Business National Taxation

Tax deadlines extended and CEWS amended by Bill C-20

Bhuvana Rai of BLG reviews Bill C-20 and its details relevant to tax practitioners

Author: Bhuvana Rai
Bhuvana Rai
Bhuvana Rai is a senior associate and member of the Tax Group in the Ottawa office of Borden Ladner Gervais LLP.

OTTAWA – Bill C-20 (An Act respecting further COVID-19 measures) was passed on July 27th, 2020. It updates deadlines relevant to tax practitioners (with the potential for further changes) and introduces substantial changes to the Canada Emergency Wage Subsidy (CEWS). Bill C-20 consists of three parts:

  • Amendments to the Income Tax Act (ITA) and Income Tax Regulations (ITR);
  • One-Time Payment to Persons with Disabilities (implemented through amendments to various existing Acts); and
  • Time Limits and Other Periods Act (COVID-19) (new, stand-alone legislation).

Parts 1 and 3 are likely to be of most interest to tax practitioners. Part 1’s amendments to the ITA and ITR implement extensive changes to the CEWS, retroactive to July 5th. The changes are complex, and appear to be aimed at removing the all-or-nothing 30% revenue decline threshold for employers. Concurrently, the new weekly maximum eligible remuneration amount per employee has been increased to $1,129 from $847. Other changes fix certain issues with the legislation, which were identified through consultations with employers (such as provisions for amalgamated corporations or those using payroll service providers).

Part 3 of Bill C-20 implements wide-ranging changes to Tax Court deadlines and would also extend other deadlines at the discretion of the Minister of National Revenue. It is possible that further changes will follow by Ministerial Order; in this regard, specific deadlines in federal taxation legislation have already been identified as permissible.

Updates to the CEWS

The ITA amendments provide for employers experiencing any revenue loss to qualify for the CEWS. Employers will now be paid amounts proportionate to their revenue losses as subsidy amounts (rather than receiving a flat subsidy amount). A new “top up” is available to employers that have been hit particularly hard by the COVID-19 pandemic.

Several new terms have been introduced in the new CEWS legislation:

  • baseline percentage,” calculated by multiplying an entity’s RRP (below) by a multiplier (which varies based on the claim period);
  • revenue reduction percentage” (or “RRP”), which is the percentage reduction in revenue for the current reference period as compared to the previous reference period;
  • top-up percentage,” equal to 1.25 multiplied by the total of the:
    • average monthly revenue decline for the past three calendar months,
    • less 50 per cent.

The sum of the baseline percentage and the top-up percentage will now be used to calculate the subsidy amount payable to the employer per employee. The intent appears to be to consider previous months’ performance as an indicator of how poorly a business is doing.

The amendments to the ITA propose new CEWS claim periods and baseline percentages, as outlined in the following table.


Time Period

Reference Periods (current/prior)

Baseline %


July 5, to August 1, 2020

July 2020 over either July 2019 or the average of Jan. & Feb. 2020

1.2 x RRP

(to a maximum of 60%)


August 2 to August 29, 2020

Aug. 2020 over either Aug. 2019 or the average of Jan. & Feb. 2020

1.2 x RRP

(to a maximum of 60%)


August 30 to September 26, 2020

Sept. 2020 over either Sept. 2019 or the average of Jan. & Feb. 2020

1 x RRP

(to a maximum of 50%)


September 27 to October 24, 2020

Oct. 2020 over either Oct. 2019 or the average of Jan. & Feb. 2020

0.8 x RRP

(to a maximum of 40%)


October 25 to November 21, 2020

Nov. 2020 over either Nov. 2019 or the average of Jan. & Feb. 2020

0.4 x RRP

(to a maximum of 20%)

The baseline multiplier and the resulting baseline percentage decline as periods progress, ranging from a maximum of 60% to a maximum of 20% in claim period 9.

Calculating the CEWS Subsidy

The wage subsidy amount that can be claimed for each arm’s length employee has been revised as follows for Period 7 onwards (i.e., for September 2020 – November 2020):

  • For each arm’s length employee who is not on leave with pay for a given week:
    • The relevant percentage multiplied by the least of:
      • The amount of eligible remuneration paid in respect of that week; and
      • $1,129.
    • For each arm’s length employee who is on leave with pay for a given week:
      • The least of:
        • The amount of eligible remuneration paid for the week;
        • An amount set by regulation; and
        • $0, if the RRP and the top-up percentage are both 0%.

Transitional rules apply for the 5th and 6th claim periods (i.e., for July 5th until August 29th) such that employers who would be better off under the previous subsidy calculations may elect to do so. Moreover, employees who are on leave with pay benefit from more favourable treatment (which may be reflective of the Government’s intention to transition workers from the Canada Emergency Response Benefit, or CERB, to CEWS).

Other Changes to the CEWS

Other substantial changes to the CEWS which were introduced by Bill C-20 include:

  • Amalgamated corporations will be deemed to be the same corporation for CEWS purposes;
  • New baseline periods have been announced for each qualifying period, where employers so elect. This change appears to be aimed at seasonal workers;
  • Eligible employees are no longer subject to a requirement that they must not be without pay for 14 days or more during any given qualifying period;
  • Eligible entities now include trusts;
  • The deadline for applications has been extended to January 31, 2021; and
  • All entities (regardless of what they ordinarily used) may elect to use the cash method or accrual method.

Updates to Tax Deadlines

Bill C-20 also implements The Time Limits and Other Periods Act (COVID-19), which would suspend most federal time limits established under Acts of Parliament for the period starting March 13, 2020 and ending September 13, 2020 (unless an earlier day is fixed by the Governor in Council). This would apply to the following deadlines at the Tax Court of Canada:

  • limits or periods for commencing a proceeding;
  • limits in relation to something that is to be done in a proceeding; and
  • any limit within which an application for leave to commence a proceeding or to do with something in relation to a proceeding.

Further, the Minister responsible for an Act may make an order suspending or extending a time limit or other periods established by any of the Acts, Provisions or Regulations listed within the schedule to the Act (including the Income Tax Act and Excise Tax Act). The total duration of a suspension or extension must not exceed six months, and said extensions or suspensions cannot continue after December 31, 2020. Ministerial orders may be retroactive and may include provisions respecting the effects of a failure to meet a deadline before the order was made, so long as the dates are not before March 13, 2020.

The Minister of National Revenue may, upon issuing Orders, update the following deadlines under the Time Limits and Other Periods Act (COVID-19):

  • Under the Income Tax Act:
  • Subsection 37(11): (deadline for SR&ED claims)
  • Paragraph 127(9)(m): (deadline to file investment tax credit form)
  • Subsection 152(3.1) & (4): (deadline to assess, reassess, or make additional assessments under the “normal reassessment period”)
  • Subsection 166.1(7): (deadline to request extension of time to file a notice of objection from the MNR)
  • Subsection 166.2(5): (deadline to request extension of time to file a notice of objection from the Tax Court of Canada)
  • Under the Excise Tax Act:
  • Subsections 298(1) & 298(2): (deadline to assess tax or rebate)
  • Subsection 303(7): (deadline to request extension of time to file a notice of objection from the MNR)
  • Subsection 304(5): (deadline to request extension of time to file a notice of objection from the Tax Court of Canada) 

Some deadlines affecting taxpayers (i.e., the ten-year deadline to request interest relief) cannot be extended under this legislation. Moreover, most of the potential extensions (other than those applicable to the Tax Court of Canada) will depend on the Minister issuing an Order — whether these extensions are favourable to taxpayers (eg., in respect of deadlines to file appeals) or to the Canada Revenue Agency (primarily, deadlines to reassess). Fairness would require that both parties are treated equally — but by virtue of excluding certain deadlines important to taxpayers, it would appear that the proposed legislation leans towards favouring the CRA.

Bhuvana Rai is a senior associate and member of the Tax Group in the Ottawa office of Borden Ladner Gervais LLP.

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