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Canada’s COVID-19 economic response plan for cellphone shop owners

This year has presented many difficulties for the cell phone store owners. Dealing with unpredictable and unexpected times may require not only an economic capacity, but also the ability to control and understand how to move forward during and after a crisis of this magnitude. Our intention with this article is to provide specific and useful information to cover the most affected aspect, the economy. This may bring relief to our large community of cell phone stores across Canada, with the financial support of the government many owners may be reducing risk and recovering some of the losses.

In this article, we are going to introduce and share with all our colleagues the economic response plan the government of Canada has announced and update with relevant information about the current situation. You’ll find an updated version of this regularly as the situation goes evolving. Please have in mind that the newest info will be included at the beginning of the article, scroll down to find general aspects of the Economic Response Plan. 

This article has summarized the items we believe to be most relevant to our clients.

On this article you’ll find an introduction and a summary of the following sources:

  1. Tax Measures Under Canada’s COVID-19 Economic Response Plan
    https://www.mccarthy.ca/en/insights/blogs/mccarthy-tetrault-tax-perspectives/tax-measures-under-canadas-covid-19-economic-response-plan
  2. Highlights of Canada’s COVID-19 Economic Response Plan
    https://www.sterncohen.com/covid-19-economic-response-plan-highlights/
  3. Government of Canada launches Canada Emergency Wage Subsidy Calculator for Employers
    https://www.newswire.ca/news-releases/government-of-canada-launches-canada-emergency-wage-subsidy-calculator-for-employers-824653825.html
  4. The Government of Canada announced the first phase of its economic response plan
    https://www.dalelessmann.com/news/blog/covid-19-economic-response-plan

1. Tax Measures under Canada’s COVID-19 Economic Response Plan
by authors: Fred Purkey, Robert W. Nearing, Christian Meighen, Kim Brown, and Raj Juneja. Published on April 30, 2020, in McCarthy Tetrault

Introduction

Since March 18, 2020, the Government of Canada announced a series of tax and economic measures under Canada’s COVID-19 Economic Response Plan to support the Canadian economy during the COVID-19 global pandemic.

For a deeper knowledge please continue with the following reading

The Response Plan is designed to help stabilize the Canadian economy and includes measures to assist both individuals and businesses through direct transfers, tax deferrals, and measures to ensure businesses continue to have access to credit. On March 25, 2020, the Government of Canada passed Bill C-13, An Act respecting certain measures in response to COVID-19 to implement the Response Plan measures. The original Response Plan has since been supplemented by measures announced on March 20, and on March 27, 2020.

On April 11, 2020, Bill C-14, A second Act respecting certain measures in response to COVID-19, which enacts the Canada Emergency Wage Subsidy, received royal assent. The Response Plan contains measures to help businesses retain their workers.

The Response Plan contains measures that will allow businesses to defer until September 1, 2020, the payment of any income tax that becomes owing between March 18, 2020, and August 31, 2020. This measure will apply to both monthly installments and year-end tax balances due under Part I of the Income Tax Act. Generally, corporations must pay income taxes owing under Parts I, VI.

Additionally, unless otherwise noted by the CRA, administrative income tax actions required of taxpayers by the CRA due after March 18, 2020 can be deferred until June 1, 2020.

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 canceled.

Curtailment of Audit and Reassessment Activity

No collection action will be taken with respect to objections related to tax matters filed by individuals and businesses which are in abeyance. If a taxpayer is prevented from making a payment when due or filing a return on time, or from otherwise complying with a tax obligation because of circumstances beyond their control, then the taxpayer can submit a request to have interest and/or penalties waived or canceled by using Form RC4288, Request for Taxpayer Relief. Payment arrangements are also available on a case-by-case basis if a taxpayer is unable to pay its taxes, child and family benefit overpayments, Canada Student Loans, or other government program overpayments in full. Specifically, no new audits will be launched, no requests for information related to existing audits will be effectuated, no audits should be finalized, and no reassessments should be issued.

In addition, the period from March 16, 2020, to May 29, 2020, is excluded from the computation of time prescribed by the rules of the TCC. Applications approved during the current period may be subject to review or audit at a later date to confirm eligibility.

Flexibility for Taxpayers

Any income tax that becomes owing by the taxpayers between March 18, 2020, and August 31, 2020, under Part I of the ITA will be deferred until September 1, 2020. Taxpayers who are unable to file a return or make a payment by the deadlines as a result of COVID-19 can request the cancellation of penalty and interest charged to their account. To reduce the administrative burdens and the necessity for taxpayers to meet with tax preparers in person, the CRA will recognize electronic signatures as having met the signature requirements of the ITA on a temporary basis.

2. Highlights of Canada’s COVID-19 Economic Response Plan
by: Adam Morke. Last updated April 30, 2020, in Stern Cohen Accountants.

Introduction

The subsidy will apply to corporations, individuals, charities, NPOs, and partnerships consisting of the aforementioned. Forgivable loans will be offered to qualifying commercial property owners to cover 50% of rent payments for April, May, and June that are payable by eligible small business tenants. Employees receive Income Tax

Tax Filing due date – 2019 Personal income tax returns due June 1, 2020, for individuals without self-employment income.

For a deeper knowledge please continue with the following reading

Income Tax – Extension on filing and deferral on payment

2019 Balance Owing – Payment of income tax becoming due between March 18, 2020, and August 31, 2020, can be deferred until September 1, 2020. No interest or penalties will accumulate on these amounts during this period.

Tax filing due date – Corporate income tax filings due between March 18 to May 31, 2020, are now due June 1, 2020.

April 11 Update – The following has been updated to reflect the legislation to enact the CEWS into law.

Highlights

For businesses and organizations that don’t qualify for the 75% subsidy, they may still qualify for the 10% subsidy. This is a temporary three-month wage subsidy that applies to employers who are: Partnerships where all partners are one or more of the above

Associated CCPCs are not required to share the $25,000 maximum subsidy per employer Canada Emergency Commercial Rent Assistance

Forgivable loans will be offered to qualifying commercial property owners to cover 50% of rent payments for April, May, and June that are payable by eligible small business tenants.

The loan will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75% for the three months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place.

The small business tenants will be required to pay the remaining 25% of the rent. Can defer reporting and remittance of Workplace Safety and Insurance Board Canada Emergency Business Account – $40,000 Interest-free Loan. Interest-free loans of up to $40,000 available to small businesses and non-profit organizations to help cover operating costs during a period where revenue has been temporarily reduced.

Tax Filing due date – 2019 Personal income tax returns due June 1, 2020 for individuals without self-employment income. Earned at least $5,000 of employment, self-employed income, or non-eligible dividends in 2019 or in the 12 month period prior to applying for the CERB. Allowing people to earn up to $1,000 per month Income support for low-and-modest income families.

3. Government of Canada launches Canada Emergency Wage Subsidy Calculator for Employers 
News provided by Canada Revenue Agency. April 21, 2020

Introduction

OTTAWA, April 21, 2020,/CNW/ – To help employers keep and re-hire workers amidst the challenges posed by the COVID-19 pandemic, the Government is implementing the Canada Emergency Wage Subsidy.

For a deeper knowledge please continue with the following reading

OTTAWA, April 21, 2020,/CNW/ – The Honourable Diane Lebouthillier, Minister of National Revenue, launched the Canada Emergency Wage Subsidy calculator to support employers as they prepare to apply for the CEWS. The CEWS calculator can be found on CRA’s Canada Emergency Wage Subsidy Web page. This Web page incorporates feedback received during user testing with stakeholders, including the Canadian Federation of Independent Business and the Chartered Professional Accountants of Canada.

The Honourable Diane Lebouthillier, Minister of National Revenue

«The Canada Emergency Wage Subsidy will help many small business owners keep their employees during the COVID-19 pandemic. We were pleased to provide feedback to the CRA on its calculator designed to make it easier for firms to access the wage subsidy».

«The APFF wishes to highlight the importance of the Canada Emergency Wage Subsidy for the survival of a large number of Canadian businesses. ».

4.  The Government of Canada announced the first phase of its economic response plan.
By Tamara Ramsey. Published on March 18, 2020 in Dale & Lessmann

Introduction

On March 27, 2020, the Government first announced the Canada Emergency Wage Subsidy. Generally speaking, the program provides a subsidy for defined periods to employers who have experienced significant decreases in revenue.

For a deeper knowledge please continue with the following reading

Canada Emergency Wage Subsidy 

Employers eligible to apply for the subsidy include corporations, individuals, registered charities, and certain partnerships. The subsidy will apply to certain qualifying periods, being March 15, 2020, to April 11, 2020, April 12, 2020, to May 9, 2020, and May 10, 2020, to June 6, 2020.

Eligible employers who suffer a drop in qualifying revenue of 15 percent in March 2020 or 30 percent in either April or May 2020 may be able to access the subsidy for the relevant qualifying period. Eligible employers will be able to apply for the Canada Emergency Wage Subsidy through the Canada Revenue Agency’s portal.

Employment Insurance Sickness Benefit

Waiving the one-week waiting period for those individuals in imposed quarantine that claim EI sickness benefits.

Canada Emergency Response Benefit

On March 25, 2020, the Government passed legislation to establish the Canada Emergency Response Benefit. The CERB replaces the previously announced Emergency Care Benefit and Emergency Support Benefit. The CERB will provide income support to eligible workers.

The Government has indicated that workers cannot be paid EI benefits and the CERB income support amount with respect to the same period The Government has provided the following administrative guidance:

“If you became eligible for EI regular or sickness benefits on March 15, 2020 or onward, your claim will be automatically processed through the Canada Emergency Response Benefit”

Link to The Economic Response Plan web:

https://www.canada.ca/en/department-finance/economic-response-plan.html#businesses

We hope this article has been useful for our entire community. We will continue to share with you updates on this issue during this period of crisis and complexity.  We also hope that this article has given you solid knowledge to make front to the crisis  COVID – 19 is causing, both locally and globally. We will continue to provide additional topics weekly to support you through this period.

Until the next time… 

Stay safe and be well!