June 2020 Newsletter

In the May 2020 Tax Letter, we noted that as part of the COVID-19 tax measures, income tax balances including instalments that are otherwise due after March 17, 2020 and before September 1, 2020, can be paid until September 1, 2020 without interest or penalties. We erroneously noted that “for individuals, this will include the March 15, 2020 instalment…”. That last statement should have read “for individuals, this will include the June 15, 2020 instalment…”. We apologize for the error.

If you are late in remitting your March 15 instalment but you have funds available, it is advisable to remit further instalments early, by at least the same number of days you were late. Interest on late instalments is calculated with an “offset” for instalments paid early, using the CRA’s “late payment” interest rate in both cases. Thus, for example, if you are 100 days late with your March 15 instalment but 100 days early with your December 15 instalment, the interest amounts could cancel each other out. (However, for 2020, the late-payment interest rate was 6% annually (compounded daily) from January-June and is expected to be only 5% from July-December, so to cancel all interest for a 100-day-late instalment you should actually pay another instalment 120 days early — if the amount of each required instalment is the same. (If the September 15 and December 15 instalments required are different amounts from those for March 15 and June 15, that would affect this calculation.)

Last modified on June 23, 2020 12:00 am
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