CRA Announces New Simplified Process for Claiming Work From Home Expenses and Formalizes the Tax Treatment of Certain Employer Provided Employee Benefits During the COVID-19 Pandemic
By: Kevin Yip, Devon LaBuik, and Kathryn Walker
On December 15, the Canada Revenue Agency (the “CRA”) released additional details regarding the availability of employee deductions for work from home expenses and the taxation of certain employer provided employee benefits during the COVID-19 pandemic.
In response to the financial hardship caused by the COVID-19 pandemic, the Government of Canada introduced the Canada Emergency Wage Subsidy (“CEWS“) in April 2020, one of the largest tax programs in the country’s history, to help companies retain or recall their employees.
Comme nous le savons tous, le Québec est entré dans la pandémie mondiale de la Covid-19 au printemps dernier. Le 13 mars 2020, le gouvernement du Québec décrétait l’urgence sanitaire qui , pendant plusieurs semaines, voire plusieurs mois, a paralysé le Québec et mis à rude épreuve l’économie des entreprises.
Le gouvernement du Québec et le gouvernement du Canada ont mis en place une série de mesures fiscales et financières visant à venir en aide aux travailleurs et aux entreprises : report de paiement de la TPS-TVQ, report de production des déclarations d’impôt ainsi que de multiples autres mesures. Ces mesures permettent essentiellement aux contribuables d’éviter de se faire imposer des intérêts et des pénalités en cas de retard dans le paiement de la TPS et la TVQ ou lors de la production des déclarations d’impôts.
The COVID-19 pandemic has revealed the fault lines of the globalized economy and triggered a rise of protectionist trade policies. The latest chapter in this trend away from a multilateralism is the U.S. withdrawal from OECD negotiations over the tax challenges of the digitalisation of the economy, which in turn has provoked European nations to retreat to unilateral solutions.
The Globalized Economy and COVID-19
In the period between the end of the Second World War and the on-set of the COVID-19 pandemic, the globalization of production created deep economic interdependencies, binding domestic economies to a global supply chain. Consequently, when the COVID-19 pandemic broke, the structure of global trade was such that a disruption in one link of the supply chain created effects all down the line.
In March 2020, the six nations hit hardest by COVID-19 were the U.S., China, Korea, Italy, Japan, and Germany. At the time, these six nations accounted for 55 percent of world supply and demand, 60 percent of world manufacturing and 50 percent of world manufacturing exports. China, where the virus first emerged, was largest contributor to global trade, the “workshop of the world,” making up 41 percent of world manufacturing exports and 20 percent of global trade in manufacturing intermediate products. Due to the globalization of production, when the pandemic decreased production in these six nations, and China in particular, the effects reverberated globally.
In January 2020, the OECD/G20 Inclusive Framework on BEPS, a group of 137 countries including Canada, endorsed a statement, which affirmed their commitment to build a global solution to the tax challenges created by the digitalisation of the economy. This work has been underway since 2015 and is slated to be finalized by the end of 2020.
The statement, itself a political expression of on-going commitment, was accompanied by additional documents which, provide an outline of the “architecture” of the currently agreed upon Unified Approach under Pillar One, a programme of work descriptions, details on the multinational enterprises (“MNEs”) that will be impacted by the initiatives under Pillar One, and a progress report on Pillar Two work (collectively the “January 2020 Statement”). The biggest development presented in this set of documents is the architecture of the Pillar One solution, including a clarified explanation of a new taxing right for market jurisdictions.