In response to the COVID-19 pandemic, the Canada Revenue Agency (CRA), provincial tax authorities and Canadian courts are making adjustments to their administration of the tax system and adjudication of tax matters. These changes affect deadlines for filings and payments, the administration of tax programs and the resolution of disputes.
DEADLINES FOR FILINGS AND PAYMENTS
Filing deadlines for some federal tax returns have been extended as follows:
For individuals, who normally must file by April 30, the income tax return filing due date is deferred until June 1, 2020.
For trusts having a taxation year ending on December 31, 2019, the return filing due date is deferred until May 1, 2020.
For charities with a Registered Charity Information Return due between March 18 and December 31, 2020, the return filing due date is deferred until December 31, 2020.
The CRA has also recently extended, to June 1, 2020, most deadlines otherwise arising between March 18 and June 1, 2020, including deadlines for returns not addressed above, and filing of elections. The deadline for filing partnership information returns and statements of amounts paid or credited to non-residents has been extended to May 1, 2020. The deadline to file any notice of objection due March 18 or later has been extended until June 30, 2020.
In addition to these filing deadline extensions, all income tax amounts (including balances due and instalments) that became owing on or after March 18 and before September 1, 2020, are now due on September 1, 2020. No interest or penalties will be charged on such amounts during this time. Payroll deductions and remittances are unaffected by these deferrals, subject to the previously announced temporary wage subsidy that, where applicable, has been increased to 75 per cent effective March 15, 2020.
For GST/HST and customs duties, the CRA has extended the deadline for payment to June 30, 2020. This deferral will apply to GST/HST remittances for the February, March and April 2020 reporting periods for monthly filers; the January 1 through March 31, 2020, reporting period for quarterly filers; and, for annual filers, the amounts collected and owing for the previous fiscal year and instalments of GST/HST in respect of the current fiscal year.
For GST and customs duty payments on imported goods, the deferral will include amounts owing between March 1 and May 31, 2020. The CRA has not announced any changes in respect of GST/HST filing deadlines.
Some federal deadlines have not been generally extended or cannot be extended without a legislative amendment. We understand that the CRA is considering how to deal with such timelines. With respect to deadlines for responding to audit queries, the CRA is currently dealing with these on a case-by-case basis. With respect to transfer-pricing contemporaneous documentation requests, we understand that the CRA intends to cancel existing requests with a deadline of March 18 or later and reissue them at a later date.
The Government of Quebec has implemented measures that generally mirror the changes to the federal deadlines. However, rules applicable to the filing of information returns for specified investment flow-through (SIFT) trusts have not been modified. In addition, partnerships that had to file a Quebec Partnership Information Return (form TP-600-V) for 2019 by March 31, 2020, now have until May 1, 2020, to file. The deadline for payments of balance of tax otherwise due by a SIFT trust or partnership falling between March 17 and August 31, 2020, has been suspended and postponed to September 1, 2020.
Quebec is also postponing, until June 30, 2020, the filing of all QST returns, as well as the remittance of QST payable, in respect of the March 31, April 30 and May 31 remittance periods, without interest or penalties.
British Columbia has extended the filing and payment deadlines for PST until September 30, 2020.
The Alberta Tax and Revenue Administration (TRA) has deferred corporate income tax balances owing between March 18 and August 31, 2020, consistent with the federal measures but has not yet announced any extensions of other deadlines, such as to respond to audit queries or object to tax assessments.
CRA/TAX ADMINISTRATIONS' PROGRAM ACTIVITY
CRA has made adjustments to its workforce in response to the pandemic, with a consequent reduction in its activities.
Collections activities on new debts are suspended until further notice, and the CRA has indicated that flexible payment arrangements will be available where needed.
Audit interactions with the “vast majority” of taxpayers and their representatives have been suspended. In particular, the CRA will limit audit interactions to cases where (1) the statute-barred (or treaty-barred) date to reassess a tax return is approaching or (2) there are high risk GST/HST refund claims that require some contact before they can be paid out. The CRA will not contact any small or medium businesses to initiate any new post-assessment GST/HST or income tax audits until mid-April.
Objections related to tax matters other than Canadians’ entitlements to benefits and credits will be held in abeyance until further notice. Objections related to benefit and credit entitlement will continue to be processed.
General enquiries lines remain open, but fewer agents are available to accept calls. The Charities Directorate call centre, the Debt Management Call Centre and the National Leads Centre call site have been closed until further notice.
Revenu Quebec has announced that all tax audit and collection activities are being suspended, and the organization will show greater flexibility in respect of payment agreements for tax debts. TRA has discontinued on-site audit work and meetings but is continuing audit work with auditors working from home. TRA has not issued further comments on collections activity.
LIMITATION PERIODS AND STATUTORY DEADLINES
For clarity, there are no changes to the limitation periods that govern the time within which the CRA is permitted to reassess prior taxation years. Other than those affected by the CRA’s recent extension of most statutory deadlines, other federal deadlines for taxpayers may continue to apply, including the time period to dispute tax assessments by way of appeal to the Tax Court of Canada.
Similarly, Quebec and Alberta have not yet announced any changes to the limitation periods that govern the time within which they are permitted to assess prior taxation years or the deadlines for taxpayers to appeal tax assessments.
In contrast, the Ontario government has issued an Emergency Management and Civil Protection Act order that suspends any provision of any statute, regulation, rule, bylaw or order of the Government of Ontario establishing any limitation period or period of time within which any step must be taken in any proceeding (or intended proceeding) in Ontario, the latter being subject to the discretion of the court, tribunal or decision-maker responsible for the proceeding. Accordingly, to the extent that Ontario limitation periods (e.g., for commencing a tax objection or appeal) are covered by the order, their running is currently suspended.
British Columbia has similarly issued an order under the Emergency Program Act suspending every mandatory limitation period and other mandatory time period within which a civil action, proceeding, claim or appeal must be commenced in the province’s courts.
FEDERAL AND PROVINCIAL TAX LITIGATION
Canadian courts that adjudicate tax matters have suspended proceedings and, in some cases, deadlines for steps to be taken in tax disputes under their jurisdiction.
The Tax Court of Canada, which adjudicates the correctness of federal tax assessments, has cancelled all judicial sittings and conference calls scheduled before May 1, 2020. On April 14, the court will reassess whether adjustments will need to be made for matters scheduled to proceed after May 1, 2020. The Tax Court has issued a practice direction and order excluding the period from March 16 to May 1, 2020, from the computation of time set by any rules governing the conduct of matters under its jurisdiction or by any order or direction of the Tax Court made prior to March 16, 2020. The court’s offices are closed for business until further notice.
Federal Court hearings, including those proceeding by way of teleconference, scheduled to be heard between March 17 and April 17, 2020, are also adjourned, subject to exceptions for urgent or exceptional matters. The running of all timelines under orders and directions of the court made prior to March 18, 2020, as well as under the Federal Courts Rules and certain other legislation governing Federal Court procedures (including the traditional 30-day deadline for commencing an application for judicial review), are suspended until April 17, 2020. Matters may be rescheduled between May 1 and May 15, 2020.
The provincial courts have implemented similar measures, including Alberta, British Columbia, Ontario and Quebec.
For further information, please reach out to a member of our Tax group or your usual Blakes contact at any time.
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