TORONTO — The federal government is looking at adjustments to the upcoming tax season to help give taxpayers and businesses a break as COVID-19 pummels the economy and leaves many Canadians worried about their next paycheque.
Prime Minister Justin Trudeau, who has been in self-isolation at Rideau Cottage since his wife, Sophie Gregoire Trudeau, tested positive last Thursday, said Tuesday that he will have more to say about changes to the upcoming tax season by the end of the week.
“We’re looking at giving more flexibility for people to make payments and for businesses to have more liquidity during this time,” Trudeau said during a press briefing.
In response to the crisis, taxpayers in the United States have been given an extra three months to pay their income tax. Quebec’s finance minister announced Tuesday that businesses and taxpayers will have until July 31 to pay their provincial taxes, freeing up about $7.7 billion worth of liquidity in the province’s economy.
If the federal government were to defer tax payments for Canadian businesses by one or two months, it could be “extremely helpful” for companies facing a cash flow crunch, according to Heather Evans, the CEO and executive director of the Canadian Tax Foundation.
“It would take some of that pressure off from an economic perspective for businesses that are trying to manage from day to day,” Evans, who is working from home, told CTVNews.ca in a phone interview on Tuesday. “Getting their tax return filed may not be the top priority right now, and I’m not sure it should be.”
Extending the deadline wouldn’t just be beneficial for businesses and taxpayers, Evans said, but also for employees of the Canada Revenue Agency, who may be worried about coming to work during the pandemic.
“It would be a prudent thing to do for their own workforce,” Evans said.
Already, the federal government has announced a $1-billion health and economic response package that includes relaxing EI rules. Another $10 billion is being made available to businesses impacted by the virus.
Since the virus was declared a pandemic last week, the stock markets have seen unprecedented declines. On Monday, the Dow posted its worst point drop in history and fell to its lowest point in almost three years. In Canada, the TSX shed 1,355.93 points on Monday, or nearly 10 per cent, hitting a 52-week low. Several top Canadian economists predict a recession later this year.
Those bleak numbers, coupled with the new realities of social distancing and self-isolation, have sent shockwaves through the Canadian economy and forced businesses from restaurants to gyms to movie theatres to shut down. For the moment, essential services such as grocery stores, public transit and pharmacies remain open.
At the time of publication, 485 Canadians have tested positive for the coronavirus — surpassing the number of Canadians who were infected with SARS. Five people have died.
For the moment, the deadline to file federal income tax returns is April 30. Evans said she hopes to hear the government’s next steps soon.
“We’re kind of all in this together and the tax community recognizes the importance of the integrity of our tax system … but I think it would be really appropriate now to give a little bit of relief to the taxpayer under the circumstances,” she said.
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