Canadian taxpayers are duty-bound to fulfill their tax obligations annually. This year, however, is an exception because of the disruption by COVID-19. Tax filers are getting a reprieve after the tax agency extended the tax filing and tax payment dates to June 1, 2020, and September 1, 2020.
Also, the CRA will exercise leniency in charging penalties if you miss the cut-off dates. But the government is hoping strict compliance because the CRA must be able to assess the 2019 tax files. If not, late filers will risk interruptions or stoppage of several benefit payments.
Tax filing is a must
People would need government benefits because the pandemic environment is very much around. The CRA is encouraging taxpayers to file their 2019 tax returns as soon as possible. Without them, processing of payments for the benefit year 2020-21 will stall. The tax agency will not use the 2018 tax returns as basis for computations.
Heather Daniels, director-general of the Benefit Programs Directorate at the CRA, is reminding Canadian taxpayers to act. Around two million people are facing interruptions to some federal and provincial payments. Low income Canadians won’t be able to claim the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit beyond September.
Parents or recipients of the Canada Child Benefit (CCB) who have yet to file their 2019 tax returns will only receive the benefit until September. The Old Age Security (OAS) pension and the Guaranteed Income Supplement (GIS) beneficiaries must comply and submit their returns on or before October 1, 2020.
There’s no exception to the CRA rule. With or without income, Canadians must file taxes to gain credits and benefits like the GST/HST and the CCB. Seniors should do the same to avoid delays in the payments of the OAS and GIS.
Uninterrupted income
Long-term investors and retirees have received non-stop, tax-free income from Fortis (TSX:FTS)(NYSE:FTS) for years. You, too, can be a happy recipient of uninterrupted income by using your or opening a Tax-Free Savings Account (TFSA) then investing in the utility stock. Fortis is a standout dividend all-star.
This $25.37 billion operator of regulated electric and gas utility assets is the safety of income-investors during recessions, and now in the pandemic. The business model is low-risk because regulatory mechanisms protect Fortis. Its growth platform is resilient, while cash flows are stable and enduring, given the set-up.
High-yield dividend stocks are attractive options, but not necessarily safe. When the company falters, the price plummets and could lead to a dividend cut. Fortis boasts of bond-like features and yields a modest 3.5%. Amid the 2020 chaos, the stock is outperforming the general market and gaining by 3% year-to-date.
With a dividend growth streak of 47 years, Fortis will not disappoint. Now is an excellent time to take a position in this pandemic-proof stock with management planning to raise the dividend by an average annual rate of 6% through 2024.
Heed the call
Director-general Daniels is worried Canadians might procrastinate and file their tax returns at the last minute. It will either delay tax refunds or interrupt benefit payments. The best action of taxpayers is to heed the call to enable the CRA to process your entitlements faster.
