The business of COVID-19: Tax Check-In

June 1 deadline for submitting tax returns is looming

With June 1 “looming”, it’s wise to be on top of tax filing details. And why not check in on the government benefit programs aiding people through COVID-19.

No one may need reminding that the deadline for filing T1 Personal Tax Returns is Monday, June 1, and for those owing tax, the tax payment due date is extended to Aug. 31.

Nothing has changed with these previously announced dates, however putting these dates into a different context may be enlightening.

It’s important to know that there are social programs that pay benefits not based on the calendar year.

Instead, these benefits run July 1 to June 30 and are calculated using a person’s prior year’s tax filing.

The four most applicable social programs are the GIS and OAS Payments, the GST Rebate and the Canada Child Benefit.

The amount that is going to be paid to a person from July 2020 to June 2021 is determined by the person’s tax filing for 2019.

With this in mind, it’s quite apparent that there is a very short time frame this year for these two social programs to be updated given the personal tax filing date of June 1 and the new benefit payment start date being July 1.

To aid with this time crunch, the government announced recently that for those people already receiving a benefit payment but not having their tax return assessed in time, their payment will continue at the same amount until Sept. 30.

Once their 2019 tax return is filed and the revised benefit calculated, the person will receive a top up or experience a claw back depending on their 2019 tax outcome. However, if their tax return is still not assessed by September, the benefit will end and the payments from July to September will have to be repaid.

Of course for someone who newly qualifies for a social program because of their personal tax situation in 2019, no benefit payment will be forthcoming until their tax return is filed and assessed.

What’s the take away?

File your personal tax return by June 1.

Regarding the Aug. 31 tax payment due date for personal taxes owing, in particular the “interest free” aspect to this deferral. What’s not being communicated well by the government is the fact that the interest free status is conditional upon a person filing their tax return by June 1.

In other words, if you are not filed by June 1 and you have taxes due, the balance will accumulate interest from June 1 until paid.

Additionally, a minimum 10 per cent late filing penalty can be levied on taxes due if a tax return is filed late.

It’s unclear if this penalty will be applied this year if not filed by June 1, although best guess is, yes.

What’s the take away?

File your personal tax return by June 1.

Here are some COVID-19 updates 60+ days into the thick of things.

The Canada Emergency Response Benefit (CERB) eligibility criterion not permitting any work related earnings during a qualifying period has been changed to allow up to $1,000 of earnings.

New this week, the application process opened for the Canada Emergency Student Benefit (CESB). This is a $1,250 monthly benefit from May 10 to Aug. 29 available to post secondary students and 2020 Graduates who cannot find employment and don’t qualify for EI or CERB. 2020 secondary school grads who are enrolled in a post secondary program beginning in 2020 or 2021 also qualify.

The government has stated that anything paper filed will be delayed in its processing, and may in fact sit idle until after COVID-19, so do whatever it takes to get electronic communications, filings and deposits set-up.

When you are about to contact the government or make application, have your information and questions at the ready.

For inquiries, the COVID-19 programs are reached at 833 966 2099, and for personal tax 800 959 8281.

Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services.

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