Due to the outbreak of Covid-19 around the globe, the government of Canada took initial steps to guard against a severe economic fallout by crafting a federal aid package designed to help Canadians who would be affected by strict mandated lockdowns. This effectively sidelined most Canadians from their jobs, forcing them to stay at home in an effort to flatten the pandemic’s curve.
The aid package paid for Canadians to remain at home by supplementing their lost income, but it didn’t stop there. The government also made changes to the normal tax season by extending the deadline for submissions to May 31st, 2020, while pushing the deadline for any outstanding payments to August 31st, 2020. These movies helped tightly budgeted Canadians delay any taxes owed to the government, which helped ease the stress of the situation.
Doubtless, you have already filed your tax returns to the government, but what about your payments? Chances are, salary workers might have to pay a little bit of money to the government if their employers didn’t take enough taxes off of each paycheck, whereas self-employed Canadians have to do their due diligence in setting aside much higher amounts to pay at the end of the season. Therefore, self-employed workers have a lot more to gain by offsetting their payment deadline for taxes owed to September 1st.
Either way, having these extra several months of extension means that many Canadians can get back on their feet during the re-opening phase, and ready themselves for what’s to come. Those left unprepared for the Covid-19 fallout may wish to take this lesson to heart, and proactively set money aside to pay for any possible taxes owed next year, rather than scramble to pay the outstanding amount at the last minute.
Although the rollout to Canada’s Covid-19 response plan has been less than desirable, it’s still a step in the right direction, and just as important now that the pandemic is beginning to slide into decline. It remains to be seen how the government will handle a potential second wave of the virus, but current data and estimates show that we are much more prepared and educated as to what we are really dealing with. This should alleviate any shock, or the need to implement major lockdowns a second time round, but Canadians should still be prepared for the possibility. In the meantime, every Canadian should take full advantage of the government’s tax payment deadline of August 31st, while simultaneously storing up income in case we need to initiate further mitigation protocols.
The key here is to spend less, and save more – at least until we are certain we’re out of the woods. It’s tempting to consider Covid-19 done and over with at this point, but the pandemic is still in full swing, albeit to a much lesser degree. If you have money to pay any owed taxes, set it aside and do not touch it. Isolating it from your revenue pool means one less thing to worry about as the country moves to get back on its feet and restart the economy. It also gives Canadians another two months to accumulate money and pad their bank accounts, which is good news considering that the government initially approved the pushing back of certain bills, such as rent, in order to combat effects of the Covid-19 economic lockdown. Cautious optimism is still the order of the day. The Canadian government has given residents an excuse to breathe a little easier, so be sure to take advantage of it, while planning ahead to make sure that taxes (of all things) don’t come rearing back to cause trouble down the road.
For more information on building and maintaining your wealth, even in the aftermath of the Covid-19 pandemic, contact us today. We’d be happy to give our advice!