Canadian legislative changes in response to COVID-19

In response to COVID-19, Canada has enacted a number of provisions on the federal and provincial levels to help employers and individuals impacted by the global pandemic.

On March 25th, 2020, bill C-13 An Act respecting certain measures in response to COVID-19, was unanimously passed into law in the parliament of Canada in support of the relief initiatives introduced by the federal government of Canada’s COVID-19 emergency response plan. Several other temporary relief measures have also been announced by authority of the Government of Canada Department of Finance, or the Canada Employment Insurance Commission, and the Pension Authorities.

Below is a summary of the key impacts these relief measures will have on Canadian employers. Check back soon for Alight’s summary of key legislation from Canadian provinces. Alight does not practice law, or give legal or tax advice, please confer with your legal/tax counsel regarding your specific circumstances.

Federal tax:

• Effective March 20, 2020, the government has suspended employers’ responsibility pertaining to the collection and remittances of Canada Revenue Agency (CRA) issued Requirements to Pay (RTP), including RTP already in place, or received within the week ending March 20, 2020, and forward.

• The bill allows all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that owed on or after March 18, and before September 2020. This relief applies to tax balances due, as well as instalments, under Part I of the Income Tax Act, this without incurring interest or penalties.

• Businesses, including self-employed individuals, will be allowed to defer until June 30, 2020, payments of the Goods and Services Tax/Harmonized Sales Tax (GST/HST), as well as customs duties owed on imports.

  • The deferral applies to:

    • GST/HST remittances for the February, March and April 2020 reporting periods for monthly filers

    • January 1, 2020 through March 31, 2020 reporting period for quarterly filers

    • For annual filers, the amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year

  • For GST and customs duty payments for imported goods, deferral will include amounts owing for March, April and May.

Wages:

• Provides eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Additional details are available here. Administrative details have yet to be finalized.

• Still Pending - a 75% wage subsidy was introduced for qualifying businesses for up to three months, retroactive to March 15, 2020, aimed to support businesses to keep and return workers to their payroll. Administrative details yet to be finalized. This proposal is expected to be considered for passage in early April, 2020.

Leave provisions:

• Amendments to the Canada Labour Code (CLC) for federally regulated employers, includes a new COVID-19 job protected leave of absence of up to 16 weeks.

• Extends the maximum duration of the Work-Sharing program from 38 weeks to 76 weeks.

Records of Employment Requirements (ROE):

Alight’s strategic partners at the Canadian Payroll Association (CPA) have published a comprehensive Q&A reference document to address the added complexity brought on by COVID-19 requests for leave of absences, layoffs and terminations.

Other provisions for employers:

• Introduces the Canada Emergency Business Account to provide guaranteed interest-free loans of up to $40,000, based on a one year term, for small businesses and not-for-profits.

Federal support and relief measures for individuals:

• Provides an extra $300 per child through the Canada Child Benefit (CCB) for 2019-20. This will mean approximately $550 more for the average family.

• Provides a one-time special payment by early May through the Goods and Services Tax credit for low- and modest-income families. The average additional benefit will be close to $400 for single individuals and close to $600 for couples.

• Deferring the filing due date for the 2019 tax returns of individuals until June 01, 2020, and allowing balance due or instalments to be deferred until after August 31, 2020, this without incurring interest or penalties.

• Introduce the new Canada Emergency Response Benefit, providing a taxable benefit of $2,000 a month for up to four months for qualified workers, including those who are self-employed and contractors.

• Remove the one week waiting period for Employment Insurance claims related to COVID-19.

• Workers who are without employment and qualify for Employment Insurance benefits can submit claim requests via the Service Canada website.

• Effective March 30, the Government of Canada is placing a six-month interest-free moratorium on the repayment of Canada Student Loans for all student loan borrowers, this without incurring interest or penalties.

• Effective March 20, 2020, the Government of Canada’s suspended the collection and remittances of CRA issued Requirements to Pay (RTP), to include RTP already in place, or received within the week ending March 20, 2020, and forward.

• Reducing the required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020.

Retirement:

During the week ending March 27, 2020, the Office of the Superintendent of Financial Institutions (OSFI) and other provincial pension governing bodies published temporary measures aimed to curb the financial impact to Canadians’ retirement plans. Key changes from OSFI and the Financial Services Regulatory Authority of Ontario (FSRA) impacting employers include:

OSFI:

• Effective March 27, 2020, OSFI revised the Directives of the Superintendent pursuant to the Pension Benefits Standards Act, 1985 to implement a full freeze on portability transfers and annuity purchases relating to defined benefit (DB) provisions of pension plans.

• Extending the deadlines for certain actions and annual filing requirements under the Pension Benefits Standards Act, 1985 (PBSA) and the Pooled Registered Pension Plans Act (PRPPA).

• Suspending a number of consultation initiatives and policy development work related to new or revised guidance until conditions stabilize.

• Additional details are available here.

FSRA:

• Regulatory filings: Plan administrators or their authorized agents who are registered on FSRA’s Pension Services Portal (PSP) may submit filing extension requests of up to 60 days via the PSP. If the filing extension request is for a period beyond 60 days, we ask you to submit your request by email to your assigned Pension Officer.

• Member disclosure:  If a plan administrator or their agents are facing challenges in complying with the prescribed timelines, we ask that you let your assigned Pension Officer know via email as soon as possible. While FSRA does not have discretionary powers to extend the prescribed timelines as they relate to member disclosures, effective immediately, provided you have advised us of the challenges you are experiencing and a reasonable proposed plan of action, summary administrative monetary penalties will not be levied with respect to non-compliance in this area until further notice.

• Additional details are available here.