COVID-19: GST/HST and PST Measures

Federal and Provincial Response Plans

Melina Rocha Lukic, Frédéric Pansieri
Article
| 4/1/2020

This is the revised version updated April 1, 2020. Originally published March 27, 2020.

On March 18, 2020, the Government of Canada announced measures intended to relieve financial difficulties related to the COVID-19 outbreak. The plan includes tax relief measures for both individuals and businesses, such as income tax remittance deferral.

The only specific measure announced by the federal government in respect of GST/HST was that the CRA will not contact any small or medium businesses to initiate any post assessment GST/HST for the next four weeks (starting March 18, 2020). Additionally, for the majority of businesses, the CRA will temporarily suspend and will not initiate audit interaction with taxpayers and representatives. This means that no new audits will be launched, there will be no requests for information related to existing audits, no audits should be finalized and no reassessments should be issued. Interaction with taxpayers will be limited to high risk and exceptional cases,, and in cases of high-risk GST/HST refund claims that require some contact before they can be paid out. Collections activities on new debts will be suspended until further notice and flexible payment arrangements will be available. The CRA also announced that the GST/HST Refund Integrity program is considered critical, and activity will continue, with some modifications, to ensure that refunds are not unnecessarily delayed.

Taxpayers can submit a request to the CRA to have interest and/or penalties waived or cancelled if they are prevented from making a payment when due, filing a return on time, or otherwise complying with a tax obligation because of COVID-19. Penalties and interest will not be charged if the new deadlines that the government has announced to tax-filing and payments are met. In respect of objections related to tax matters, the CRA is currently holding these accounts in abeyance and no collection action will be taken with respect to these accounts during this period. For any objection request due March 18 or later, the deadline is effectively extended until June 30, 2020.

On March 27, 2020, the Government of Canada announced additional measures to support Canadian businesses dealing with the economic impacts of the pandemic. The new measures include a GST/HST remittance deferral applicable for most of the businesses. The CRA published further documentation on March 31 where it still seems to suggest that this relief is intended to apply to “Canadian businesses.” It is not yet clear whether such relief would be available to businesses that are not residents of Canada or that are foreign-owned. The Minister of National Revenue will extend until June 30, 2020 the time that:

  • Monthly filers have to remit amounts collected for the February, March and April 2020 reporting periods;
  • Quarterly filers have to remit amounts collected for the January 1, 2020 through March 31, 2020 reporting period; and
  • Annual filers, whose GST/HST return or instalment are due in March, April or May 2020, have to remit amounts collected and owing for their previous fiscal year and instalments of GST/HST in respect of the filer’s current fiscal year.
The CRA later clarified that the deferral until the end of June 2020 applies to any GST/HST payments (including instalments) or remittances that become owing on or after March 27, 2020, and before June 2020. No interest will apply if payments or remittances are made by the end of June 2020. The CRA also confirmed that the deadline for businesses to file their returns is unchanged and those who are able to, should continue to file their GST/HST returns on time and report their net tax for the reporting period. However, the CRA will not impose penalties where a return is filed late, provided that it is filed by June 30th.
 
GST/HST returns that are filed electronically will be processed by the CRA. Paper GST/HST returns and returns filed electronically that require client contact or additional review will not be processed until normal operations resume. Therefore, the CRA encourages registrants to file GST/HST returns electronically. 
 
According to the CRA, refunds will be issued in a timely manner if there is no balance owing, provided that the GST/HST returns were filed electronically and that they do not require client contact or additional review. In regard to GST/HST rebate applications, they will also be processed in a timely manner only if they are filed electronically as well. Otherwise, the CRA will only process them once everything goes back to normal.
 
The additional measures also apply to customs duties and the 5% GST on imports, that are generally due before the first day of the month following the month in which the statements of accounts are issued. According to the new measures, payment deadlines for statements of accounts for March, April, and May are also being deferred to June 30, 2020.

 

 Provincial Tax Measures
  • Saskatchewan announced that businesses who are unable to remit their PST due to cash flow concerns will have three-month relief from penalty and interest charges. Businesses that are unable to file their provincial tax return by the due date may submit a request for relief from penalty and interest charges in respect of the return affected. Audit program and compliance activities have been suspended.
  • British Columbia is extending the filing and payment deadlines for the PST and other taxes until September 30, 2020. The province also postponed until further notice the tax changes announced in Budget 2020, such as the elimination of the PST exemption for carbonated beverages and the expanded registration requirements for non-resident sellers.
  • Manitoba has stated that RST returns for small and medium businesses (i.e. with monthly RST remittances of no more that $10,000 per month) will be due on June 22, 2020. Businesses that file on quarterly basis will also have the due date extended to June 22, 2020. Businesses that qualify for the filing extension and were not able to file and remit their February sales tax return will not be assessed a late filing penalty and interests will not be applied until after June 22, 2020. However, interest will continue to apply on outstanding tax debts owed prior to the March remittance deadlines.
  • Quebec also announced measures aligned with the measures taken by the federal government, such as deadline extension for filing income tax returns. Revenu Québec will also suspend all tax audit and collection activities and will provide greater flexibility in respect of payment agreements for tax debts. On March 27, 2020, Quebec also announced additional measures, following the federal government, to postpone the QST remittances and instalment payments to June 30, 2020 in respect of all QST returns that must be filed between March 7, 2020 and June 1, 2020, without interest or penalties. Revenu Quebec also later clarified that the deadlines for filing the QST returns will not change. However, a late filing penalty will not be imposed if the returns are filed by June 30, 2020. Moreover, Québec will accelerate the processing of requests for tax credits intended for businesses and tax refunds. 
  • Ontario announced that, beginning April 1, 2020, penalties and interest will not apply to Ontario businesses that miss any filing or remittance deadline under select provincial taxes. The relief will apply for a period of five months and will be waived automatically for all late returns or remittances by Ontario businesses during the relief period. Among the provincial taxes included in the relief period are the Insurance Premium Tax and Retail Sales Tax on Insurance Contracts and Benefit Plans. Ontario businesses are required to file any late returns or remittances by the end of the relief period. The relief measure does not include outstanding taxes, interest or penalties owing to the government from previous filing periods and they will continue to accrue interest. Ontario is also temporarily suspending audit interactions with most business and representatives for the month of April 2020.

Connect with the Author

Melina Rocha Lukic
Melina is a Senior Manager in Crowe Soberman's Commodity Tax Group.
Connect with Melina at 416 963 7165 or melina.rocha@crowesoberman.com

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