Tax Measures Under Canada’s COVID-19 Economic Response Plan

  • returns;
  • elections;
  • designations; and
  • responses to information requests.

This extension does not apply to prescribed forms, receipts or documents, or prescribed information, that must be filed with the Minister on or after the day specified, in respect of the form, receipt, document or information, in subsection 37(11) or paragraph (m) of the definition “investment tax credit” in subsection 127(9) of the ITA. As well, payroll deductions and related activities (except those relating to the reduction of remittances in respect of the temporary wage subsidy) must continue to be performed on time.

Taxpayers who are unable to file a return or make a payment by the new deadlines due to COVID-19 may request that any penalties or interest charged to their account be cancelled.

Canadian Emergency Business Account (“CEBA”)

This federal program[20] provides financing to businesses for their expenses that cannot be avoided or deferred as they take steps to navigate a period of shutdown. The federal government provides interest-free loans of up to $40,000 to small businesses and not-for-profits. Repaying the balance of the loan on or before December 31, 2020, will result in loan forgiveness of 25%. The program was expanded on December 4, 2020[21], by allowing qualifying businesses to access an additional interest-free $20,000 loan. Half of this additional amount would be forgivable if the loan is repaid by December 31, 2022. Eligible businesses may apply until March 31, 2021, to this program through their financial institution.

The CRA confirmed that the part of the loan that is forgivable is included in the income of the year in which the loan is received by virtue of paragraph 12(1)(x) of the ITA. However, as CEBA funds are to be used to pay for non-deferrable operating expenses of the business including payroll, rent, utilities, insurance, property tax, and regularly scheduled debt service, the recipient can elect to reduce the amount of outlay or expense under subsection 12(2.2) as opposed to reporting the amount as an income inclusion.

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