Canada’s COVID-19 Economic Response Plan: Support for Canadians and Businesses
Canada's COVID-19 Economic Response Plan
March 25, 2020 Bill C-13, the COVID-19 Emergency Response Act, today received Royal Assent, guaranteeing the rapid implementation and administration of measures to protect Canadians’ health and safety and stabilize the Canadian economy. The authorities in this legislation makes sure that the government can do what it takes to support Canadians and Canadian businesses, and the economy as whole, in a timely way, today and in the future, as the situation continues to evolve.
On March 18, 2020, the Prime Minister announced a new set of economic measures to help stabilize the economy during this challenging period. These measures, delivered as part of the Government of Canada’s COVID-19 Economic Response Plan, will provide up to $27 billion in direct support to Canadian workers and businesses.
Support for Canadians
Temporary Income Support for Workers and Parents
- Waiving the one week wait period to obtain EI sickness benefits;
- Waiving a medical certificate requirement;
- Emergency Care Benefit flat rate amount for up to 15 weeks, administered through the CRA, for:
- Workers and self-employed in quarantine but not eligible for benefits;
- Workers and self-employed who are caring for someone in quarantine but not eligible for benefits; and
- Parents who are caring for children due to school closures who cannot earn income whether they qualify for EI benefits or not.
- Applications for the Benefit will open in April.
Longer-Term Income Support for Workers
- Emergency Support Benefit delivered through the CRA for workers who are not eligible for EI and who are facing unemployment;
- Implementing the EI Work Sharing Program
Income Support for Individuals Who Need It Most
- One-time special payment by early May 2020 through the Goods and Services Tax credit (GSTC) to low income individuals and families;
- Increasing annual Canada Child Benefit (CCB) payment amounts, only for the 2019-20 benefit year, by $300 per eligible child;
- Indigenous Community Support Fund to address immediate needs in First Nations, Inuit, and Métis Nation communities;
- Placing a six-month interest-free moratorium on the repayment of Canada Student Loans for all individuals currently in the process of repaying these loans;
- Reducing required minimum withdrawals from Registered Retirement Income Funds (RRIFs) by 25% for 2020;
- Reaching Home initiative to continue to support people experiencing homelessness during the COVID-19 outbreak;
- Supporting women and children fleeing violence, by providing women’s shelters and sexual assault centres monetary assistance to help with their capacity to manage or prevent an outbreak in their facilities.
Flexibility for Taxpayers
- CRA will defer the filing due date for the 2019 tax returns of individuals until June 1, 2020;
- For trusts having a taxation year ending on December 31, 2019, the return filing due date will be deferred until May 1, 2020;
- CRA will allow all taxpayers to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020.
Role of Financial Institutions
The Superintendent of Financial Institutions has made clear his expectation that banks will use the additional lending capacity provided by recent government actions to support Canadian businesses and households. Including measurers such as, up to a 6-month payment deferral for mortgages, and the opportunity for relief on other credit products.
Mortgage Default Management Tools
The Canada Mortgage and Housing Corporation and other mortgage insurers offer tools to lenders that can assist homeowners who may be experiencing financial difficulty. These include payment deferral, loan re-amortization, capitalization of outstanding interest arrears and other eligible expenses, and special payment arrangements. These will take effective immediately.
Support for Businesses
Supporting Canadian Business through the Canada Account
The Canada Account is administered by Export Development Canada (EDC) and is used by the government to support exporters when deemed to be in the national interest. This will allow the government to provide additional support to Canadian companies through loans, guarantees or insurance policies during these challenging times.
Helping Businesses Keep their Workers
To support businesses that are facing revenue losses and to help prevent lay-offs, the government is proposing to provide eligible small employers a temporary wage subsidy for a period of three months. The subsidy will be equal to 10% of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer. Businesses will be able to benefit immediately from this support by reducing their remittances of income tax withheld on their employees’ remuneration. Employers benefiting from this measure will include corporations eligible for the small business deduction, as well as non-profit organizations and charities.
Flexibility for Businesses Filing Taxes
The Canada Revenue Agency will allow all businesses to defer, until after August 31, 2020, the payment of any income tax amounts that become owing on or after today and before September 2020. This relief would apply to tax balances due, as well as instalments, under Part I of the Income Tax Act. No interest or penalties will accumulate on these amounts during this period;
The Canada Revenue Agency will not contact any small or medium (SME) businesses to initiate any post assessment GST/HST or Income Tax audits for the next four weeks.
Ensuring Businesses Have Access to Credit
The Business Credit Availability Program will allow the Business Development Bank of Canada and Export Development Canada to provide more than $10 billion of additional support, largely targeted to small and medium-sized businesses;
The Office of the Superintendent of Financial Institutions (OSFI) announced it is lowering the Domestic Stability Buffer by 1.25% of risk-weighted assets, effective immediately;
The Bank of Canada cut the interest rate to 0.75%.
Supporting Financial Market Liquidity
Insured Mortgage Purchase Program. Under this program, the government will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation. This action will provide long-term stable funding to banks and mortgage lenders, help facilitate continued lending to Canadian consumers and businesses, and add liquidity to Canada’s mortgage market.
All the details can be found by accessing this link.