Making sense of the new tax filing and payment deadlines

There have been so many announcements over the past couple of months with respect to temporary changes to individual and business tax obligations that keeping up with all of the new rules and altered deadlines isn’t easy. The good news is that, in all cases, individual taxpayers (both employees and the self-employed) are being provided with extended time to pay any income tax amounts for both 2019 and 2020. And, in most cases, taxpayers also have more time to file returns for the 2019 tax year.

In an ordinary year, for most taxpayers (except the self-employed and their spouses) the filing and payment deadline is the same day — April 30. This year, both the filing and payment deadlines have been extended, but to different dates, as follows.

• Individual taxpayers (other than self-employed taxpayers and their spouses) must file a return for 2019 on or before June 1, 2020.
• Self-employed taxpayers and their spouses must file their returns for the 2019 tax year on or before June 15, 2020.
• For ALL individual taxpayers, the deadline for payment of 2019 income tax balances owed has been extended to September 1, 2020. In other words, although the return must be filed during the month of June, any tax balance owed from that return doesn’t have to be paid until September 1, 2020. Where the payment is made on or before that September date, the Canada Revenue Agency (CRA) will not charge interest on the amount owed.

As all of these changes were announced part way through tax filing season, some confusion was perhaps inevitable. The CRA website indicates that some taxpayers may have received a Notice of Assessment indicating that payment of a tax balance was due on or before April 30, 2020. That is incorrect, as all individual income tax balances owed for the 2019 tax year are not due until September 1, 2020.

Although the filing deadline has been extended, it’s still a good idea to file as soon as possible. Eligibility for certain means-tested government benefits, like the Goods and Services Tax Credit or the Canada Child Benefit, is determined in part by the amount of income reported on the annual return. The upcoming benefit year for all such benefits runs from July 1, 2020 to June 30, 2021, and both eligibility for and the amount of benefit received will be determined, in part, by the amount of income reported on the income tax return for 2019. Where that return has not yet been filed by the taxpayer and processed by the CRA, no determination of benefit entitlement can be made and so any payment of benefits which would start in July 2020 will be delayed.

Millions of individual Canadians also pay income tax for the current (2020) taxation year through quarterly instalments paid throughout the year. Those instalments are usually paid on the 15^th day of March, June, September, and December. This year the usual June payment deadline has been extended, and any instalment payment of tax which was normally due on that date can be paid anytime up to September 1, 2020. There has been no change announced with respect to the September 15 instalment payment deadline.

Incorporated businesses will also benefit from extended filing and payment deadlines. Where a corporation’s income tax return for 2019 was due after March 18, 2020 and before June 1, 2020, that deadline is extended to June 1, 2020. Payment deadlines for corporations were also extended, such that any income tax balances owed or instalment payments of income tax required after March 18 and before September 1, 2020 do not have to be paid until September 1, 2020.

More information on the extended payment and filing deadlines for this year can be found on the CRA website at https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/covid-19-filing-payment-dates.html.