Individual tax measures – COVID-19

Changes to filing and payment deadlines for 2019 returns

Individual Canadians are generally required to file their tax returns for the 2019 tax year on or before April 30, 2020. Self-employed Canadians (and their spouses) have until June 15, 2020 to file such returns. All individual Canadians, regardless of their filing deadline, must usually pay all taxes owed for 2019 by April 30, 2020.

However, the filing deadline for individuals who would normally have to file by April 30 has been extended to June 1, 2020. The filing deadline for self-employed individuals and their spouses remains June 15, 2020.

The new payment deadline for all individual income tax owed for the 2019 tax year has been extended and is now September 1, 2020. No interest or penalty will be assessed where payment is made on or before September 1.

While individual taxpayers now have until June 1 to file, those who receive Canada Child Benefit or the Goods and Services Tax/Harmonized Sales Tax credit (or similar credits provided by their province of residence) should consider filing as soon as possible. The benefit year for those programs starts on July 1, 2020 and both eligibility for, and the amount of any benefit payable is based on information provided in the 2019 tax return. A delay in the filing of the 2019 return could mean a delay in receiving benefits starting in July 2020. As well, regardless of when they file, taxpayers will have until September 1 to pay any tax balance owed for 2019.

Change to June 15 instalment payment deadline

Many Canadians pay their current year (i.e. 2020) income taxes quarterly, through the income tax instalment system. Such instalment payments of tax are normally made on March 15, June 15, September 15 and December 15.

The federal government has indicated that taxpayers who would normally make an instalment payment of tax on June 15 will instead have until September 1, 2020 to make that payment. No interest or penalties will be assessed where the payment is made on or before September 1.

One-time increase to GST/HST tax credit

The federal government will be providing a one-time increase to the GST/HST tax credit, which is usually paid to qualifying individuals in January, April, July and October of each year.

Those individual Canadians who are eligible for the GST/HST credit will receive a special one-time payment in early May 2020. While precise figures have not been provided, the federal government announcement indicates that the payment will be “close to” $400 per individual and $600 for couples.

Increase to Canada Child Benefit

Eligible Canadian families receive a monthly non-taxable payment of the Canada Child Benefit, with the amount of that payment based on family size and income.

The federal government has announced that, for the 2019-20 benefit year only, the amount of the Canada Child Benefit will be increased by $300 per child. There is no need to make any application, as the increased payment will be added automatically to the regular May 2020 payment, which is scheduled to take place on May 20, 2020.

Change to registered retirement income fund withdrawal requirements

Canadian taxpayers are required to collapse their registered retirement savings plans (RRSPs) by the end of the year in which they turn 71. Most Canadians convert their RRSPs into registered retirement income funds (RRIFs) and they are then required to make annual withdrawals from those RRIFs.

The amount of such annual withdrawal is, by law, a specified percentage (based on the taxpayer’s age) of the balance in the RRIF as of January 1 of the year. There has been a significant decline in the markets since the beginning of this year and, consequently, many RRIF holders will have seen a corresponding decline in the value of their investments.

So that RRIF holders are not penalized by those events (by having to liquidate investments at a loss in order to make a required withdrawal) the federal government has reduced the amount of required withdrawals, for the 2020 taxation year only. Specifically, the minimum withdrawal requirement for RRIFs for 2020 has been reduced by 25%.

It’s important to note, however, that individuals who have already withdrawn more than the reduced 2020 minimum amount will not be permitted to re-contribute to their RRIFs an amount up to the 25% proposed reduction.

Finally, the changes announced also apply to the minimum amount for individuals receiving variable benefit payments under a defined contribution registered pension plan or pooled registered pension plan. Such amounts will also be reduced by 25%, for 2020 only.

Student loan repayments suspended

As of March 30, required repayments of Canada Student Loans will be suspended for a period of 6 months, and no additional interest will accrue on unpaid amounts during that time. There is no requirement that an application be made, as the moratorium on payments during that period will be implemented automatically.

Canada Emergency Response Benefit

Canadians who have no source of income as a consequence of the pandemic may receive $2,000 per month, for a four month period, with that amount provided under under the Canada Emergency Response Benefit (CERB). The CERB is available to a broader group of Canadians than would normally be eligible for income replacement under the Employment Insurance system. Specifically, the CERB applies, in addition to wage earners, to contract workers and self-employed individuals who would not normally qualify for EI.

CERB will be available for Canadians who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19, as well as working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures. In addition, those who are still employed but are not currently receiving any income from their employer – i.e. are laid off – can qualify.

The specific requirements for an individual to receive CERB, as set out on the federal government website, are as follows:

• Residing in Canada, who are at least 15 years old;
• Who have stopped working because of COVID-19 or are eligible for Employment Insurance regular or sickness benefits:
• Who had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
• Who are or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period. For subsequent benefit periods, they expect to have no employment income.

The federal government has indicated that applications for the CERB can be made online at https://www.canada.ca/en/services/benefits/ei/cerb-application.html as of April 6. As thousands of applications are expected, applicants are asked to apply in the following order:

• on April 6, for those with dates of birth in January, February and March;
• on April 7, for those with dates of birth in April, May and June;
• on April 8, for those with dates of birth in July, August and September;
• on April 9 for those with dates of birth in October, November and December.

Payments will be made within 3-4 days by direct deposit and within10 days if sent by mail.

Detailed information on the CERB, including a list of FAQ, can be found on the federal government website at https://www.canada.ca/en/services/benefits/ei/cerb-application.html?utm_campaign=not-applicable&utm_medium=vanity-url&utm_source=canada-ca_coronavirus-cerb.