Federal government COVID-19 tax updates

April 13, 2020 CPA Canada is a respected and influential voice relaying matters raised by our members to the Canada Revenue Agency (CRA) and working collaboratively to identify solutions. Be sure to check back regularly for updates.

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Update: April 13, 2020

Revised tax blog post on the 75% Canada Emergency Wage Subsidy (CEWS)

Read our updated tax blog post which reflects the federal government CEWS legislation that enacted on April 11, 2020. Update: April 11, 2020

Legislation released on the Canada Emergency Wage Subsidy (CEWS)

New legislation relating to the 75 per cent Canada Emergency Wage Subsidy has been introduced in Parliament. It is expected that the legislation will receive Royal Assent later today. In addition to the legislation, the government has also released a revised backgrounder. The legislation is generally consistent with the April 8th backgrounder, but we want to highlight two new beneficial measures that were included today:

Update: April 9, 2020

New tax blog post: Canada Emergency Wage Subsidy (CEWS)

Read our new tax blog post about key rules and issues on the 75 per cent CEWS. This post is based on the information released by the Department of Finance on April 8, 2020. Legislation has not yet been released. Once it is, we will provide an update as needed.

Tax webinar update

The tax webinar recording, originally posted April 3, 2020, has been removed as the information is out of date with the April 8 federal government announcement pertaining to the Canada Emergency Wage Subsidy. We are planning a second webinar based on updated information and government measures.   Update: April 8, 2020

Canada Emergency Wage Subsidy (75 per cent subsidy)

The government released more details on the Canada Emergency Wage Subsidy (CEWS). At an initial glance, it appears that the revised rules will deal with only some of the key issues that CPA Canada has brought forward to senior officials at the CRA (see this list in the April 7 update below).

Summary of Identified COVID-19 Tax Issues (Non-CEWS)

CPA Canada, in conjunction with the Canadian Tax Foundation (CTF), has received many inquiries about tax issues generally related to the COVID-19 pandemic. Together, we documented this input and compiled a summary of the key matters. This was recently forwarded to the federal government and we look forward to the clarification of these points. View the summary.   Update: April 7, 2020

Summary of identified COVID-19 tax issues (CEWS)

CPA Canada, in conjunction with the Canadian Tax Foundation (CTF) has received many inquiries about the Canada Emergency Wage Subsidy (CEWS). Together we documented this input and compiled a summary of the key matters. This was recently forwarded to the federal government and we look forward to the clarification of these points. View the summary. Update: April 6, 2020 

Canada Emergency Response Benefit

Today is the first day that Canadians can apply for the Canada Emergency Response Benefit (CERB). We were informed by an applicant that tried the system this morning of the following:

CRA has confirmed with us that the CERB application will not be available on Represent a Client since attestation is needed. We encourage you to visit “Frequently Asked Questions” website for important updates made over the weekend. For more general information on CERB please also refer to the CRA’s general guide and CERB Application Page.

Message from CRA on portal use to assist Canadians making CERB applications

In support of Canadians applying for the Canada Emergency Response Benefit (CERB), as a temporary measure, we ask that you avoid accessing the CRA portals from Monday to Thursday, April 6 – 9, 2020. Instead, we encourage you to continue to use the services within your certified software such as electronic authorizationsAuto-Fill My Return and Client Data EnquiryExpress NOA and ReFILE. Some of these services may use the same log-in credentials as the portals but are accessed via web service rather than through the portals directly.   Update: April 3, 2020

Update on sending returns, correspondence and payments to the CRA

More information has been provided on sending returns, correspondence and payments to the CRA.   Update: April 2, 2020

Update on federal government wage subsidy programs

On April 1, 2020, the Department of Finance released additional details on the Canada Emergency Wage Subsidy (CEWS) program. This is the new 75 per cent subsidy program that was first announced last week by the Prime Minister. It should be noted that the original 10 per cent subsidy program announced on March 18, 2020, called the Temporary Wage Subsidy (TWS), will remain available. Despite some initial uncertainty, individuals and partnerships can qualify for both programs, subject to the conditions of each programs. With two programs, it will be important to determine which program applies. For employers who meet the 30 per cent decline in revenue test for the CEWS, they can also claim the TWS but any benefit from the TWS “would generally reduce the amount available to be claimed under the CEWS”. We assume this means the total subsidy claimed by such an employer can’t exceed the benefit under the CEWS. For employers that do not meet the conditions for the CEWS, they can claim the TWS, assuming that they meet the conditions for that program, which have not changed. For more information, see:

CRA’s position on transfer pricing deadlines

We received the following statement from CRA on contemporaneous documentation: “This message provides more information for taxpayers regarding requests for transfer pricing contemporaneous documentation issued by the Canada Revenue Agency (CRA). The CRA recognizes that taxpayers are experiencing challenges and have limited resources during the COVID-19 outbreak, and that administrative relief may be necessary on various issues. Requests for contemporaneous documentation that were made prior to April 1, 2020 having a deadline of March 18, 2020 or later will be considered cancelled and will be re-issued at a later date, providing the maximum amount of time of 3 months to submit the documentation. We anticipate that a more formal communication will be provided but wanted to provide early confirmation of our planned approach.” Update: April 1, 2020

New 75 per cent wage subsidy details announced

The Department of Finance has released additional information on the new 75 per cent Canada Emergency Wage Subsidy. The new program will be available to a wide group of employers in the event their revenue has decreased by 30 per cent or more. For more details, see the Department of Finance backgrounder. The original 10 per cent Temporary Wage Subsidy will continue to be available to employers who don’t qualify for the 75 per cent subsidy.

Updates on government announcements:

Deadlines for GST/HST returns – In a new Q&A page on GST/HST, the CRA made the following statement on the deadlines for GST/HST returns: “The deadline for businesses to file their returns is unchanged. Those who are able to, should continue to file their GST/HST returns on time, reporting their net tax for the reporting period to help facilitate tax compliance and administration. However, recognizing the difficult circumstances faced by businesses, the CRA won’t impose penalties where a return is filed late provided that it is filed by June 30th.” The Quebec government will apply the same policy for QST returns.   Update: March 31, 2020

Updates on government announcements:

Update: March 30, 2020

Update on wage subsidy

The Prime Minister announced a few details on the 75 per cent wage subsidy that will be available to qualifying Canadian businesses. According to the federal government, if an employer’s revenue has decreased by 30 per cent as a result of the COVID-19 pandemic, that business will be eligible for the wage subsidy. The federal government has said that it will cover 75 per cent of the first $58,700 of income earned, which works out to $847 per week. This subsidy will be retroactive to March 15, 2020. The Prime Minister also advised that the wage subsidy will apply to all non-profit organizations, charities, and companies of all sizes. We anticipate that partnerships and sole proprietors will also be eligible based on Bill C-13 even though the Prime Minister did not mention these employers specifically. More substantive details are expected to be announced Tuesday March 31 by the federal government.   Update: March 27, 2020 The government announced additional support for businesses and employees. The tax measures announced include:

For more details, please see the Department of Finance backgrounder. Keep in mind that the Canada Revenue Agency also announced tax deadline extensions on March 26, 2020 (see below). Update: March 26, 2020

Federal government announces broad tax measures

The federal government announced additional extensions to many tax-related deadlines. Most federal tax filing deadlines have been extended to June 1, 2020, including the March 31 deadline for T1134 forms and T2s. The filing deadline for the T5013 partnership return and other information that individuals will need to complete their T1 returns has been extended to May 1, 2020. The deadline for most T1 returns remains June 1, 2020. Note that some returns and payments will still be due at the usual time. Find more information on the announcement.Update: March 23, 2020 As discussed in our previous update, we are continuing to communicate with CRA on the issues related to COVID-19 and the relief that the government announced.  The highlights include:

On some of the key issues we know that you are concerned about, we have a few updates:

We will continue to provide updates on a regular basis. Finally, we strongly recommend that you monitor the CRA’s COVID-19 page, as the CRA will be updating this page as more information becomes available. And, you should sign up for one of CRA’s social media channels on TwitterFacebook or LinkedIn as they are providing updates through social media. A deferral for charity returns was announced late Friday as an example. March 19, 2020  On March 18, 2020, the federal government released information on tax extensions and other changes that have become necessary due to the COVID-19 crisis. Although this was welcomed news, there is still some uncertainty as the announcement did not provide a comprehensive update on all tax deadlines that are soon approaching. The specific measures in the announcement include the following

Despite requests made by CPA Canada to specifically address the filing deadlines for many partnerships coming at the end of March, no mention of an extension was made for those returns.  Also, no information was provided for corporate tax returns which are due near-term. It should also be noted that no mention was made on relief for GST/HST for businesses. A key concern is that businesses that continue to operate will have to collect and remit HST/GST but may not be paid immediately by their customers, or at all in the case of bad debts. This could create significant cash flow issues. As relief for income tax preparers, to reduce the necessity for taxpayers and tax preparers to meet in person during this difficult time, effective immediately the CRA will recognize electronic signatures as having met the signature requirements for T183 and T183Corp forms, as a temporary administrative measure. We will continue to discuss issues of concern with CRA with a goal of providing more clarity, and in particular, whether extensions can be provided for other key tax deadlines that are approaching. We do believe from our discussions with CRA that relief will be provided for returns and other filings and we will continue to ask for more clarity. On CRA services, they have sent most staff home and will focus on essential services including the continuity of benefit payments and associated functions while cutting back activities in other areas. Although the CRA will continue to respond to incoming calls at call centres, they will operate at a significantly reduced capacity and may give priority to enquiries related to benefits. The government also announced that benefits such as the Canada Child Benefit and the GST credit will be enhanced.

Access the government announcement here:


CRA Resources:

Helping Canadians with the economic impact of the COVID-19 Pandemic