Tax Measures Under Canada’s COVID-19 Economic Response Plan

Other Tax Measures Supporting Individuals

In a recent webinar[69] with the CRA organized by the Chartered Professional Accountants of Canada (“CPA Canada”), the CRA provided more information on how certain rules on taxable benefits will be interpreted:

  • Commuting Costs: Where an employee is reimbursed or receives a reasonable allowance from their employer for travel expenses associated with travelling from home to their regular place of employment during the pandemic, the CRA will not consider this to be a taxable benefit.
  • Parking Costs: Employer-provided parking at the employee’s regular place of employment will not be considered a taxable benefit by the CRA where the regular place of employment is closed during the COVID-19 pandemic.
  • Home Office Equipment: Employer reimbursements of up to $500 of home office equipment or computer equipment will not be a taxable benefit, provided the equipment is needed for the employee to perform his/her duties of employment at home. CRA indicates home office equipment would include items such as desks or chairs. Furthermore, it was announced[70] that the CRA will allow employees working from home in 2020 due to COVID-19 with modest expenses to claim up to $400, based on the amount of time working from home, without the need to track detailed expenses, and will generally not request that people provide a signed T2200 form from their employers.

International Tax Measures for Businesses and Individuals

CRA’s Guidance[71] on international income tax issues raised by the COVID-19 crisis provides relief respecting adverse impacts of COVID-related travel restrictions. The guidance is as follows:

  • Individual tax residency: In general, an individual’s residence for Canadian tax purposes is a question of fact decided according to common law criteria, which are based on the individual’s ties to Canada. In addition, an individual who is physically present in Canada for a period or periods totaling 183 days or more in a taxation year is deemed to be resident in Canada all year round. Where a non-resident cannot return to their country of tax residence due to travel restrictions, CRA’s position is that this factor alone will not result in the individual being resident in Canada for Canadian tax purposes.
  • Corporate tax residency: Under the Canadian tax system, companies that were incorporated under foreign laws can be considered resident in Canada if their “central management and control” is located in Canada. Certain tax treaties decide the issue of dual residence, taking particular account of the place where the company’s affairs are actually managed. If directors of companies subject to such tax treaties are present in Canada due to travel restrictions and must attend board meetings in Canada because of these restrictions, the CRA will not consider this reason alone to be sufficient for the corporation to be considered resident in Canada. Determinations of corporate residency involving potential dual residency with non-treaty countries will be determined on a case-by-case basis.

This administrative approach will also be followed in respect of other entities established in foreign jurisdictions that are considered corporations under Canadian income tax law, such as limited liability companies.

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