Tax – T1 Income Tax Update

The Canada Revenue Agency (CRA) has announced that in addition to a previous extension of the 2019 Individual Tax Return (T1) filing deadline to June 1, 2020, taxpayers will be granted tax penalty relief for late-filed T1 (personal tax) filings to help those impacted by COVID-19. More specifically, the CRA has announced that late-filing penalties will NOT apply to any 2019 T1 Return filed by September 1, 2020, provided that the related tax balance is also paid by September 1, 2020.

What is the difference between an actual Extension of the Filing Deadline (i.e., to June 1st for most individuals) and the CRA stating that they will not assess Late-Filing Penalties?

What this means is that the T1 Return is still considered late-filed. However, the primary deterrent (i.e., the application of late-filing penalties) is removed if all conditions are otherwise met.

So what does this Late-Filing Penalty Relief really mean?

While the June 1st and June 15th 2020 filing deadlines for the 2019 T1 Return for individuals and self-employed individuals (and their spouse or common-law partner), respectively, remain unchanged, late-filing penalties and interest will not be charged if the T1 Return is filed and payments are made by September 1, 2020. 

The CRA has also confirmed that this administrative relief applies to Form T1135, Foreign Income Verification Statement, and to any other forms/elections/designations associated with the T1 filing deadline.

The due date for instalment payments due on or after March 18 and before September 1, 2020, has also been extended to September 1, 2020, with penalties and interest waived if payments are made by that date.

What about the Due Dates for Corporations and Trusts?

The CRA also announced that the due date for corporations to file a T2 corporate tax return and for trusts to file a T3 tax and information return, where such returns would ordinarily be due in June, July, or August 2020, is extended to September 1, 2020.

Why file by the Deadline if no Payment is Due until September 1?

The CRA is still encouraging Canadians to file their taxes on time to ensure that they receive benefit and credit payments. Entitlement to these benefit payments will otherwise be calculated until September 2020 on the basis of an individual’s 2018 T1 Return and will be adjusted, if necessary, once the individual’s 2019 T1 Return is assessed.

For more information about the extended tax filing and payment deadlines, please visit the CRA’s website by clicking here.

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