COVID-19 Tax Update: Canada Revenue Agency announces additional tax relief measures

The Canada Revenue Agency (“CRA”) has announced additional tax relief measures as part of its response to the ongoing COVID-19 crisis. These measures are summarized below.

Administrative Tax Measures

The new measures extend various filing deadlines under the Income Tax Act and represent an expansion to previously announced administrative tax measures.

Extended to May 1, 2020 are filing deadlines that would otherwise fall between March 18, 2020 and May 1, 2020 for Trust Income Tax and Information Returns (Form T3), Partnership Information Returns (Form T5013) and Statements of Amounts Paid or Credited to Non-Residents of Canada (Form NR4). Further, extended to June 1, 2020 is the deadline to file a T3 return for any trust with an off-calendar taxation year that would otherwise have a filing due date in April or May.

Extended to June 1, 2020 are filing deadlines that would otherwise fall between March 18, 2020 and June 1, 2020 for “administrative income tax actions required of taxpayers by the CRA” unless otherwise stated by the CRA. The CRA notes that these “administrative income tax actions” include the filing of returns, elections, designations and responses to information requests. While the scope of this extension is not entirely clear, it appears to presently apply to at least Corporation Income Tax Returns (Form T2) that would otherwise be required to be filed between March 18, 2020 and June 1, 2020. Extending the return filing deadline for corporations would be in line with the CRA’s decision to extend return filing deadlines for individuals, trusts, partnerships and charities. The CRA’s position also appears to extend the deadline for foreign reporting forms (for example, T1134s and T1135s) otherwise required to be filed after March 18, 2020 and before June 1, 2020. However, unless and until the CRA has provided clear guidance to corporate and other taxpayers on their specific filing obligations, all taxpayers should continue to try to meet their normal filing deadlines.

Specifically excluded from the June 1, 2020 extension are filing deadlines for Scientific Research and Experimental Development (SR&ED) Expenditures Claims (Form T661) and any prescribed forms or information relating to claims for investment tax credits under the Income Tax Act.

Extended to December 31, 2020 are filing deadlines that would otherwise fall between March 18, 2020 and December 31, 2020 for Registered Charity Information Returns (Form T3010).

It is anticipated that Revenu Québec will provide parallel filing deadline extensions.

The following table summarizes the extended return filing deadlines and payment due dates for individuals, corporations, trusts, partnerships and charities, based on current CRA guidance.

[1] Subject to the caveat noted above and only if filing deadline would otherwise fall between March 18, 2020 and June 1, 2020.

[2] Only if filing deadline would otherwise fall between March 18, 2020 and May 1, 2020.

[3] Only in respect of income taxes payable and income tax instalment payments under Part I of the Income Tax Act that became owing after March 18, 2020 and before September 1, 2020. No interest or penalties will accumulate on these amounts up to September 1, 2020.

Objections and Appeals

The CRA has stated that “for any objection request due March 18 or later, the deadline is effectively extended until June 30, 2020.” It is unclear what is meant by the word “effectively”. However, it appears that notices of objection that would otherwise be required to be filed between March 18, 2020 and June 30, 2020 can now be filed by June 30, 2020.

The CRA has identified objections relating to Canadians’ entitlement to benefits and credits as being critical. These specific objections will continue to be processed during the COVID-19 crisis. All other objections will be held in abeyance and no collection action will be taken with respect to accounts associated with those objections.

Similarly, appeals relating to Canada Pension Plan or Employment Insurance rulings are being given priority status.

Audit Activities

During the COVID-19 crisis, the CRA will generally not initiate contact with taxpayers for audits. While there may be exceptions to this, the CRA has stated that: (1) no new audits should be launched; (2) no requests for information relating to existing audits should be issued; (3) no existing audits should be finalized; and (4) and no reassessments should be issued.

Collections

The CRA has stated that “collections activities on new debts will be suspended until further notice and flexible payment arrangements will be available”. It’s not clear what constitutes a “new debt”, but it presumably includes an amount that became owing after March 18, 2020.

Requirements to Pay

Until further notice, banks and employers are not required to comply with existing requirements to pay issued by the CRA.