Today Prime Minister Justin Trudeau announced the Canadian Government’s COVID-19 Economic Response Plan, to provide up to $27 billion in direct support to Canadian workers and businesses and a further $55 billion to support business liquidity via tax deferrals. The $82 billion total package provides support in the following areas:
Support for individuals
Temporary income support for workers and parents – for Canadians without paid sick leave (or similar workplace accommodation) who are sick, quarantined or forced to stay home to care for children. Benefit Applications available April 2020.
Longer-term income support for workers – for Canadian who lose their jobs or face reduced hours as a result of COVID’s impact.
Income support for individuals who need it most –
- a one-time payment by early May 2020 through the Goods and Services Tax credit (GSTC) for more than 12 million low- and modest-income families (expected to be close to $400 for single individuals and close to $600 for couples)
- For over 3.5 million families with children a proposed increase in maximum annual Canada Child Benefit (CCV) by $400 per child only for the 2019-20 benefit year.
- $305 million a distinctions-based Indigenous Community Support Funds
- Six-month interest-free moratorium on repayment of student loans
- Reducing required minimum withdrawals from Registered Retirement Income Funds (RRIFs) for 2020
Flexibility for taxpayers – Canada Revenue Agency will defer the filing due date for 2019 tax returns of individuals to June 1, 2020 and to May 1, 2020 for certain trusts. Canadians who expect to receive benefits under GSTC or CCB above should not delay filing their return.
Role of financial institutions – The Minister of Finance encourages Canada’s banks to show flexibility in helping customers whose personal or business finances are affected by COVID-19.
Mortgage default management tools – The federal government through Canada Mortage and Hosuing Corporation (CMHC) is providing increased flexibility for homeowners and will permit lenders to allow payment deferral beginning immediately.
Support for businesses
Various measures announced this week to increase the availability of credit to businesses of all sizes, sustain liquidity in key financial markets and provide flexibility to businesses experiencing hardship.
Additional support to exporters.
Helping businesses keep their workers – a temporary wage subsidy for a period of three months for eligible small employers equal to 10 percent of remuneration paid during that period, up to a maximum subsidy of $1,375 per employee and $25,000 per employer.
Flexibility for businesses filing taxes — Canada Revenue Agency (CRA) will allow all businesses to defer until after August 31, 2020 the payment of any income tax amounts that become owing on or after March 18 and before September 2020. No interest or penalties will accumulate on these amounts during this period.
Ensuring businesses have access to credit – More than $10 billion of additional support largely targeted to small and medium-sized businesses provided through the Business Development Bank of Canada (BDC) and Export Development Canada (EDC). Measures taken by the Office of the Superintendent of Financial Institutions (OSFI) to allow Canada’s large banks to inject $300 billion additional lending in to the economy; and actions by Bank of Canada to support the Canadian economy, including cutting the interest rate to 0.75 percent as a proactive measure.
Supporting financial market liquidity — The government will purchase up to $50 billion of insured mortgage pools through CMHC (announced March 16) and various other financial measures IMPP, Bank of Canada, Standing Liquidity Facility, Canada Mortgage Bond market etc.
