COVID-19 Changes to Due Dates, Payment Deadlines and CEWS

Due Dates and Payment Deadlines:

The Canada Revenue Agency “CRA” has announced that it is further extending the payment due date for 2019 individual tax returns, 2019 or 2020 corporation or trust returns, as well as applicable instalment payments. The payment due date has been extended from the previously extended date of September 1, 2020 to September 30, 2020.

Penalties and interest will not be charged if the returns are filed and payments are made by the new extended deadline of September 30.

Individuals:

You will not be charged late-filing penalties or interest as long as your tax returns are filed and payments are made prior to September 30, 2020. This includes the June 15, 2020 and September 15, 2020 instalment payments for those required to pay instalments and have not already made these payments.
Trusts with a filing due date of March 31, 2020 or April 1, 2020 to August 31, 2020 will not be assessed penalties or charged interest if the returns are filed and payments are made by September 30, 2020.
Extensions to the filing due date and the waiver of penalties and interest also applies to Forms T1135, T106, and any elections, forms and schedules that must be filed with the personal tax return, provided they are filed by September 30, 2020.
If you have received a Notice of Assessment that states the deadline for payment is April 30, 2020 or September 1, 2020, those dates are now incorrect. The correct payment due date is September 30, 2020.

Businesses:

Corporations with a filing due date between March 18, 2020 and August 31, 2020 have until September 30, 2020 to file their returns and pay any taxes owing and instalment payments due during this period.
The waiver of penalties and interest applies to Forms T1135, T106, and any elections, forms and schedules that must be filed with the corporate tax return, provided they are filed by September 30, 2020.

Existing Debts with CRA:

CRA will also waive arrears interest on existing tax debts related to individual, corporation and trust income tax returns from April 1, 2020 to September 30, 2020, and from April 1, 2020 to June 30, 2020 for GST/HST returns. Any interest already assessed on a taxpayer’s account prior to this period will not be cancelled, however interest will cease accruing during this period.

Changes to the Canada Emergency Wage Subsidy (CEWS):

The government has announced that the Canada Emergency Wage Subsidy (“CEWS”) program will be extended until December 19, 2020 (10 total periods). This extension brings significant changes to eligibility for the program and the potential subsidy amounts for this extended period. Highlighted changes which will apply to the CEWS program from July 5, to November 21, 2020 (period 5 to period 9) include the following:

Starting on July 5, 2020, the CEWS program will no longer offer a fixed 75% wage subsidy to “eligible employers” and “eligible employees” up to a maximum of $847 per week per employee. Under the new rules, the amount of the wage subsidy will be calculated and determined based on an eligible employer’s revenue decline, and there will now be a “base” subsidy and a “top-up” subsidy of up to an additional 25%.
The new rules include a sliding scale of support - more support is provided to employers who need it the most based on revenue decline. Employers with a revenue decline of less than 30 percent may also now qualify.
The new rules integrate a gradual phase-out of support. The total potential subsidy amount available decreases as the periods progress.
The new calculations include a “safe-harbour” rule for periods 5 and 6. An eligible employer that would have been entitled to a larger per-employee subsidy under the original rules can submit their claim for these two periods under the original rules.
The new rules separate employees into two CEWS rate structures, one for active employees (ones that are still able to work), and another for furloughed employees (on leave with pay).
- Active employees – the calculation for the subsidy now includes the determination of a base subsidy rate and top up subsidy rate. These rates are applied to the eligible weekly remuneration paid (up to a maximum of $1,129 per employee).
  - The base subsidy rate is directly correlated to the revenue decline, and does not require a minimum 30% revenue drop to be eligible.
  - The top-up subsidy rate provides an additional subsidy amount for employers who are experiencing a revenue drop of 50% or more.
- Furloughed employees – the calculation for periods 5 and 6 (July 5, 2020 – August 1, 2020 & August 2, 2020 – August 29, 2020) remain unchanged to the previous rules for the first 4 periods. The calculation for the subsidy amount for period 7 and later has not yet been announced, however, the support will be adjusted to align with the benefits provided through the Canada Emergency Response Benefit (“CERB”) and or Employment Insurance (“EI”).
Starting in period 5, an employee no longer has to have worked for 14 consecutive days during the period to meet the definition of an eligible employee for the purpose of the CEWS.
The deadline to apply for all CEWS claims has been extended to January 31, 2021.
Baseline remuneration periods have been expanded to include remuneration paid from March 1 – May 31, 2019 for the first three periods, March 1 – June 30, 2019 for period 4 and July 1 – December 31, 2019 for period 5 onwards.. This is a significant change, as an employee that was previously excluded from CEWS due to no eligible remunerated paid during January 1 – March 15, 2020, may now qualify for CEWS if they have eligible remuneration paid during the expanded periods.
The old rules allowed employers to elect to compute their revenue using the cash method where they would have otherwise used the accrual method. The new rules now allow an employer to elect to compute their revenues using the accrual method where they would have otherwise used the cash method.
The new CEWS rules do not effect previous periods.
The subsidy continues to be fully taxable.

Details for period 10 have not yet been released. The amendments to the CEWS program are particularly complicated and involve various criteria to determine eligibility and the subsidy amount. Should you require any assistance, please do not hesitate to contact our office. We have specialists in this area who are assisting clients in assessing which periods they may be eligible to claim CEWS, as well as preparing the supporting documentation and certification forms.

NOTE: Due to the rapidly evolving changes with respect to the Government’s Economic Response Plan to Covid-19, please understand that any posts written in the past may not be reflective of the current applicable obligations, rights and benefits of individuals and businesses.