The COVID-19 pandemic has resulted in many programs and subsidies that can be used to help farms survive through these testing times. All farms have been affected differently, whether they have seen changes in commodity prices or decreased demand for products.
It is important to have a quick summary of the changes in deadlines and programs that are available to know how they could be used by your farm. This article is current as of April 21.
Filing deadlines and tax payments
Important changes to deadlines to be aware include:
- The filing deadline for personal taxes was extended to June 1, 2020. For sole proprietor farms, the deadline to file continues to be June 15. However, you are not required to pay tax owing until Sept. 1.
- The corporate income tax deadline has not been extended. It continues to be six months after your taxation year. However, any amount that becomes owing after March 17 does not need to be paid until Sept. 1.
- The GST filing deadline has not been extended. However, the remittances due for April have been deferred until June 30.
Ten percent wage subsidy
The government introduced a 10 percent wage subsidy in March. The criteria to qualify is as follows:
- Your farm had a payroll account with the Canada Revenue Agency on March 18.
- You pay wages to an employee in Canada between March 18 and June 19.
- If your farm is a corporation, it was able to claim the small business deduction in the previous tax year. If qualified, you may be able to reduce your payroll remittance by the subsidy amount on wages paid from March 18 to June 19 up to $1,375 for each employee. This subsidy maxes out at $25,000 per employer. It is also important to note that associated corporations are not required to share the maximum subsidy.
Seventy-five percent wage subsidy (Canada Emergency Wage Subsidy)
The 75 percent wage subsidy is another program that was announced shortly after the 10 percent subsidy. This is more difficult to qualify for. To do so, your farm needs to demonstrate a 30 percent decrease in revenues (15 percent for March) because of COVID-19.
Generally, this subsidy would cover 75 percent of the wages paid from March 15 to June 6. The maximum benefit is $847 per employee, per week.
This subsidy has many different aspects that I have not highlighted. There is expected to be significant audit activity of businesses that apply for this and severe penalties if they are found to be “gaming” the subsidy.
Canada Emergency Response Benefit (CERB)
This benefit is for people older than 15 who have stopped working because of reasons related to COVID-19 and had income of at least $5,000 in 2019 or the past 12 months.
This provides $2,000 per month for up to four months. If someone is already receiving Employment Insurance payments, they should not apply for CERB. If you applied for EI after March 15, CERB will automatically apply. Farm employees may be eligible for this benefit if they are required to self-isolate.
Producers who have an outstanding loan through the Advance Payments Program, such as the Canola Growers Advance, which is due on or before April 30, will receive a stay of default, allowing them an additional six months to repay the loan. Applicable producers who still have interest-free loans outstanding will have the opportunity to apply for an additional $100,000 interest-free portion for 2020-21, as long as their total APP advances remain less than $1 million.
New measures are being announced rapidly in response to this unprecedented outbreak. Be sure to communicate with your trusted advisers to stay up to date on changes in these times.
Colin Miller would like to thank Riley Honess and Payden Van Gaalen of KPMG for their assistance with writing this article.
Colin Miller is a chartered accountant and partner with KPMG’s tax practice in Lethbridge. Contact: firstname.lastname@example.org.