Individual tax measures – COVID-19 (April 2020)

Changes to filing and payment deadlines for 2019 returns

Individual Canadians are generally required to file their tax returns for the 2019 tax year on or before April 30, 2020. Self-employed Canadians (and their spouses) have until June 15, 2020 to file such returns. All individual Canadians, regardless of their filing deadline, must usually pay all taxes owed for 2019 by April 30, 2020.

However, the filing deadline for individuals who would normally have to file by April 30 has been extended to June 1, 2020. The filing deadline for self-employed individuals and their spouses remains June 15, 2020.

The new payment deadline for all individual income tax owed for the 2019 tax year has been extended and is now September 1, 2020. No interest or penalty will be assessed where payment is made on or before September 1.

While individual taxpayers now have until June 1 to file, those who receive Canada Child Benefit or the Goods and Services Tax/Harmonized Sales Tax credit (or similar credits provided by their province of residence) should consider filing as soon as possible. The benefit year for those programs starts on July 1, 2020 and both eligibility for, and the amount of any benefit payable is based on information provided in the 2019 tax return. A delay in the filing of the 2019 return could mean a delay in receiving benefits starting in July 2020. As well, regardless of when they file, taxpayers will have until September 1 to pay any tax balance owed for 2019.

Change to June 15 instalment payment deadline

Many Canadians pay their current year (i.e. 2020) income taxes quarterly, through the income tax instalment system. Such instalment payments of tax are normally made on March 15, June 15, September 15 and December 15.

The federal government has indicated that taxpayers who would normally make an instalment payment of tax on June 15 will instead have until September 1, 2020 to make that payment. No interest or penalties will be assessed where the payment is made on or before September 1.

One-time increase to GST/HST tax credit

The federal government will be providing a one-time increase to the GST/HST tax credit, which is usually paid to qualifying individuals in January, April, July and October of each year.

Those individual Canadians who are eligible for the GST/HST credit will receive a special one-time payment in early May 2020. While precise figures have not been provided, the federal government announcement indicates that the payment will be “close to” $400 per individual and $600 for couples.

Increase to Canada Child Benefit

Eligible Canadian families receive a monthly non-taxable payment of the Canada Child Benefit, with the amount of that payment based on family size and income.

The federal government has announced that, for the 2019-20 benefit year only, the amount of the Canada Child Benefit will be increased by $300 per child. There is no need to make any application, as the increased payment will be added automatically to the regular May 2020 payment, which is scheduled to take place on May 20, 2020.

Change to registered retirement income fund withdrawal requirements

Canadian taxpayers are required to collapse their registered retirement savings plans (RRSPs) by the end of the year in which they turn 71. Most Canadians convert their RRSPs into registered retirement income funds (RRIFs) and they are then required to make annual withdrawals from those RRIFs.

The amount of such annual withdrawal is, by law, a specified percentage (based on the taxpayer’s age) of the balance in the RRIF as of January 1 of the year. There has been a significant decline in the markets since the beginning of this year and, consequently, many RRIF holders will have seen a corresponding decline in the value of their investments.

So that RRIF holders are not penalized by those events (by having to liquidate investments at a loss in order to make a required withdrawal) the federal government has reduced the amount of required withdrawals, for the 2020 taxation year only. Specifically, the minimum withdrawal requirement for RRIFs for 2020 has been reduced by 25%.

It’s important to note, however, that individuals who have already withdrawn more than the reduced 2020 minimum amount will not be permitted to re-contribute to their RRIFs an amount up to the 25% proposed reduction. 

Finally, the changes announced also apply to the minimum amount for individuals receiving variable benefit payments under a defined contribution registered pension plan or pooled registered pension plan. Such amounts will also be reduced by 25%, for 2020 only.

Student loan repayments suspended

As of March 30, required repayments of Canada Student Loans will be suspended for a period of 6 months, and no additional interest will accrue on unpaid amounts during that time. There is no requirement that an application be made, as the moratorium on payments during that period will be implemented automatically.

Canada Emergency Response Benefit

Canadians who have no source of income as a consequence of the pandemic may receive $2,000 per month, for a four month period, with that amount provided under under the Canada Emergency Response Benefit (CERB). The CERB is available to a broader group of Canadians than would normally be eligible for income replacement under the Employment Insurance system. Specifically, the CERB applies, in addition to wage earners, to contract workers and self-employed individuals who would not normally qualify for EI.

CERB will be available for Canadians who have lost their job, are sick, quarantined, or taking care of someone who is sick with COVID-19, as well as working parents who must stay home without pay to care for children who are sick or at home because of school and daycare closures. In addition, those who are still employed but are not currently receiving any income from their employer – i.e. are laid off – can qualify.

The specific requirements for an individual to receive CERB, as set out on the federal government website, are as follows:

  • Residing in Canada, who are at least 15 years old;
  • Who have stopped working because of COVID-19 or are eligible for Employment Insurance regular or sickness benefits:
  • Who had income of at least $5,000 in 2019 or in the 12 months prior to the date of their application; and
  • Who are or expect to be without employment or self-employment income for at least 14 consecutive days in the initial four-week period. For subsequent benefit periods, they expect to have no employment income.

The federal government has indicated that applications for the CERB can be made online at https://www.canada.ca/en/services/benefits/ei/cerb-application.html as of April 6. As thousands of applications are expected, applicants are asked to apply in the following order:

  • on April 6, for those with dates of birth in January, February and March;
  • on April 7, for those with dates of birth in April, May and June;
  • on April 8, for those with dates of birth in July, August and September;
  • on April 9 for those with dates of birth in October, November and December.

Payments will be made within 3-4 days by direct deposit and within10 days if sent by mail.

Detailed information on the CERB, including a list of FAQ, can be found on the federal government website at https://www.canada.ca/en/services/benefits/ei/cerb-application.html?utm_campaign=not-applicable&utm_medium=vanity-url&utm_source=canada-ca_coronavirus-cerb.

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Your taxman for tax refunds

If you an individual that has been affected by COVID-19 and are interested in tax refunds. Use our Contact us page or call us at 514-954-8789

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2019 Disallowance of Losses

Case: 2019 TCC 205 — Paletta et al. v. The Queen

Paletta et al. v. The Queen. Tax Court of Canada, October 1, 2019 (Amended October 7, 2019). Neutral Cite: 2019 TCC 205. Court File Nos. 2013-225(IT)G, 2013-2420(IT)G, 2013-4837(IT)G. Hogan J. Tax shelters — Appeal from Minister’s disallowance of losses claimed by taxpayer — The individual and corporate taxpayers entered into two separate arrangements which they characterized as investments in the film industry and they subsequently claimed $96 million in losses arising from those investments.

The Minister disallowed all such loss claims on the basis that some of the transactions entered into by the parties were a sham and that the partnership interests acquired by the appellants were unregistered tax shelters. The taxpayers appealed from those characterizations and their appeals were dismissed. The Tax Court of Canada reviewed the terms of the agreements entered into by both the individual and corporate appellants, and held that each such agreement was properly characterized as a sham.

The Court concluded that the parties to the agreements had agreed from the start that the film company would reacquire the films made before their commercial release by exercising its option to acquire all of the partnership interests. Consequently, in the Court’s view, the appellants and the partners knew that they would never generate income from the films. The Court concluded that each such Option Agreement was therefore a sham. The appellants were not entitled to the loss claims made, and their appeals from the Minister’s disallowance of such claims were dismissed. — Income Tax Act, RSC 1985, c. 1 (5th Supp.), s. 237.1.

Film and Media Tax Credits tax refunds

Planning to invest in the film industry. There are risks of disallowance of losses within structures that are not acceptable to CRA. Call us before you invest at 514-954-8789 or visit our Contact-us page.

Film and Media Tax Credits tax refunds
Film and Media Tax Credits tax refunds

Canadian and Provincial Film or Video Production Tax Credits, and the Film or Video Production Services Tax Credits provide refundable income tax credits to eligible productions.  If you are funding stage or starting a production call us at 1-514-954-8789 or Contact-us for free consultation.

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2019 Federal Budget

Resolutions 76 to 78

Under the current Scientific Research & Experimental Development (SR&ED) program, qualifying expenditure deductions are fully deductible in the year they are incurred and eligible for an investment tax credit. This credit is larger and refundable for corporations that are Canadian-controlled private corporations (CCPCs) for the first $3 million in eligible expenditures. However, the amount eligible for the enhanced credit is reduced once a CCPC’s taxable income for the previous year reaches $500,000 (before being eliminated at $800,000) and once a CCPC’s taxable capital employed in Canada reaches $10 million (before being eliminated at $50 million).

Budget 2019 proposes to eliminate the taxable income reductions currently set out in 127(10.2) of the ITA. Under the new regime, CCPCs claiming SR&ED credits will only be subject to reductions in their enhanced SR&ED credits based on their taxable capital employed in Canada. The purpose of this amendment is to provide a more predictable reduction in the enhanced SR&ED credit for CCPCs.

This amendment will apply to taxation years ending on or after March 19, 2019.

Applicability

Applies to taxation years ending on or after March 19, 2019

Legislation

About W.J. Oliver and Associates

W.J. Oliver and Associates provides Canadian and international income tax recovery services to individuals, businesses, and trusts.

If you want to take advantage of our services. Give us a call at 514-954-8789, or visit our Contact Tax Experts page.

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2018 Fall Economic Statement

2018 Fall Economic Statement announced several tax goodies that will hopefully benefit Canadian businesses.

  • The most notable among them is the Accelerated Investment Incentive for capital cost allowance (“CCA”).  Full CCA write-offs for manufacturing and process property and eligible clean energy property. 
  • Mineral exploration tax credit will be extended for five years, until March 31, 2024.
  • The Canadian government is promising several tax incentives to support the Canadian media.  They will provide more clarity in Budget 2019. Specifically, the government is proposing a refundable tax credit for labour costs incurred by Canadian news organizations, a temporary non-refundable tax credit for eligible digital news media subscriptions, and to give non-profit news organizations qualified donee status.

For more information on assessments, visit Department of Finance Canada in English https://www.fin.gc.ca/n18/18-107-eng.asp or in French https://www.fin.gc.ca/n18/18-107-fra.asp 

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The Quebec government will follow the accelerated capital cost allowance rules announced by the Department of Finance Canada announced in its Fall Economic Statement 2018 on November 21, namely to:

  • allow taxpayers to write off the full cost of machinery or equipment used in manufacturing or processing and clean energy generation equipment, for the taxation year in which the property becomes available for use, where such property becomes available for use before 2024, with a gradual reduction afterwards;
  • introduce an accelerated investment incentive, namely, an accelerated capital cost allowance making it possible to claim up to three times the amount that could otherwise be deducted for nearly all other types of assets, for the taxation year in which the property becomes available for use.
Save your tax

Ontario Minister of Finance, Vic Fedeli, announced on December 10, 2018, that the province will “match the federal capital cost allowance”.  This statement presumably refers to the Accelerated Investment Incentive that was announced in the federal 2018 Fall Economic Statement last month.

  • Although the computation of income for provincial purposes mostly relies on income computed for federal income tax purposes, capital cost allowance for Ontario purposes is slightly different. The CCA deduction from income is not the amount that is deducted under the federal Income Tax Act, but it is rather prescribed by regulation. That regulation, however, provides that the provincial CCA deduction is nearly identical to the federal computation, but with a few very minor differences, such as different rates applicable to certain farming equipment.
  • As a result of this announcement, the government will ensure that its CCA rules harmonize with the Accelerated Investment Allowance for federal purposes, so Ontario businesses will be able to accelerate their CCA deductions for newly-acquired assets for the purposes of computing both federal and provincial income tax.

If you are looking to acquire manufacturing and processing or clean energy  property or interested in Canadian media incentives contact us to save your tax.

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Tax Refunds Notice of Assessment

The Notice of Assessment is a good starting point to look for Tax Refunds.

The ability to Appeal or Objection to notice of Assessment, first protects your rights to appeal the tax issue with the tax authorities. Typically, the bases for appeal are a disagreement with the assessment  or a dispute over how the CRA has interpreted the income tax law.

Secondly, by using your Authorized Representative as the intermediary for the appeal or notice of objection creates better manageable tax issue and uses the expertise of the authorized representative to your advantage.

Thirdly, the objective of filing an appeal or objection is to obtain a tax refund while at the same time taking into account how the issue could affect future taxation years.

For more information on assessments, visit our page http://www.canadian-tax-refund.net/notice-of-assessment/

If you have recently received a notice of assessment and either disagree with the conclusion or just want a second opinion contact us for a free consultation to discuss the assessment.  

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New Residential Rental Property Rebate

New Residential Rental Property Rebate

If you are a landlord of a new residential rental property, it is important to know about the New Residential Rental Property Rebate. When you purchase a residential rental property, depending on your province of residence, you have to pay goods and services tax/harmonized sales tax, or GST/HST/QST. To address the situation and level the playing field, the government introduced the NRRP Rebate. You do not need to be a GST/HST/QST registrant to apply. Individuals may also qualify.

For more information http://www.canadian-tax-refund.net/new-residential-rental-property-rebates/

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NSBA 2017 Small Business Taxation Survey

Most Small Businesses Spend $1000 or More on Tax Administration Alone

  • US Small businesses are spending way too much time and money on federal taxes, a new survey has found.
  • According to the National Small Business Association Tax-Survey-2017 (PDF), federal tax burden is one of the biggest challenges facing small businesses. The report finds the majority of small businesses (67 percent) are spending more than $1,000 each year on just the administration of federal taxes.
  • It reveals one in three small businesses are spending more than 80 hours each year on federal taxes.
  • It also reveals (61 percent) of small business are using a external tax professional.

NSBA 2017 Small Business Taxation Survey

Administrative Burden Continues to be an Issue

There’s also evidence this administrative burden weighs heavy on small business owners.

According to the survey, 58 percent of small businesses find the administrative burden of handling taxes a bigger issue than the actual financial cost of federal taxes (38 percent).

Businesses Want Tax Reform

What’s worth noting is that for most small business owners, the possible elimination of deductions and credits without an offsetting reduction in tax rates is the top concern.

Not surprisingly, most surveyed small business owners support tax reform that would reduce taxes and deductions for both corporations and individuals.

“The need for broad tax reform — and not just a tinkering here and there — is a real need for millions of American small businesses,” said NSBA Chair Pedro Alfonso of Dynamic Concepts, Inc. in Washington, D.C.

The 2017 NSBA Small Business Taxation Survey was conducted online March 8-30 with responses from 950 small business owners.

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Ombudsman slams Revenue Quebec practices

2015 September report by the Quebec ombudsman recently accused Revenue Quebec of becoming more intransigent and less respectful towards taxpayers, prompting an immediate reaction from the provincial finance minister who ordered the tax department to come up with a “concrete action plan” to remedy the “unacceptable” situation.

Revenue Quebec “frequently failed” to apply the principles of natural justice or the fundamental rules of procedural fairness while recovering tax dollars, rigidly interpreted fiscal laws which often resulted in needless court action to resolve tax disputes, and “employed inadequate, and even abusive” auditing methods, according to the latest report marking the second year in a row that the ombudsman has castigated the tax collector.

Here is the full report : annual-report-protecteur-2014-2015

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agri-food business

If you are in the agri-food business, you could get funding to explore export markets, develop strategies, and seize business opportunities.

You could get a refund of up to 30% of the cost of activities related to exporting products outside of Quebec.

Eligible activities include:

  • Market exploration
  • Market validation
  • Hosting buyers in Quebec
  • Participation in trade shows

You must:

  • Conduct processing and packaging activities in Quebec
  • Have processed or marketed agri-food products predominantly from Québec for at least 2 years
  • Be able to provide a three-year export business plan.
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10 previous calendar years

For most Canadian taxpayers, the normal reassessment period for income tax is three years. This means that the CRA has three years from the date that your tax return for a particular year is initially assessed to reassess.

After that normal reassessment period has expired, you can argue that a reassessment is not valid and should be vacated. After the normal reassessment period has expired for a given year, we refer to an assessment of that year as being “statute-barred”.

Generally you can ask for a change to a return for a tax year ending in any of the 10 previous calendar years. For example, a request made in 2016 must relate to the 2006 or a later tax year to be considered.

If you have a adjustment to be made in the 2006 calendar year, just contact us…

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