On March 18, 2020, Prime Minister Justin Trudeau announced the COVID-19 Economic Response Plan. Its goal is to mitigate the negative economic effects of the virus by providing relief for workers and businesses through fiscal stimulus measures. More specifically, the plan will provide up to $27 billion in direct assistance to Canadian individuals and businesses. In addition, $55 billion in tax revenues will be deferred.
The package may seem confusing and daunting at first; however, our goal at Sodagar & Co. is to help you understand what the package means for Canadians and more specifically, how it applies to you. From accessing loans and credit to implementing wage subsidies to preserve employees, Sodagar & Co. can provide the support needed as you navigate through the response plan. As mentioned in a previous blog post, the Firm has invested in technology that enables its employees to work seamlessly from home. This means that we can communicate and service remotely via telephone, email, video conference–whatever is most convenient for your needs.
Below is a brief summary of the measures being taken. To find more details, refer to the Government of Canada website here.
- Families with children who require additional support may receive additional Canada Child Benefit (CCB) payment amounts. Specifically, the maximum payment amounts are increasing by $300 per child.
- The Canada Revenue Agency (CRA) is deferring income tax filing due dates for 2019 individual tax returns. Specifically, tax filings are delayed to June 1, 2020 for individuals and to May 1, 2020 for Trusts. Taxpayers who owe income tax balances or income tax instalments on or after March 18, 2020 and before September 2020 have until September 1, 2020 to remit these amounts. In turn, it may provide taxpayers with some cash flow relief.
- The Canada Mortgage and Housing Corporation (CMHC) is offering tools and assistance to homeowners who are under financial difficulty. For example, payment deferral, loan re-amortization, capitalization of outstanding interest arrears and other eligible expenses, and special payment arrangements. In addition, Canada’s large banks have announced that they will implement a mortgage payment deferral for up to 6 months as well as relief on other credit.
- The one-week waiting period to claim Employment Insurance (EI) sickness benefits is waived as of March 15, 2020. Canadians who don’t have paid sick leave, who are sick, quarantined or forced to stay home to care for children are applicable.
- Those who are ineligible for EI and are facing unemployment or reduced working hours may receive an Emergency Support Benefit.
Sick or Quarantined Support
- The requirement to provide a medical certificate to access EI sickness benefits will be waived. Canadians who don’t have paid sick leave, who are sick, quarantined or forced to stay home to care for children are applicable.
- The Emergency Care Benefit will be accepting applications in April 2020. It will be providing up to $900 bi-weekly for up to 15 weeks. However, to be eligible, you must either:
- be self-employed and quarantined or sick with COVID-19;
- be taking care of a family member who is sick with COVID-19, but do not qualify for EI sickness benefits; or
- be parents with children who require care or supervision and are therefore unable to earn employment income.
Low and Modest Income Support
- The Government is providing a one-time payment through the Goods and Services Tax Credit (GSTC) for low and modest income families. Thus, the maximum GSTC payment will be doubled for the 2019-20 benefit year.
- The Reaching Home Initiative will receive $157.5 million to support homelessness during the COVID-19 outbreak.
- Up to $50 million will be provided to support women’s shelters and sexual assault centres.
- $305 million will be provided to the Indigenous Community Support Fund.
- The minimum withdrawals from Registered Retirement Income Funds (RRIFs) will be reduced by 25%. Therefore, seniors will have more flexibility if they need to liquidate their RRIFs.
Student and Recent Graduate Support
- A six-month interest-free moratorium on the repayment of Canada Student Loans will be implemented.
Employee Retention Support
- Workers who have reduced working hours will be provided EI benefits through the EI Work Sharing Program.
- Temporary wage subsidies up to 3 months for eligible small business employers. For example, corporations eligible for the small business deduction, non-profits, and charities.
- More than $10 billion of support will be provided by the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) through the Business Credit Availability Program (BCAP). However, this support primarily targets small and medium-sized businesses.
- Canada’s large banks will inject $300 billion of additional lending as a result of the Domestic Stability Buffer lowering by 1.25%.
- The Bank of Canada cut interest rates to 0.75% because of the negative consequences arising from COVID-19 and the drop in oil prices.
Financial Market Liquidity Support
- CMHC will support the liquidity and stability of financial markets and continued lending to Canadian consumers and businesses. The Bank of Canada will adjust market liquidity operations, broaden eligible collateral, and be ready to provide support to the Canadian Mortgage Bond market.
Evidently, Canada’s COVID-19 Economic Response Plan contains many components. Sometimes it’s difficult to distinguish between what is and isn’t relevant to you and your business. Law firms are well versed with applying for these programs. Therefore, they will assist with any services applicable to you.