March 27, 2020 Update to COVID-19 Related Tax Extensions

In response to queries regarding filing matters that seemed not to be addressed in the CRA’s previously announced tax filing and payment extensions on March 27, 2020 the CRA issued welcome clarifications.  The CRA has agreed to defer to June 1, 2020 a number of additional administrative tax actions that are due after March 18, 2020.

The March 27, 2020 CRA release states that, unless otherwise noted, the administrative actions to which the extension applies “include the filing of returns, forms, elections, designations and responses to information requests”.  The CRA has summarized their updated positions in a  schedule on their website.

The CRA has specifically indicated that the deadline for payroll remittances and withholding taxes under Part XIII are not extended.

Based on our dialogue with the CRA over the last week we have confirmed that penalties based on unpaid balances, for late filing forms such as personal and corporate taxes, will be based on the extended deadlines. So what was clarified today?

  • It is our understanding that this broader wording is intended to capture all filings, including those (such as T1134s) which are not based on a tax return filing deadline.
  • Trust, partnership and NR4 information return deadlines are all extended to May 1, 2020.  We have confirmed that the reference to information returns includes T3 – Supplementary Forms and T3 Summaries.  This fact would indicate that, with respect to partnerships, Forms T5013- Supplementary should also be covered by the extension.

    Please note that, for a partnership where all partners are corporations, the deadline of the T5013 for the partnership’s December 31, 2019 fiscal period remains at its legislated May 31, 2020 date;

  • Corporations – Our understanding is that while the technical deadline for filing a corporate income tax return is 6 months after the taxation year end, if the deadline falls between March 18, 2020 and June 1, 2020 the deadline will be extended to June 1, 2020. For example, if a corporation had an October 31, 2019 year end the return is now due on June 1, 2020 instead of April 30, 2020.

    The CRA announcement states that this extension “applies to balances and instalments under Part I of the Income Tax Act”. It appears the extension does NOT apply to the payment of Part IV tax.

  • Corporations with an Scientific Research & Experimental Development (SR&ED) claim must still file the necessary forms to claim SR&ED expenses and investment tax credits (namely, Form T661 and Schedule 31 of the T2 corporate tax return) by their regular due dates;
  • The CRA is extending the filing deadline to December 31, 2020, for all charities with a Form T3010, Registered Charity Information Return, due between March 18, 2020 and December 31, 2020; and
  • For any objections due March 18 or later, the deadline has been extended until June 30, 2020. Existing Objections for benefits and credits will be processed but other objections are being held in abeyance. Collection action on these accounts has been deferred during this time.
  • Audit and collection activities, with certain exceptions (not stated), and requests for information on existing audits will not be initiated during this time. Furthermore, audits will not be finalized and reassessments will not be issued but no end date for this deferral has been announced.
  • Collections activities on new debts (not defined) will be suspended until further notice. Payment schedules may be arranged, but it appears to be on a case-by-case basis. In addition, banks and employers do not need to comply with existing requirements to pay (e.g., garnishee type orders).

The due date of personal tax returns for self-employed individuals and their spouses is June 15, 2020, so no extension is required at this time.

Penalties and interest will be waived if the extended deadlines for tax-filing and payments are met. However, taxpayers who are unable to file a return or make a payment by these extended deadlines, because of COVID-19, will be able to request the cancellation of penalties and interest charged, if any, under the Taxpayer Relief Measures.

The government has also announced extensions for the remittance of certain GST/HST and customs duties. These items are explained on the CRA’s website.