Even in the warped reality of the COVID-19 pandemic, Canadians must file their taxes to receive many of the benefits they’re entitled to.
And around two million people could face interruptions to some federal and provincial payments if they wait too long to send in their 2019 tax returns, the Canada Revenue Agency warns.
“The CRA recognizes that in the current COVID pandemic environment it’s imperative for benefits to continue without disruption to Canadians,” says Heather Daniels, director-general of the Benefit Programs Directorate at the CRA.
But some Canadians will face payment delays if the CRA can’t process their 2019 returns before the beginning of September, Daniels notes.
Amid the novel coronavirus pandemic, Ottawa pushed the deadline for most individuals to file taxes from April 30 to June 1 while telling Canadians they had until Sept. 1 to pay any taxes owing without facing interest or penalties. (The tax-filing deadline for self-employed Canadians, however, remained June 15.)
But even those who missed the postponed tax cutoff wouldn’t be immediately penalized, the federal government said.
Canadians who’d been receiving the Canada Child Benefit (CCB) and the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit, for example, would continue to get payments until September 2020 even if they missed their filing deadline.
The CCB is a tax-free monthly benefit for eligible families with children under 18 years of age, while the GST/HST credit is a quarterly payment for low-income Canadians. Both are tax-free and may include payments from provincial and territorial programs.
Canadians, including those with no income, must file taxes in order to access credits such as the GST/HST tax credit and benefits like the Canada Child Benefit as well as the Old Age Security pension and the Guaranteed Income Supplement.
For late-filers, the CRA has been using 2018 tax-year information to calculate the CCB and GST/HST credit amounts for July, August and September, according to Daniels.
But those payments could stop in October if the CRA doesn’t receive your 2019 return by early September, the CRA warns.
As of July 1, the CRA had yet to assess the 2019 tax files of some two million CCB and GST/HST credit recipients, Daniels tells Global News. That’s approximately 13 per cent of the 15 million Canadians who were eligible for those benefits based on their 2018 returns, she adds.
Daniels urges Canadians who haven’t done so yet to file their 2019 taxes electronically and sign up for direct deposit to ensure faster processing of tax refunds and avoid any interruption in benefit payments.
“I do worry that if people wait until the end of August to file — and they file on paper — there may be an issue,” she says.
In mid-May, the CRA warned of the probability of “significant delays” for paper filers due to “reduced staff onsite to support physical distancing.” Currently, however, CRA tax centres are working “at full capacity” processing paper returns, according to Daniels.
The CRA said earlier this year it expected to handle about two million paper returns this calendar year out of roughly 26 million filings. So far, nearly 10 per cent of 2019 returns received by the CRA up until July 13 were paper files, according to the agency’s latest available statistics. In the previous tax season, paper files made up 12 per cent of returns.
Canadians who don’t send in their 2019 taxes on time may see a debt showing up on their CRA account in addition to possibly experiencing payment interruptions, Daniels says.
Canadians will have to repay any benefits issued since July 2020 for which they turn out to be ineligible.
In most cases, however, the federal tax agency will calculate any difference between the benefits estimated based on 2018 tax-year information and what taxpayers are entitled to based on their 2019 returns, Daniels says.
Taxpayers who received too much would only have to repay the amount they were overpaid, Daniels says. Benefit payments will also restart automatically as soon as their 2019 returns are assessed, she adds.
A “good portion” of the two million CCB and GST/HST credit recipients who haven’t filed yet are seniors, Daniels says. And the majority of returns the CRA is still expecting are from residents of Ontario and Quebec, she adds.
In mid-May, the government also said it would temporarily continue to pay benefits related to the guaranteed income supplement (GIS) for late tax-filers.
Individuals on the GIS and those on so-called allowance payments — a benefit available to low-income individuals aged 60 to 64 who are the spouse or common-law partner of a GIS recipient — would continue to get their monthly amounts through the summer even if their 2019 income information had not been assessed yet.
Still, seniors should submit their tax returns by Oct. 1 to avoid an interruption in benefits, the government said in a press release.
More than 214,000 seniors will benefit from the interim measure, Employment and Social Development Canada, which issues the benefits, told Global News. The department, however, did not say how many GIS and allowance recipients have yet to have their 2019 taxes assessed.
In an effort to help Canadians file their taxes even while following social-distancing guidelines, the CRA has been working with community organizations to set up virtual tax clinics on an interim basis.
There are now some 225 such organizations across Canada available to help eligible taxpayers file their returns remotely for free, according to Daniels.
The CRA website also has a list of tax software options that let Canadians file for free or in exchange for a voluntary donation.
Canadians who file their taxes after the June 1 or June 15 deadlines but before Sept. 1 won’t face any late-filing penalties, the government has said.