Fall Fiscal Update: Summary of Tax Measures

30 Nov Fall Fiscal Update: Summary of Tax Measures

Posted at 16:28h in Latest News by Team Clearline 30 Nov

The Minister of Finance, Chrystia Freeland, delivered the 2020 Fiscal Update on Nov. 30th. Highlights of the tax measures announced in the Update are summarized below. The Update did not contain any significant tax changes or increases.

Business Income Tax

CEWS Subsidy Extension

The Government will increase the Canada Emergency Wage Subsidy (CEWS) to 75% for Periods 10 to 13 (December 20, 2020 to May 13, 2021). A summary is as follows:

The weekly wage subsidy for a furloughed employee for Periods 10 to 13 will be the lesser of:

the amount of eligible remuneration paid in respect of the week; and
the greater of:
- $500, and
- 55% of pre-crisis remuneration for the employee, up to a maximum subsidy amount of $595.

In regard to furloughed employees, employers will also continue to be entitled to claim under the wage subsidy their portion of contributions to the Canada Pension Plan (CPP) and Employment Insurance (EI).

CERS Subsidy

The Government will extend the Canada Emergency Rent Subsidy (CERS) as follows:

Personal Income Tax

Home Office Expense Deduction

Employees working from home in 2020 due to COVID-19 will be allowed to claim expenses up to $400, based on the amount of time working from home, without the need to track detailed expenses. Nor will they be required to have a signed Form T2200. The CRA will provide further information in the coming weeks.

Support for Families with Young Children

The Government announced a temporary support totaling up to $1,200 in 2021 for each child under the age of 6 for families who are entitled to the Canada Child Benefit (CCB).

Families with net income at or below $120,000 will receive four tax-free payments of $300 per child under the age of 6 years. Families entitled to CCB with net income above $120,000 will receive four tax-free payments of $150 per child under the age of 6 years. These payments will start shortly after legislation is approved, then in April, July, and October 2021.

Stock Options

Further to comments in previous budgets, the Government has proposed the following changes to employment stock option rules:

A $200,000 annual limit will apply on employee stock options grants that can qualify for the stock option deduction granted on or after July 1, 2021.
Canadian Controlled Private Corporations (CCPCs) and some-non CCPCs (start-ups, emerging companies, and employers with annual gross revenues of $500 million or less) will be not subject to this new limit.

Indirect Tax

GST/HST on Face Masks and Shields

Effective December 6, 2020, the GST will be reduced to 0% on certain face masks (medical and non-medical) and face shields.

GST/HST on Digital Services

Foreign based vendors that sell digital products to Canadians will be required to register for, collect, and remit GST/HST on the taxable sales to Canadians effective July 1, 2021. This will include video and music streaming, online video gaming, and mobile apps.

GST/HST on Fulfillment Warehouses

Foreign based vendors will be required to charge GST/HST on sales to Canadians for goods that are sold using Canadian fulfillment warehouses. This will also be effective July 1, 2021.

GST/HST on Short-Term Accommodation through Digital Platforms

Platforms will be required to charge GST/HST on sales using platform-based short-term rental accommodations supplied in Canada. This will also be effective July 1, 2021.