Tax Filing Deadline Now September 1?

Evelyn Jacks

Who needs to file a 2019 T1 return and when? It’s a question Canadians and their advisors continue to struggle with, as filing deadlines become an ever-moving target. Last Friday (May 22), CRA changed their website to announce they will not charge a late filing penalty as long as the extended June 1 filing deadline is met by September 1. So why file now? Here are some key reasons:

Expecting a Refund? If CRA owes you a refund, don’t wait: get that money into your own hands. It can be used to:

• Pay off non-deductible consumer debt
• Saved in a TFSA for emergencies
• Make quarterly tax instalment remittances (September 1 for the June 15 remittance and following that your September 15 remittance
• If you are eligible, you can put the money into an RRSP to save money on next filing season

Expecting to Pay?  You won’t have to remit your payment until September 1, nor will there be a late filing penalty so why file by June 1?  It will allow you to find out exactly how much you owe so you can tuck that money aside. Here is the bigger problem: interest will be attached to those overpayments at a rate that is currently 6%. Although, this is expected to drop by a percentage point as of July 1.   

Expecting Benefits? Are you eligible to receive OAS, GIS, a GST/HST or Canada Child Benefit? The CRA indicated on May 15 that you aren’t required to file a T1 by June 1 to have benefits continue. Payments will continue until the end of September 2020 uninterrupted, as they’ll have trouble assessing all the tax returns that will come in late on June 1 in time to use this to calculate the amounts.  That will be a problem for anyone whose income decreased in 2019 as it means that benefits for this period will still be calculated based on 2018 family net income figures. File that tax return as soon as possible in order to qualify for the correct benefit amounts this year, especially if your income situation has further deteriorated in 2020.

CRA has further noted that if they are unable to assess tax returns by early September 2020, estimated benefit amounts will stop in October. Further to this, if estimated amounts issued to credit and benefit filers over the summer are overpaid, recipients will have to start repaying those amounts in the fall. 

Sole Proprietorship?  If you are a sole proprietor, your tax filing deadline of June 15 has never changed. However, any amounts owed can be paid by the extended September 1 deadline as well. As no interest or penalties will be charged if this deadline is no met, technically these folks can extend their filings to September 1 as well.  CRA has been silent on this however on their website. 

Paper Filing Confusion. CRA has sent out messaging to paper tax return filers that assessing their returns will take a very long time and have urged them to file again…electronically!  This means the CRA could be in receipt of two returns for the same taxpayer, and that’s something they’ve always strongly discouraged in the past. It is sure to add even more confusion, complexity and cost to the post-pandemic assessment ordeal if people file another return electronically by September 1.

Do you really want to think about this all summer? Year-end tax planning time for 2020 taxes is coming soon. . .so now is the time to get those 2019 tax returns done ensure  2020 plans start with the most recent information from the 2019 tax return.  

Bottom line:  File as early as you can to plan your current year tax matters with certainty, and be sure to keep good records. You are going to need them to help CRA get things right later. When it comes to tax auditing, we are expecting Pandemic Pandemonium. . .a topic we will cover in depth at our next Virtual CE Summit on September 30.  Be sure to mark your calendar and stay tuned, as more information will be released soon on this event you won’t want to miss!

Additional educational resources: In the meantime, get up to speed on the Emergency Pandemic Response Benefits. Take the Emergency Pandemic Benefits Response Course online, which includes 9 recorded speaker sessions. You’ll earn 10 CE credits and be well-positioned to provide sound advice for tough times. This course features outstanding, detailed content on the tax and financial planning effects of an unprecedented event that will impact individuals, families and businesses alike today and in the future. The value is priceless: your clients want to know how to access support in their most difficult financial hours. Feel more confident and in-the-know about the government supports – and significant debt and audit risk – your clients might be signing up for.

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