Tax relief in Canada to support the economy during the Covid-19 crisis

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In the face of the Covid-19 crisis and its economic hurdles, Canada has set up relief plans and taken action to support its economy.

As Covid-19 crisis hit the world and threw it into an economic turmoil, various countries have set up relief plans and taken measures to help support their economies.

In Canada, several such measures have already come into force, both nation-wide and locally in certain provinces.

Nation-wide support

In order to face the Covid-19 crisis, the Canadian government has established clear guidelines and support in the COVID-19 Economic response plan. In particular, several measures regarding taxes and tariffs have been taken to relieve the strain on businesses:

Income tax relief:

The Canada Revenue Agency (CRA) has allowed businesses to defer their income tax payments of any amount due between 18th March and 31st August 2020 (both dates included) until September 2020. The amounts deferred over this period will not be subjected to any penalties’ or interests’ accumulation if they are paid before the end of June 2020.

You can find all the information on deadlines, procedures and requirements on the Government of Canada website.

Sales Tax Remittance and Customs Duty Payments relief:

All businesses are allowed to defer the payment of their Goods and Services Tax (GST) or Harmonised Sales Tax (HST) until the end of June 2020. This applies to any GST/HST payments due between March 27 and the end of May 2020. If you fail to pay the taxes before the end of June 2020, interests and/or penalties may start to accumulate.

The deferral of GST and customs duty payments for imported goods will included the amounts due between March and May 2020.

Note: In both of the above cases, although the taxes’ payment may be deferred, the deadlines for filing the declarations remain the same.

Waving of tariffs on certain medical goods:

Like many other governments across the globe, Canada has selected certain number of medical articles for which to relief customs tariffs. The Certain Goods Remission Order (COVID-19): SOR/2020-101 allows the relief of customs duty for eligible goods that have been imported from 5th May 2020 onwards.

This relief applies to imported goods. It may be claimed at the time of importation or within two years of the importation date. You will also be able to find information on the application process, conditions of application and the list of eligible goods in the Customs Notice 20-19.

Provincial support

In Canada, a federal state, provinces are entitled to collect additional taxes, such as the Provincial Sales Tax (PST). Some Canadian provinces have set up their own tax relief to face the crisis caused by the Coronavirus outbreak, on top of the national response plan.

British Columbia

British Columbia (BC) has announced an extension of the deadlines until 30th September 2020 for both the filing and the payment of the PST and other taxes due between 23rd March and 30th September.

Moreover, some of the tax changes that had been announced in Budget 2020 have also been postponed until further notice. Therefore, the changes brought to the tax on carbonated drinks and software and telecommunication services are put on hold for now.

Carbon tax rates, which were also due to increase, will remain at their current levels. BC has yet to announce the new date when these changes will come into force.

Manitoba

In the RST 20-03 Notice, the government of Manitoba has declared that small and medium businesses with monthly Retail Sales Tax (RST) remittance of less than $10,000 due in May, April and June 2020 will now be due on the 20th July 2020.

For businesses that file their RST on a quarterly basis that had a deadline on 20th April 2020, the due date has now been extended to 20th July 2020.

If businesses that qualify for the filing extension have failed to file and remit their February RST return by 20th March 2020, they will not be assessed a late filing penalty and interests will start to apply after 20th July 2020. Furthermore, interests will continue to apply for all outstanding debts prior to the March 2020 remittance deadlines.

Québec

The Gouvernement du Québec has also set up relief measures to support businesses. On March 27, it has announced in an information bulletin from  Finances Québec the postponement of the deadline for filing Québec Sales Tax (QST) returns and the attendant payments to 30th June 2020. This measure covers the period from 27th March to 1st June 2020.

As explained in the press release of 27th March 2020, interests and penalties will be waived for the QTS remittances of March 31, April 30 and May 31.

Saskatchewan

In Saskatchewan, “businesses that are unable to remit their PST due to cashflow concerns will have a three-month relief from penalty and interest charges”.

Tax returns must nonetheless be filed each month or quarterly if the companies are able to do so, although payment may be deferred.

Monthly filers may defer tax payment of amounts due for the reporting periods of February, March and April 2020 to 31st July 2020.

Quarterly filers may defer tax payment of amounts due for the reporting period of January-March 2020 to 31st July 2020.

Businesses do not need to submit a request for penalty and interest charges relief, but they must pay their tax in full or make arrangements for their tax payments by July 31. Otherwise, they will not qualify for automatic deferral and waiver of penalty and interest charges. Consult the Saskatchewan Business Response Team for further information.

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