The Canada Revenue Agency (CRA) is extending the deadline for Canadians to file their annual tax returns because of the COVID-19 pandemic.
As announced by the federal government on March 18, all Canadian citizens will have until June 1 to submit their 2019 returns to the CRA instead of the usual deadline of April 30. If you owe the government money, you now have until July 31 to settle up interest-free. Businesses are also getting a tax-return deadline extension to July 31 to pay corporate taxes.
For trust funds with a taxation year ending on Dec. 31, 2019, the new due date for filing returns is now May 1. Additionally, the federal government says people can defer their income tax payments until after August 31 without fear of being charged interest or facing any penalties.
The changes were made as part of a $107 billion aid package outlining a series of emergency financial measures the government is taking to help Canadians weather the impact COVID-19 is having on the economy.
What Does the Tax Deadline Extension Mean for Individuals?
As outlined by the government in part one of the Income Tax Act, the relief applies to tax balances due as well as installments. The move is designed to aid Canadians facing financial hardship as a result of COVID-19. However, the government advises any Canadian who is expecting to receive benefits under the Goods and Services Tax Credit (GSTC) or the Canada Child Benefit, not to delay the filing of their return to ensure their entitlements for the 2020-21 benefit year are properly determined.
The assistance for individuals and families includes:
- Boosting the Canada Child Benefit by $300 per child beginning in May
- Doubling the GSTC for low- or moderate-income households; an extra $400 for individuals and $600 for couples
- A Canada Emergency Response Benefit of up to $2,000 a month for up to four months beginning in April. For people who do not qualify for Employment Insurance such as the self-employed, contractors, or freelancers, as well as parents caring for children because of school closures, they can apply for this benefit through the CRA’s website
Moreover, with an aim to adhere to “social distancing” guidelines, the CRA will permit electronic signatures for T183 (for individuals) and T183CORP (for companies) authorization forms, which typically are signed by hand.
For homeowners concerned about meeting their mortgage payment obligations, Canada’s big banks are stepping up to with unprecedented mortgage relief. Their timing is impeccable. With the possibility of 11 million to 26 million out of 37.6 million Canadians at risk of catching the virus, the National Bank of Canada estimates up to 1 million people may find themselves out of work.
What Does the Tax Deadline Extension Mean for Businesses?
The government is also assisting businesses facing economic uncertainty in the wake of COVID-19. Businesses have until July 31 to file their 2019 tax returns and can defer any tax payments to August 31 without incurring interest or any penalties.
In its announcement, the government also says it is introducing measures to help small businesses, including:
- Preventing layoffs and helping small businesses keep their employees through a temporary wage subsidy for three months. The maximum subsidy available is $1,375 per employee and $25,000 per employer
- Providing loans, guarantees, and insurance to companies through the Canada Account managed by Export Development Canada
- Small and mid-sized businesses can also apply for financial support through the Business Credit Availability program