Government of Canada's Economic Response Plan for COVID-19
Information from the Government of Canada - March 18, 2020
Unprecedented times call for unprecedented measures and governments across Canada and around the world are announcing response plans designed to support their citizens and business as we navigate through the COVID-19 pandemic. Today, the Government of Canada announced the COVID-19 Economic Response Plan: Support for Canadians and Businesses that will provide up to $27 Billion in direct support for workers and businesses that includes the following:
Support for Individuals
Temporary Income Support for Workers & Parents:
Waiving the one-week waiting period for Employment Insurance (EI) sickness benefits
Waiving the requirement to provide a medical certificate to access EI sickness benefits
Introducing the Emergency Care Benefit that will provide up to $900 bi-weekly for up to 15 weeks designed to support people who don’t qualify for EI
Introducing an Emergency Support Benefit to provide up to $5 Billion in longer-term support for workers beyond the 15 weeks
Implementing the EI Work Sharing Program which provides EI benefits to workers who agree to reduce their normal working hours
For over 12 million low and modest income families, providing a one-time special payment through the GST Tax Credit in May 2020
Increasing the Canada Child Benefit for 2019-2020 by $300/child
A new Indigenous Community Support Fund
A six-month interest free moratorium on Canada student loans payments
Reducing required minimum withdrawals by 25% for Registered Retirement Income Funds (RRIF) for 2020
Providing the Reaching Home Initiative to support people experiencing homelessness
Supporting funding to women’s shelters and sexual assault centres to help with capacity to manage or prevent an outbreak
Flexibility for Taxpayers:
Defer the personal tax return filing date to June 1, 2020
Deferring the payment of any tax owing between today and September 2020 to after August 31, 2020
Role of Financial Institutions:
The Government has made it clear to financial institutions that banks should utilize their additional lending capacity to support Canadian businesses and households to manage through hardships such as pay disruption, childcare disruption and illness.
Measures that could be used by financial institutions include up to 6 month mortgage payment deferral and payment relief on other loans and credit products.
Canada Mortgage & Housing Corporation (CMHC) and other mortgage insurers also offer other tools that include loan re-amortization, capitalization of outstanding interest arrears and special payment arrangements.
Support For Businesses
Support to Canadian exporters when deemed to be in the national interest through loans, guarantees or insurance policies
Providing a temporary wage subsidy for a period of three months equal to 10% of remuneration up to a maximum subsidy of $1375 per employee (and up to $25,000 per employer)
Deferring, until after August 31, 2020, the payment of any income tax amounts that become owing before September, 2020
A 4 week moratorium on initiation of any GST or Income Tax audits (and a suspension of most current audit interactions)
Through the Business Credit Availability Program (BCAP), administered by the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) provide more than $10 billion of support to small and medium sized businesses
Enhanced credit availability to farmers and the agri-food sector through Farm Credit Canada (FCC)
Supporting Financial Market Liquidity:
Through the establishment of the Insured Mortgage Purchase Program (IMPP), the government will purchase up to $50 billion of insured mortgage pools through CMHC. This action will provide long-term stable funding to banks and mortgage lenders.
These measures are diverse and far-reaching and should provide support and relief to Canadian citizens and businesses impacted by COVID-19. Whether it will be sufficient or not to stave off bankruptcies (both personal and corporate) and minimize layoffs, remains to be seen.