Published: May 12, 2020
Last Updated: November 24, 2020
Canadian Federal Government COVID-19 Relief Measures for Individuals – A Toronto Tax Lawyer Analysis
Introduction – Individual Financial Reliefs related to COVID-19
The ongoing COVID-19 pandemic has had wide-ranging impacts on Canadians’ lives. One of the areas of impact is personal finance. Prior to the COVID-19 outbreak, a survey estimates nearly half of Canadians were on the brink of insolvency. The COVID-19 pandemic and lockdown have added more financial anxiety for ordinary Canadians.
The Canadian Federal government has implemented several programs for individual relief. Canadians should keep these programs in mind when planning their personal finances for the near foreseeable future.
These reliefs programs for individuals can be categorized as the following:
- Emergency benefits for Canadians who lost all of their income,
- Subsidies for low-income Canadians,
- Debt obligation relief for mortgages, and student loans, and
- Extension to file Personal Income Tax
Canada Emergency Response Benefit (CERB)
The Canada Emergency Response Benefit (CERB) is a benefit program that pays each qualified Canadian $2,000.00 every four weeks for sixteen weeks. This amount is treated as taxable income under the Income Tax Act. The program is designed to provide a basic income for Canadians who lost their job due to the COVID-19 pandemic, and the program criteria are set out as the following:
- live in Canada and are at least 15 years old
- stopped working fulltime or working seasonally because of COVID-19 or are eligible for EI regular or sickness benefits
- have not voluntarily quit their job
- did not already apply for EI
- had an income of at least $5,000 in 2019 or in the 12 months prior to the date of their application.
On April 15, 2020, the Federal government announced that fulltime or seasonal workers who have exhausted their EI could apply for CERB. However, it seems that those who already applied for EI and have yet to exhaust their EI benefits are still excluded from CERB. If you are eligible for CERB and EI and have yet to apply for either one of them, it is best to weight the benefits of applying for CERB compared to EI as applying for EI still excludes Canadians from applying for CERB.
The April 15 revision also allowed CERB recipients to earn up to $1,000 per month while collecting the CERB.
Subsidies for Canadians
Canadians who are not put out of work by the COVID-19 pandemic can also be eligible for the following subsidies. Canadians who are already eligible to receive the Canada Child Benefit will get an increase of $300.00 per child. This increase is automatic for anyone who is already receiving the Canada Child Benefit as well as for individuals who successfully applied for the Canada Child Benefit.
The Federal government also implemented an increase in the HST/GST credit for certain individuals who are already eligible to receive the HST/GST credit. To be eligible for the HST/GST credit, a Canadian tax resident must meet at least one of the three general criteria:
- the taxpayer is at least 19 years old
- the taxpayer has (or had) a spouse or common-law partner
- the taxpayer is (or was) a parent and lives (or lived) with his or her child
Once a taxpayer is qualified for the general eligibility criteria for HST/GST, the amount he or she receives would depend on a combination of their marital status and the number of children under the age of 19 who are already registered as the taxpayer’s dependent for the purpose of Canada Child Benefit. Furthermore, the HST/GST amount received by each eligible taxpayer also varies based on the taxpayer’s net family income, and taxpayers with net family income over certain amounts may not be entitled to receive HST/GST credit.
The CRA publishes their GST/HST credit calculation sheet for the past four tax years on their website: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/goods-services-tax-harmonized-sales-tax-gst-hst-credit/gst-hst-credit-calculation-sheets.html
Taxpayers who are eligible to receive GST/HST credits for the 2018 tax year and had filed their 2018 tax return will have their GST/HST increased as a part of the COVID-19 individual relief package. The amount of this one-time increase will be based on the same factors for receiving GST/HST credit in the first place.
Individual Debt Obligation Relief
For Canadians with mortgage and/or student loan debts, there are relief measures available in the form of temporary repayment deferral. The Canada Mortgage and Housing Corporation and National Student Loans Service Centre are implementing mortgage payment deferral and student loan repayment deferral, respectively.
The Canada Mortgage and Housing Corporation is working with Canadian mortgage lenders for a six-months mortgage payment deferral without interest forgiveness. This means if an individual enters into the mortgage deferral program, his or her mortgage payment obligation will be suspended for six months while interest continues to accrue.
Furthermore, a six-months deferral does not mean debt forgiveness. Any unpaid amount, principal or interest, will need to be repaid after the end of the deferral period.
The National Student Loans Service Centre is suspending repayment obligations without interest until September 30, 2020. As opposed to the Mortgage deferral program, student loan interest will not accrue from March 30, 2020, to September 30, 2020. However, individuals who wish to continue to pay off their student loans can still make payments through online banking or through their NSLSC online account.
Lastly, the Canada Revenue Agency (“CRA”) has suspended their collections activities on new debts. CRA states on their website, “Collections staff will address pre-existing situations on a case-by-case basis to prevent financial hardship.” This means individuals who have already entered into a payment arrangement with the CRA or are being garnished by the CRA will have to contact their collections officer and try to come to an agreement.
Extension to file Personal Income Tax
As of April 29, 2020, the deadline to file personal income tax has been extended to June 1, 2020.
Tax Tips – Consult Experienced Tax Lawyers
It is important to prepare to file your taxes during these trying times, even if you have no taxable income to declare. If you are already in collections with the CRA’s collections department and need representation to obtain payment deferrals, or if you need legal advice on any of the above-mentioned relief measures, schedule a consultation with one of our experienced Canadian tax lawyers.
"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."