sittings and conference calls scheduled between March 16 and May 1, 2020, inclusive, are cancelled. The court will reassess on April 14, 2020 whether further alterations will be made to the judicial sittings schedule. Those affected by the cancellations will be contacted directly.

The period between March 16 and May 1, 2020 will not be included in the computation of time under the Tax Court of Canada Rules (General Procedure); all rules under the Tax Court of Canada Act that are under the Tax Court of Canada’s jurisdiction; or an Order or Direction of the Tax Court of Canada. 

The approach being taken varies depending on the court. Below are the arrangements made by the courts that deal with most federal tax matters.

Tax Court of Canada:

  • All judicial activities are cancelled from March 16-27, 2020 and the Tax Court is closed until 9 a.m. on March 30, 2020;
  • No Rule of the Tax Court of Canada needs to be complied with until March 30, 2020 (or until further direction is given) and all timelines prescribed by any Rules of the Tax Court of Canada are extended until March 30, 2020 (or until otherwise ordered by the court).

For further information, please see the Practice Direction and Order of the Tax Court of Canada dated March 16, 2020 or contact a member of our Tax Disputes & Litigation team.

Federal Court of Canada:

  • The Federal Court remains open for urgent case-related matters;
  • All general sittings are cancelled between March 16 and April 17, 2020, and any matters scheduled to proceed during this time are adjourned sine die, including hearings that were scheduled to proceed by way of telephone conference;
  • Urgent and “exceptional” matters may qualify for an exception on a case-by-case basis. This will typically include applications for a stay of release from detention or for removal from Canada, which occur during the suspension period.
  • All timelines made under Orders and Directions of the Court prior to March 18, 2020 are suspended for the suspension period, as well as those under subsection 18.1(2) of the Federal Courts Act, para 72(2)(c) of the Immigration and Refugee Protection Act, and under the Federal Courts Rules. All other statutory deadlines continue to apply.
  • The paper filing requirements are relaxed and documents – including originating documents – may be filed by e-mail. Judgments and reasons will be deemed signed if affixed with a facsimile of the judge’s signature. These measures will be effective until further notice.

For further information, please see the release dated March 17, 2020, or contact a member of our Tax Disputes & Litigation team.

Federal Court of Appeal:

Updated as of April 2, 2020

For purposes of calculating time under the Federal Court Rules, the period between March 16 to May 15, inclusive, will not be included in the calculation of time.

All filing deadlines continue to apply.

For further information, please see Notice to the Parties and the Profession dated April 2, 2020, or contact a member of our Tax Disputes & Litigation team.

  • All hearings scheduled to be heard through to April 17, 2020 are adjourned, except for any urgent matters, which will be heard by teleconference.
  • The Federal Court of Appeal remains available to deal with urgent matters by teleconference.
  • All filing deadlines continue to apply. Parties who are not able to meet the ordinary filing deadlines, however, may apply for an extension but are asked to do so after court operations return to normal.
  • Staff will remain available to receive court filings at all registry offices.
  • Electronic filing will be permitted until April 13, 2020, by emailing PDF documents to information@fca-caf.gc.ca. Documents may not exceed 10 MB. Parties are not required to file paper copies.

For further information, please see the Notice to the Parties and Profession dated March 16, 2020, or contact a member of our Tax Disputes & Litigation team.

Supreme Court of Canada:

Updated as of March 25, 2020

Hearings scheduled for March, April, and May are tentatively rescheduled to June 2020.

The Registrar will be in touch with parties regarding rescheduling hearings.

  • Hearings scheduled for March 24-26, 2020, are tentatively rescheduled to June 2020;
  • All other currently scheduled hearings remain on the agenda until further notice;
  • Parties may seek adjournments or request to appear via teleconference or video link. The press and media are permitted to attend such hearings in person;
  • Physical access to the premises will be restricted to persons necessary to the proceedings before the Court and no visitors are permitted;
  • Modified filing requirements apply.

For further information, please see the news release from the Supreme Court of Canada, or contact our Tax Disputes & Litigation team.

For advice with respect to tax issues arising from COVID-19, please get in touch with the authors listed below who are ready and available to assist with navigating through these unprecedented times. BLG has also created a COVID-19 Resource Centre to assist businesses on a variety of topics, including contractual risks, public disclosure requirements, schools and criminal law.

  • Services: Tax

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