COVID-19 tax update: March 27
The federal government has announced more measures to combat the COVID-19 situation.
New tax measures
Prime Minister Justin Trudeau confirmed that the new Emergency Response Benefit will be a taxable benefit, but tax will not be deducted at source.
A news release from the Prime Minister’s office announced that the wage subsidy for eligible businesses will increase to 75% from the originally-announced 10%. The subsidy applies retroactive from March 15 and ends after up to 3 months. Per the legislation that was enacted as a part of Bill C-13, a business can reduce its source deductions accordingly. The details of this subsidy program are currently under review, but more information will become available before the end of March.
The Department of Finance also published a backgrounder which announced all of the measures below.
The government will defer payments of GST/HST until June 30, 2020. For monthly GST/HST filers, this applies to amounts for the February, March, and April reporting periods, For quarterly GST/HST filers, this deferral applies to tax collected in the reporting period from January 1, 2020 to March 31, 2020. For annual GST/HST filers whose return or installment is due in March, April, or May 2020, this deferral applies to amounts collected and owing for the prior fiscal year and installments owing for the current fiscal year.
Also, for import duties and sales taxes, payment deadlines for statements of accounts for March, April, and May are being deferred to June 30, 2020.
New loan programs
The backgrounder also announced several new loan programs for businesses.
The government is launching the Canada Emergency Business Account, which will allow banks to provide government-guaranteed loans of up to $40,000, $10,000 of which will be forgivable. The loans will be interest-free for one year. Qualifying organizations must demonstrate that they paid between $50,000 to $1 million in total payroll in 2019. Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25%.
Export Development Canada is committing $20 billion to guarantee new operating credit and cash flow term loans that financial institutions extend to small and medium businesses that are domestic or in the export sector.
The government is also launching a $20 billion co-lending program between the Development Bank of Canada and financial institutions in order to lend to small and medium businesses. Eligible businesses may obtain incremental credit amounts up to $6.25 million.
